- Inflation rate was 19% in January amid currency plunge
- Wampah failed to rein in prices, Accent's Appiah says
Ghana’s central bank Governor Kofi Wampah will retire four months early, cutting short his tenure amid sputtering growth and persistently high inflation.
Wampah, who has been governor since March 2013, will leave at the end of this month, the Bank of Ghana said on its website Tuesday. His term was due to end on Aug. 5.
Under Wampah the central bank raised Ghana’s benchmark rate by four percentage points since July to stem losses in the cedi and combat inflation, which soared to 19 percent in January, the highest in at least five years. Growth in the world’s second-largest cocoa producer, an oil supplier since 2010, is languishing near the slowest pace in 20 years, while rising public spending has prompted credit downgrades.
The government has pledged to curb its fiscal deficit as part of an agreement to receive almost $1 billion in loans from the International Monetary Fund, helping to restrain price pressures. Wampah’s “unexpected” retirement is an example of poor communication with the market, said Godfred Bokpin, head of the finance department at University of Ghana’s business school.
“Timing of the governor’s exit does not auger well for market predictability,” Bokpin said by phone. “The next governor must have credibility to follow through with the stringent measures and requirements of the IMF program.”
The Washington-based lender said in January policy makers will need to act more aggressively if price growth doesn’t ease.
While the inflation rate dropped to 18.5 percent in February, it has been above 15 percent since July 2014. The Bank of Ghana targets inflation between 6 percent and 10 percent. The cedi has fallen 3.4 percent this year after depreciating 15 percent in 2015. The currency was 0.2 percent stronger at 3.8460 per dollar as of 9:44 a.m. in Accra on Wednesday.
Wampah “failed in reining in inflation,” Collins Appiah, chief economist at Accra-based Accent Financial Services, said by phone on Wednesday. “Ghana needs a new face to head the central bank as the election nears.”
President John Dramani Mahama will stand for a second term in presidential elections that could be held as early as Nov. 7.
Mahama’s press office didn’t immediately respond to e-mailed questions. James Klutse Avedzi, chairman of the parliament’s finance committee, and Communications Minister Edward Omane Boamah didn’t answer calls to their mobile phones.