Bank of Ghana maintains policy rate at 20 per cent

Bank of Ghana kept its benchmark interest rate unchanged at 20 per cent on Monday, citing the need to keep inflation within its medium-term target of 8 per cent plus or minus two percentage points.

Governor of the Bank, Dr Ernest Addison told a news conference that while inflation expectations appeared to be well anchored, there were some emerging pressures underlying inflation in the last two months of 2017.

“Under the circumstances and to ensure that the inflation target horizon is maintained and the medium term inflation target of 8 per cent plus or minus two percentage points is achieved this year, the Committee decided to maintain the monetary policy rate at 20 per cent,” he said.

The Central bank has eased rates by 550 basis points in the past year to foster growth on the back of decline in headline and core inflation throughout 2017.

Dr Addison said provisional data on government operations indicated an overall budget deficit of 5.4 per cent of Gross Domestic Product (GDP) in the year to November 2017, against the target of 6.0 per cent.

Total revenue and grants was 17.1 per cent of GDP, below the target of 19.0 per cent while of GDP below the budgeted estimate of 25.0 per cent.

“Preliminary banking data showing government receipts and payments indicate that the overall budget deficit is likely to stay within the 2017 target of 6.3 per cent of GDP,” he said. 

Total public debt as at November 2017 stood at GH¢138.8 billion (68.7 per cent of GDP) up from GH¢122.6 billion (73.3 per cent of GDP) in December 2016.

Domestic debt component went up by 20.1 per cent to GH¢64.2 billion, while external debt rose by 7.9 per cent to GH¢74.7 billion.

On the external front, Dr Addison said the trade account recorded a surplus of $1.1 billion compared with a trade deficit of $1.8 billion in December 2016, and driven mainly by higher export receipts from oil, cocoa and gold.

Gross International Reserves stood at $7.6 billion, equivalent to 4.3 months of import cover compared to $6.2 billion in December 2016.