The ministry of finance and economic planning (MOFEP) announced on Wednesday 11th August that the rate of inflation for July 2010 has declined to a record 9.46 percent. The news comes despite an increase in government expenditure in 2010.
In December ‘08 inflation soared to 18.1 percent, which MOFEP explains was due to the fiscal expansion stance of the previous government and increasing crude oil prices. Yet since June ‘09 the rate of inflation has been steadily declining and is expected to reach 7 percent by December 2010.
In its report, MOFEP was quick to refute its critic’s claims that inflation has fallen due to the government withholding payments to creditors and depriving commercial banks of cash, deeming the claims ‘false’ and a ‘complete misrepresentation of the facts’. The current government is said to have spent GH¢2,980 million since January ‘09 in a bid to liquidate part of the debt left by the previous government.
Furthermore, the report indicates consistent annaul increases in governemt expenditure: ‘Total government expenditure in the first half of 2008 was GH¢3.6 billion(GBP1.6bn). The corresponding figure for ‘09 was GH¢4.2 billion (GBP 1.9bn) and for 2010 it was GH¢5.4 billion(GBP2.4bn). This represents an increase of 16.7 percent in ‘09 and 50 percent in 2010 over the ‘08 level’.