Accra, Ghana, July 24, 2018//-Businesses operating in Ghana and consumers are positive on growth and employment prospects, despite concerns about exchange rate movements.
However, the business and consumer confidence surveys indicate moderation in overall sentiments, according to the Bank of Ghana (BoG).
The Governor of BoG, Dr Ernest Addison, observed: ” Growth in key monetary aggregates slowed down significantly from a year ago, consistent with the disinflation process and the on-going cleaning up in the financial sector”.
Similarly, annual growth in broad money supply (including foreign currency deposits) eased to 13.0 percent in June 2018, from 28.9 percent in June 2017 reflecting a 13.4 percent annual decline in Net Foreign Assets.
Government budgetary operations
He told journalists in Accra recently noted that the government budgetary operations for the period January to May 2018, indicated that revenue and grants amounted to GH¢17.4 billion (7.2% of GDP) and 7.6 percent less than programmed. Total expenditures, including arrears clearance, was GH¢22.6 billion (9.4% of GDP) and 6.4 percent short of the target.
These developments, according to him, resulted in an overall cash deficit of 2.6 percent of GDP, higher than the targeted 2.4 percent of GDP for the review period.
Debt
Total public debt declined from 67.3 percent of GDP (GH¢137.3 billion) in May 2017 to 63.8 percent of GDP (GH¢154.3 billion) at the end of May 2018.
Of the total debt stock, domestic debt was GH¢72.6 billion accounting for 47.0 percent and external debt was GH¢81.7 billion with a share of 53.0 percent, the recent Monetary Policy Committee (MPC) report revealed.
Commodities
On the international commodities markets, crude oil prices rose by 18.2 percent on year-to-date basis to an average of US$75.9 per barrel in June 2018 due to supply constraints amidst geopolitical tensions, it added.
Crude oil prices have retreated somewhat in recent weeks as OPEC agreed to boost production. Gold prices gained a marginal 1.1 percent on year-to-date basis to US$1,281.1 per fine ounce.
Cocoa prices continue to recover due to cut back in global production forecasts and increased demand, with prices increasing to US$2,435.7 per tonne in June 2018, representing a year-todate growth of 27.9 percent.
These price developments, together with improved production outturns, especially in crude oil, translated into a positive trade balance. Provisional estimates indicated that the trade account recorded a surplus of US$1.1 billion (2.1% of GDP) at the end of June 2018, reflecting higher export receipts from crude oil.
This compares with a surplus of US$1.1 billion (2.4% of GDP) recorded over the same period in 2017. Provisional data show that the current account recorded a deficit of US$334 million (0.6% of GDP) at the end of June 2018 compared to a deficit of US$181 million (0.4% of GDP) for the same period of 2017.
Over the past two months, normalisation of US monetary policy resulting in strengthening of the US dollar and rising US yield rates have continued to weigh-in on emerging market assets. A combination of these factors led to tight financing conditions and reverse capital flows in a number of emerging market and frontier economies, including Ghana.
These external factors, together with increased demand for foreign exchange from the corporate and energy related sectors, exerted pressure on the domestic currency market.
Consequently, the Cedi, which had performed strongly against the major international currencies over the first four months of the year, depreciated in May and June.
In the year to July 19th, the Cedi has cumulatively depreciated by 5.8 percent against the US dollar, compared to 3.9 percent observed during the same period of last year.
Despite the sharp depreciation observed, the real effective exchange rate (in trade-weighted terms) remained broadly aligned with underlying fundamentals.
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