Bright outlook for cedi - BoG

The Bank of Ghana (BoG) says it expects the cedi to hold firm against its international peers on the back of the inflow of some foreign exchange into the economy.

It said the inflows from the Eurobond and the Cocobod syndicated loan would provide more dollars on the foreign exchange market to ease the shortage which has contributed to the fall of the local currency.

Ghana last week Thursday raised $1 billion from a third Eurobond to finance government’s budget and the syndicated loan of $1.7 million from international banks for the purchase of cocoa in the 2014/15 crop year.

Addressing a news conference after the BoG’s 61st Monetary Policy Committee (MPC) in Accra yesterday, the Governor, Dr. Henry Kofi Wampah, said the cedi was gradually gaining stability.

"With the current rate in the movement of the cedi, it will be economically not prudent for an individual to still keep his or her money in dollars,” he said.

The cedi, which slumped about forty per cent against the dollar, has started to rebound due to the capital inflows into the economy.

On the general economic outlook, Dr Wampah said the growth prospects of the country were positive.

“The growth outlook is generally positive based on expected higher cocoa and oil output,” he said.

The Governor said the discovery of more oil expected to come on stream in the next two years would provide additional resources for government to improve the liquidity situation of the country.

Dr Wampah explained that the pace of the domestic economy continues to improve during the second quarter of the year in spite of the current economic challenges facing the country.

“BOG’s CIEA for the second quarter of 2014 suggests improved activity relative to the same period in 2013. The index registered a year on year real growth of 10.8 per cent at the end of June, 2014, compared with a growth of 3.3% for the period corresponding period in 2013,” he stated.

He said the gas production which is expected to come on stream soon would help address the energy challenges facing the country.

The country, the Governor, said would make an annual savings of $500 million used in the import of gas and crude oil to power the country’s thermal plants.

Dr. Wampah said the savings to be made by the import in gas and crude oil, would provide additional resources to government to finance development projects.

Responding to allegations that about $600 million is lost from the BOG, the Governor responded that ‘’no money has lost from the bank.”

Meanwhile, the BoG has maintained its policy rate at 19 per cent citing the expected dollar liquidity inflows to the economy for the decision to maintain the policy rate.