BoG maintains Monetary Policy Rate at 16% again

The Bank of Ghana (BoG) has for the fourth time maintained the Monetary Policy Rate at 16% as it continues to monitor developments within the economy.

The Governor of the central bank Dr. Ernest Addison, justifying the decision of the Monetary Policy Committee, however observed that the pace of disinflation slowed within the quarter, which he attributed largely to pressures coming mainly from the recent upward adjustment of utility tariffs, ex-pump prices and transport fares.

The Committee also raised concern about the current fiscal situation, and the need to strengthen efforts to close the deficit gap.

“The Committee was concerned about the continued revenue weakness which requires expenditure adjustments to contain a larger than projected budget deficit. This will help underpin investor confidence in the Ghanaian economy and reduce the burden on monetary policy.”

The Monetary Policy Committee pointed out that growth has remained strong and the momentum sustained since last year driven by strong growth in the communication, mining and real estate sectors.

It also noted that Gross International Reserves (GIR) increased by US$1.2 billion to US$8.2 billion (equivalent to 4.1 months of import cover) as at end August 2019 from US$7.0 billion (equivalent to 3.6 months of import cover) at the end of December 2018.

Banking Sector

Dr. Ernest Addison also touted the “marked improvement” brought by the recent banking sector reforms.

For instance, he said, prior to the reforms in August 2017, total assets of the then 36 banks were GH¢89.1 billion. Two years after the central bank’s reforms, the remaining 23 can boast of total assets of GH¢115.2 billion at end August 2019.

Dr. Addison said in the same direction, total deposits have improved from GH¢55.7 billion to GH¢76.0 billion over the same comparative period.

Public Debt

Meanwhile, Ghana’s public debt stock has risen to 59.4 percent of GDP (GH¢205.6 billion) at the end of July 2019 compared with 5 53.1 percent of GDP (GH¢159.7 billion) at the end of July 2018.

“Of the total debt stock, domestic debt was GH¢98.4 billion (28.4 percent of GDP), of which GH¢10.7 billion (3.1 percent of GDP) represented bonds issued to support the financial sector clean-up, while external debt was GH¢107.2 billion (31.0 percent of GDP).”

All these, he indicated, contributed to the decision of the Bank of Ghana to maintain the policy rate at 16 while monitoring developments going forward.