The Governor of Bank of Ghana (BoG), Dr. Ernest Addison has said that Ghana’s economy is doing relatively well despite government’s high demand for financing due to the Covid-19 pandemic.
Speaking at the 97th Monetary Policy Committee press conference on Monday, the governor said that Ghana’s economy is in good standing despite the impact of the COVID-19 pandemic on government’s expenditure.
According to him, increase in cocoa and gold export since September has contributed to the improvement in the economy.
Gold and cocoa export earnings went up by 8% and 11% respectively due to favourable prices and production volumes,” he said.
He added that inflation has also reduced as at October 2020. “Inflation pressures from events preceding the partial lockdown of the economy in April 2020 are easing. Inflation steadily rose in the second quarter and peaked at 11.4% in July as against 7.8% in the first quarter of 2020. Since then, headline inflation has trended downwards and is reported at 10.1% for October driven by both declines in food and non-food prices” Dr. Addison said.
According to him, Gross International Reserves at the end of October 2020 was US$8.63 million, equivalent to four months of import cover of goods and services.
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He revealed that Bank of Ghana is still expecting to build up enough reserves of 300 million by the end of the year to guarantee a stable exchange rate ahead of 2021.
He added that average lending rate of banks has reduced from 28% to 21.3% but said that the “the government’s demand for financing during this period (Covid-19 period) has gone up, and this is what accounts for the longer term interest rates remaining high because of high financing rates of the government.
Dr. Ernest Addison said that the key risk government is likely to face is the evolution of a budget deficit and the financing needs to support the budget in an event of uncertainties surrounding the pandemic.
Source: Fauzeeya Jamal-deen
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