BoG gives upbeat assessment of the economy

The Bank of Ghana (BOG) has given an upbeat assessment of the performance of the nation’s economy, indicating that, the government’s fiscal consolidation is on track.

Mrs. Evelyn Kwatia, Head of the Governors’ Department, said the expectation was that it would deliver better-than programmed budget deficit in 2017 as expenditures were properly aligned to address shortfalls in revenues.

She added that economic activity had picked up significantly with private sector credit growth also recovering.

She was speaking at a two-day training programme for financial and economic journalists in Kumasi under the theme “Monetary policy and financial stability reporting: the role of the media”.

It was jointly organized by the BOG and the Private Newspapers Publishers Association of Ghana (PRINPAG) and brought together selected reporters from Ashanti and Brong-Ahafo Regions.

Mrs. Kwatia said with inflation expectations well anchored, the medium term “inflation target of 8±2 percent is projected to be achieved this year”.

Just last week, the Ghana Statistical Service (GSS) revealed that inflation dropped from 11.8 per cent in December 2017 to 10.3 per cent in January 2018.

The Bank’s weighted inflation expectations by businesses, consumers and the financial sector also declined and she stated that the gross domestic product (GDP) growth momentum was maintained throughout, last year.

Provisional GDP estimates from the GSS indicated that the economy grew by 9.3 percent in the third quarter, up from 9.0 and 6.6 percent in the second and first quarters of 2017 respectively.

Mrs. Kwatia said “following improved macroeconomic conditions, interest rates generally followed a declining trend in 2017”.

Interbank rates - the rates at which commercial banks lend among themselves, came down to 19.3 per cent in December 2017, as against 25.4 per cent in December 2016.

The interest rate equivalent of the benchmark treasury securities also declined - the 91-day Treasury bill rate, dropped to 13.3 per cent from 16.8 per cent in 2016, while the 182-day rate reduced to 13.8 per cent compared with 18.5 per cent in the previous year.

Mrs. Kwatia said the trend decline in headline and core inflation throughout 2017 allowed for some 550 basis points policy rate cut and underlined that “these trends are expected to continue in 2018”.

She, however, pointed out that maintaining stable asset prices at all levels although crucial, that alone could not prevent a financial crisis from occurring.

It was therefore vital to ensure that the financial system became strong and resilient to be able to withstand shocks, stress situations and periods of profound structural change.