The Institute of Economic Affairs (IEA) has said it made suggestions to the Bank of Ghana (BoG) ahead of the Monetary Committee (MPC) meeting last Monday May 23 that taxes and levies on fuel in Ghana should either be removed or reduced.
But, the IEA said this matter was not addressed directly by the MPC.
During the MPC press conference, Governor of the Bank of Ghana, Dr Ernest Addison said recent price developments indicate elevated pressures arising from the sharp increase in global energy and commodity prices, and the consequential effects on domestic ex-pump petroleum prices and transportation costs, food prices, as well as the pass-through effects of the recent exchange rate depreciation.
The two inflation readings, since the last MPC, he said showed that headline inflation further surged from 15.7 percent in February 2022 to 19.4 percent in March, and 23.6 percent in April.
The price pressures are increasingly becoming broad-based and reflected in almost all components of the consumer basket, from both domestic and imported sources. Non-food inflation went up significantly from 17 percent in March to 21.3 percent in April 2022, while food inflation also rose further from 22.4 percent to 26.6 percent over the same comparative period.
At the same time, he said the Bank’s core inflation measure, which excludes energy and utility prices, picked up from 15.4 percent in February 2022 to 18.5 percent in March, and further up to 22.3 percent in April.
Reacting to these, the IEA in a statement signed by the Director of Research, Dr John Kwakye said “For fuel the IEA suggested that the country should be prepared to mitigate price shocks that may occur due to geopolitical developments . This will require BOST to maintain strategic reserve that could be released to cushion pump prices in the midst of shocks.
PRESS RELEASE!!!
Bank of Ghana’s Response to Inflation Crisis Largely in Sync with IEA’S Expectations pic.twitter.com/lRw9f6Nrxr— IEA Ghana (@IEAGhana) May 26, 2022
“Government should also be ready to use some of its windfall earnings from higher oil prices to cushion domestic prices and also suspend or reduce some of the numerous fuel taxes and levies amidst oil shocks. The BoG did not directly address this call.”