Inflation In Ghana Essay

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Although Ghana has very good resources they often experience numerous of high rates of inflations. In 1999 Ghana’s inflation percentage was 12.6 % it rose to 49.5 % in 2000. Beginning in 2000 Ghana’s inflation rate has been because of an extent of external shocks, unjustifiable macroeconomic policies, and tariffs of depreciation. However the major cause of inflation from 2000-2003 is the Bank of Ghana role in the obtaining of the country’s greater product cocoa; which is Ghana’s main cash crop. Big amounts of cash were distributed each year into the economy by the size of the crop and the producer price. Superior the amount carried in the more the money supply would grow and the higher their inflation rate rose. Some also believe the country borrowed from the Central Bank in 2000 to sponsorship their presidential election. In 2001 Ghana became a constitutionally elected government for the first time in their history. The NDC (Nation Democratic Congress) gave the control of the country to another elected form of the government, the NPP (National Purchasing Partners) in January 2001, in effort to lower inflation. Near the end of the first quarter of the year in 2001 Ghana’s inflation had decreased from 41.9% to 40.5%. The reason was because of the unnecessary money supply growth in the last quarter of 2000, neglected of local food stocks in Ghana, and the price adjustment for February 2001. However, with the fiscal management and monetary policies the NPP government has been able to reduce the year-on-year inflation from 40.5% as at the end of December 2000 to 21.3% as at the end of December 2001, showing a tremendous decline. Ghana set a target of 25% inflation rate for the end of th... ... middle of paper ... ...nt of the CPI, which ultimately led to a decay of inflation to 11.8%, an additional miss of the single digit target in 2002. There was also conversation rate immovability coupled with a decline in the prime rate which was presented during the NPP government in 2004 to exchange the bank rate. This replicated in a fall in interest rates which is a lift to savings and general productivity of the economy. Ghana’s economy was looking to be on the rise. From 2004-2014 Ghana’s inflation rate stayed monetarily around the same. It was 12.3% at the end of 2004, 12.2% in 2005, 13.5% in 2006, and 12.7% in 2007, 15.8% in 2008, 16.5% in 2009, 12.7 % in 2010, 13.8% in 2011, and 16.8% in 2012. The reason for the inflation rates becoming so stable is the job that the NPP government is doing to keep rates down. They set a target goal for each year and almost always reach their mark.
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