SIGNS OF BETTER THINGS TO COME (JULY 15, 2010)

CURRENT economic indices point to the fact that the prudent austerity measures taken by the Mills administration have started yielding results.
There can be no denying the fact that the disclosure by the Government Statistician, Dr Grace Bediako, that inflation for last month hit 9.52 per cent presents the nation with not only good news but also hope that the nation will soon emerge from the economic wilderness into positive growth and prosperity.
According to the Government Statistician, the impressive 9.52 per cent inflation comes from a backdrop of consistent drops in the inflationary rate over the last many months, with the possibility of further decline (see front page).
It is important for this achievement to be placed in the proper context to truly appreciate its scope and significance.
As late as January last year when the Mills administration took over the reins of government, inflation stood at over 20 per cent and was set to rise even higher, with an overall deficit of about 18 per cent of the Gross Domestic Product (GDP).
It is also important to point out that the value of the cedi, which has an effect on the inflationary spiral, had also fallen significantly and looked set to depreciate further.
In such a situation, it required the taking of difficult and politically unpalatable but necessary measures to first arrest the escalating inflationary spiral, even it out and sustain the progress to induce it to begin to drop.
Thus, if within 18 months the inflation figure has been more than halved and is even set for further decline, we as a people rightly deserve to pat ourselves on the back for a good job done.
While it cannot be denied that the myriad of sacrifices made by the good people of this country have contributed significantly to the attainment of this achievement, the fiscal discipline, cut back on wasteful and ostentatious spending and the general prudent management of the economy has been a decisive factor in this respect.
In a sense, it does appear as if history is repeating itself, as it was the Economic Management Team, under the same Professor John Evans Atta Mills, then as Vice-President of the Republic during the second term of the National Democratic Congress (NDC) government, which chalked up a similar single digit inflation of 9.8 per cent.
We are aware that as inflation falls, so the purchasing power of any given quantum of money appreciates, thereby enhancing the money in people’s pockets. The reverse is the case with a galloping inflation.
With inflation on the decline, all things being equal, the general cost of doing business will be relatively lower, business people can plan better, especially in the medium to long term, and this will have a significant impact on job creation, the value of the cedi and other important economic indices.
We are heartened by the explanation of the Finance and Economic Planning Minister, Dr Kwabena Duffour, to the effect that the occurrence of this appreciable decline in inflation in the face of increased government spending pointed to the prospect of good economic growth.
A good growth, coupled with the introduction of fairer means of distributing national resources such as the Single Spine Salary Scheme (SSSS) should help reduce poverty and improve the quality of life of our people.
Finally, we wish to counsel against complacency so that we do not slip back and compromise the impressive gains we have chalked up.
The light at the end of the tunnel is getting brighter and we need to work harder and remain focused and disciplined to get us to the much sought after economic prosperity we all dream of.