The rate of inflation is rising not only in Ghana, but also in some developed countries such as the United Kingdom (UK) and the United States (US), according to President Nana Addo Dankwa Akufo-Addo.
Mr. Akufo-Addo made the remarks on Wednesday, September 21, during the 77th session of the United Nations General Assembly.
Mr. Akufo-Addo outlined the negative effects of the coronavirus pandemic, as well as the ongoing Russia-Ukraine conflict, on African economies.
“The economic turmoil is global,” he said, “with inflation as the number one enemy this year.” It recently reached a 40-year high in the United States and the United Kingdom. In the eurozone, inflation is at an all-time high. Inflation rates in several African countries are now three to four times higher than they were just two years ago. Ghana is experiencing the highest inflation rate in 21 years. Food prices are disproportionately affecting the poor, particularly the urban poor.
Furthermore, the spillover effect of central banks raising interest rates to combat inflation has been severe across borders, as global investors withdraw funds from developing economies to invest in bonds in the developed world.
Also read: Ghana’s economy bad due to Russia-Ukraine war
“This has resulted in currency depreciation and higher borrowing costs, implying that we must raise and spend more of our own currency to service our foreign debts in US dollars.” If there was any doubt, it is now clear that the international financial structure is heavily skewed against developing and emerging economies like Ghana. Small nations are barred from taking measures that would relieve economic pressures on powerful nations.
“To make matters worse, credit rating agencies have been quick to downgrade African economies, making it more difficult to service our debts.”
The label of Africa as an investment risk is, in essence, a self-fulfilling prophecy created by international money market prejudice, which denies us access to cheaper borrowing, pushing us deeper into debt.
“The financial markets have been set up and operate on rules designed for the benefit of rich and powerful nations, and during times of crisis, the façade of international cooperation under which they purport to operate vanishes.”
And the need for systemic reform is compelling.”
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