Ernest Addison, governor of the Bank of Ghana, said that there had been a notable reduction in the number of products in the Consumer Price Index basket reporting inflation exceeding 50% since the year's beginning.
Additionally, after reaching a more than two-decade inflation-rate high of 54.1% in December, Ghana's consumer inflation dropped for the fourth consecutive month in April, to 41.2% year on year.
The country's administration also got a big break in the form of a $3 billion, three-year support program from the executive board of the International Monetary Fund last week, allowing for an immediate transfer of around $600 million and a potential exit from the crisis.
"While this development (the approval of the IMF financing) is positive for the domestic economy, it is conditional on a strong implementation of the fiscal and structural policies under the program," the central bank said.
Despite the approval of a $3 billion loan from the IMF, which adds to the country’s already mounting debt, Ghana relayed its plans to restructure its debt, seeking a $10.5 billion reduction in the amount of external debt service from 2023 to 2026. Although Ghana's debt is now unsustainable, the nation hopes to reduce its risk of financial distress to a "moderate" level by 2028, according to the fund.
The decision to retain the policy rate was expected, according to Leslie Dwight Mensah, an economist at the Institute for Fiscal Studies in Accra, who made the disclosure to the American news organization Reuters. "It matches a conservative stance, which recognizes that although inflation may be heading downwards through the rest of the year, it will be a long while before it returns to the official target band," he said.
The Bank of Ghana has an inflation target of 8% with a 2-percentage-point error tolerance. "More interesting perhaps is the context in which the announcement was made – a new IMF program and an agreement between the central bank and the ministry of finance to prohibit monetization of the deficit, which is positive for the credibility of monetary policy." He added.