The Institute said the country must develop sustainable industries to add value to its rich raw materials and leverage natural resources for rapid growth.

That, together with solving the persistent macroeconomic problems of high fiscal deficits and public debt, exchange rate instability, high rate of employment, would make the fundamentals of the economy strong enough to resist inflationary and other external shocks.

Dr John Kwabena Kwakye, the Director of Research at IAE, said: “The only way to find a durable solution to the recurrent problems is to address the economy’s weak structural fundamentals. This should be done through transformation of the colonial-type economy to a vibrant industrialised economy.”

“This cannot, however, be achieved by relying on our narrow tax base and borrowing but rather by leveraging our vast natural resource wealth by taking ownership of it,” Dr Kwakye added.

He was commenting on the raising of the policy rate by a further 200 basis point from 17 percent to 19 percent by the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) to tackle the country’s inflationary pressures.

Two months ago, the Committee raised the policy rate, which is the rate the Central Bank borrows to commercial banks, and served as a tool to control the increase in prices of goods and services by 250 basis points from 14.5 percent to 17 percent.

However, Dr Kwakye said it did not fully exert its impact on the inflationary pressures, therefore, the need to further hike the rate.

He said: “IEA wishes to make it clear that, while we are talking here about inflation as an immediate problem, the other persistent macroeconomic problems are all manifestations of a bigger problem.”

“That problem is the underlying weak structure of the economy, characterised by reliance on low-value added primary export products and high import dependency,” he added.

The Research Director said the solution to all the inflationary challenges facing the economy, though multi-faceted approach, the most important was to solve the structural weaknesses.

He emphasised that it was important for Ghana to: “Leverage capacities and opportunities for earning foreign exchange through greater processing of export commodities and increasing earnings from natural resources.”

Additionally, there should be a deliberate effort to increase food production and ensure storage and preservation of excess produce, especially during the peak seasons so that buffer stocks may be released to cushion prices amidst shocks and during the lean seasons.

Other things the Institute has urged the Government to do are to ensure that the Bulk Oil Storage and Transportation Company (BOST) maintained strategic oil reserves that could be released to cushion pump prices in the midst of shocks.

For transport, the public transport system should be improved and the availability of intra- and inter-city public transport increased.

In April, Ghana recorded inflation of 23.6 percent, the highest in 18 years and the 11th consecutive monthly increase.

This has resulted in the cost of living rising sharply across the country, with the prices of goods and services experiencing high increases.

The Central Bank attributed the situation to the global economy entering a period of profound uncertainty and fragility, in addition to disruption of global supply chains by the COVID-19 pandemic.

Dr Ernest Addison, Governor, BoG, at the last MPC update, said the uncertainty surrounding price developments, including petroleum price adjustments and transportation costs, and exchange rate depreciation, and its impact on economic activities were weighing down business and consumer confidence.