GHANA’S government would pump $2bn into the economy to rescue the cedi currency, the presidency wrote on Twitter on Wednesday, adding that it would cut political appointees’ salaries by up to 30 percent as part of measures to ease its financial problems.
The West African country is facing rampant inflation, a depreciating local currency and a heavy debt burden that has dented investor confidence and could build up into a debt crisis. The cedi has weakened by about 20 percent against the dollar this year, exacerbating its problems.
The announcement from President Nana Akufo-Addo follows the central bank’s decision on Monday to hike its main lending rate by 250 basis points to 17 percent, the largest increase in Ghana’s history.
Ghana was long seen as a rising star among Africa’s emerging market economies, but underwhelming oil revenues and supply chain disruptions amid the Covid-19 pandemic have dampened expectations.
The Bank of Ghana raised its main lending rate by 250 basis points to 17 percent, signalling an aggressive stance against the rocketing price of goods from flour to sugar to fuel, and against a depreciating local currency that has dented investor confidence.
It is the largest increase in Ghana’s history, according to government records, more than double the 100-basis-point rise predicted by a Reuters poll of 10 economists last week.