The Bank of Ghana (BoG) has stepped up efforts to bring inflation under control, eliminate monetary financing of budget, and rebuild foreign currency buffers, Governor Dr Ernest Addison has said.
He said the central bank is also taking steps to implement comprehensive strategy to ensure rebuilding of capital buffers of financial institutions’ post-Domestic Debt Exchange Programme (DDEP) and establishing the Ghana Financial Stability Fund to provide additional support to the financial sector.
“These measures are beginning to yield positive results. Signs of stabilization and recovery in the Ghanaian economy are emerging. The latest releases show that: • Real GDP Growth ended 2023 at 2.9 percent, up from the revised target of 2.3 percent, driven by the services and agriculture sectors. Growth in 2024Q1 came in stronger than expected at 4.7%, with the industrial sector posting a growth rate of 6.8%. • Inflation which peaked at 54.1 % in December 2022, and has decelerated faster-than-expected and reached 22.8 percent in June 2024, underpinned by strong policies, and effective liquidity sterilization efforts. • Fiscal policy implementation has been broadly aligned with requirements under the IMF-supported programme. • Banking sector’s performance has improved as adverse spillovers from DDEP and macroeconomic challenges receded,” Dr Addison said during At the SME Growth and Opportunity Summit on Tuesday July 16.
Regarding the banking sector, Dr Addison indicated that the sector remains stable, liquid, and profitable.
“Significant profits were recorded in 2023, helping to correct losses from 2022. Meanwhile,
banks impacted by domestic debt restructuring have submitted capital restoration plans which are being implemented. At the same time, Ghana Financial Sector Fund established —with an initial allocation of US$750 million, comprising US$250 million from the World Bank and US$500 million from GoG—to provide recapitalisation support to the financial sector (banks and non-banks) is in progress.
“Gross international reserves position has improved. At the end of April 2024, the stock of
Gross International Reserves increased to US$6.59 billion representing 3.0 months of import cover, compared with US$5.91 billion (2.7 months of import cover) at end-December 2023.
“The exchange rate which recently come under some pressure, has begun to stabilise as
uncertainties surrounding the progress of debt restructuring negotiations with external creditors has been eliminated and the Bank of Ghana’s Gold Purchase programme over over-performed.”
