Source: newsthemegh.com
According to the Bank of Ghana (BoG), the country’s economy is strongly recovering, and the currency rate has stabilized. Inflation has also decreased, and the amount of foreign exchange reserves has increased.
The restoration of Ghanaians’ real wages and purchasing power, in accordance with the central bank, should follow persistent improvement in these indices.
Dr. Ernest Addison, the governor of the BoG, spoke to the media yesterday in Accra. He mentioned that the central bank’s monetary policy committee had noticed that macroeconomic conditions were generally improving, with reasonably strong economic growth and a decline in inflation in August.
He said, “These developments show that the policy mix under the three-year IMF Extended Credit Facility (ECF) is starting to produce results.
According to the CIEA update released by the bank in July 2023, the robust growth outturn seen in the first half of 2023 is anticipated to persist in the third quarter.
According to the governor, Ghana’s PMI also supports the growth outlook, suggesting better business conditions.
The relative stability of the Ghana cedi and, more recently, the restart of the disinflation process, according to the findings of the confidence surveys to date, have had an impact on business and consumer sentiments, he noted.
According to Dr. Addison, a rise in confidence is anticipated to last the rest of the year as macroeconomic conditions continue to improve.
Regarding the application of fiscal policy, he said that while practices have so far been in line with the IMF-supported program, there are still issues with revenue mobilization that necessitate further work to protect the revenue-led fiscal adjustment program.
He claims that over the first eight months of the year, the country’s external sector situation continued to dramatically improve, helped by a current account surplus that was a result of stronger gold export revenues, import compression, and decreased outflows from the services and income accounts.
The BoG boss underlined that the country’s reserve buffers were rebuilt thanks to a decreased balance of payments deficit, the domestic gold purchase program, inflows from the mining industry, and the liquidation of some short-term foreign liabilities.
He predicted that the planned inflows from the cocoa syndication loan, the second tranche of the IMF ECF program, and other multilateral inflows will further support reserve accumulation in the last quarter of the year.
Dr. Addison added that during the first eight months of 2023, the banks’ profits remained high.
The sector had a profit after taxes of GH5.7 billion, or a 41.4 percent annual growth, as opposed to the 26.5 percent growth seen the year before.
He said that net interest income rose significantly by 37.9 percent to GHS13.5 billion while net fees and commissions rose by 27.3 percent to GH2.9 billion.
He claimed that the major measures of financial soundness remained largely constant.
Indicators of profitability also improved, he said, with Return-on-Equity (ROE) rising to 36.9 percent in August 2023 from 23.0 percent in August 2022 and Return-on-Assets (ROA) rising to 5.4 percent from 4.7 percent in the same time.
Indicators of industrial liquidity, he added, had improved throughout the course of the review period.
“In August 2023, the Capital Adequacy Ratio (CAR) was 14.2 percent, greater above the new prudential minimum of 10 percent, after accounting for regulatory reliefs.
“The industry’s NPL ratio, however, increased to 20.0 percent in August 2023 from 14.3 percent in August 2022, attributable to elevated credit risk associated with the lag effect of the macroeconomic crisis in 2022,” he said.
He disclosed that following several months of steady losses, the primary export commodities of Ghana had significant rises in August 2023.
In August 2023, the price of crude oil rose by 4.0 percent to US$84.6 per barrel on forecasts of tight crude oil supplies as a result of Saudi Arabia and Russia’s decision to extend output curbs for the remainder of the year.
Due to limited supplies in West Africa, he added, cocoa prices have increased by 37.1 percent year to date to US$3,480.3 per tonne in August 2023.
According to him, predictions of a break in the US policy tightening cycle contributed significantly to the 6.8% annual increase in gold prices, which ended up at US$1,918.8 for each good ounce.
“In the first eight months of the year, the trade account registered a surplus of US$2.0 billion, compared with US$1.6 billion recorded in the same period of last year,” he said.
This was mostly caused by import compression and a drop in exports, he continued.
According to Dr. Addison, total export revenues decreased by 8.9% year over year to US$10.8 billion, mostly due to a sharp dip in crude oil and cocoa product exports.
“During the review period, crude oil exports fell significantly by US$1.5 billion due to a drop in production volumes of 18.8% and a drop in prices of 23.6%.
“Compared to the same time in 2022, exports of cocoa beans and products remained largely similar at US$1.6 billion as increased production volumes of the beans offset decreased volumes of cocoa goods. According to him, gold exports grew to US$4.7 billion due to an 8.5 percent increase in volume and a 1.9 percent increase in price.
Additionally, he stated, “Total imports contracted by 14.7 percent to US$8.8 billion, from US$10.3 billion a year earlier.” He claimed that earnings from other exports, including non-traditional exports, decreased slightly by 1.6 percent to US$2.1 billion.