Business News of Tuesday, 21 November 2023
Source: www.ghanaweb.com
Reduction in interest rates, inflation in 2024 could result in setbacks – Economist explains
Professor Lord Mensah, Financial Economist
Financial Economist, Professor Lord Mensah, has cautioned that government’s target of reducing interest rates and inflation could result in setbacks in 2024.
He argued that the projected budget deficit for 2024 and expenditure targets set out in the 2024 budget could however hamper on inflation forecast and interest rate targets for the period.
Speaking on JoyNews’ PM Express monitored by GhanaWeb Business, Prof. Mensah expressed concern that financing the deficit of about GH¢61 billion could result in inching up interest rates on the market.
“Government average issue of treasury bill on the market which is highly concentrated in the 91-day papers is around GH¢3 billion. Even with that, government is struggling to bring interest rates down,” the Economist is quoted to have said by Joy Business.
He explained that, “So, if we are trying to finance the deficit of about GH¢61 billion from domestic sources, then we are likely to borrow around GH¢5 billion every month to finance this deficit. If we should go strictly by this budget, then I don’t think that, interest rates will drop from the current levels. It will rather be going up.”
Professor Lord Mensah further indicated the development, if not well coordinated, could put additional pressure on the private sector forcing government to compete with businesses for funding support.
Touching on his overall view of the 2024 budget, the Economist said, “I was expecting this budget to narrow the deficit, rather than embarking on initiatives that will increase the deficit”.
MA/SA
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