Economic fortunes will improve next year – BoG Governor

Bank of Ghana (BoG) Governor Dr. Ernest Addison has expressed confidence regarding the economy’s outlook going into 2024.

Highlighting his optimism, the Governor said he expects “significant improvement in the operating environment for businesses” next year.

Speaking at the BoG’s end-of-year cocktail event, Dr. Addison affirmed the policy mix under the IMF-supported Post COVID-19 Programme for Economic Growth (PC-PEG) is steadily yielding affirmative results.

He noted that inflation was at a modest 12.7 percent in December 2021, and the extraordinary inflation witnessed in 2022 should not be used to pass judgment.

From the peak of 54.1 percent in December 2022, headline inflation declined to 35.2 percent in October 2023 and further to 26.4 percent last November.

“As you are aware, there has been considerable noise from our detractors who have celebrated the high inflation recorded in 2022. Today, we are vindicated that inflation in 2022 was just a blip and we are quickly returning to where we were before the crisis,” he stated.

The Governor also highlighted improvements in the country’s external sector position throughout the year, citing the build-up of foreign exchange reserve buffers that has facilitated stability in the forex market.

Additionally, he noted the positive signals from high frequency economic indicators monitored by the central bank, which suggest a likelihood of outpacing GDP growth projections for 2023.

Reflecting on the evolving role of central banks over the past decade, Dr. Addison said: “Central banks have had to re-evaluate their mandate since the global financial crisis, and supported fiscal policy to play a countercyclical role in stabilising economies.

“In the present ‘poly-crisis’ world, central banks have found themselves broadening monetary policy formulation beyond interest rates to include the deployment of balance sheets in a variety of unconventional monetary policies.”

Dr. Addison credited the economy’s steady progress amid global shocks to effective collaboration between the BoG and Ministry of Finance.

Touching on the financial sector, he reassured attendees it has remained relatively stable and sound over the last six turbulent years.

He cited prudential data showing banks’ profitability has stayed comparatively robust through October 2023. Furthermore, the industry’s capital adequacy ratio, adjusted for regulatory reliefs, overshot the revised prudential minimum.

“The evidence is clear that the economy is responding well to policy initiatives that have been put in place,” Dr. Addison concluded.

In November, the BoG’s Monetary Policy Committee (MPC) decided to hold the benchmark policy rate at 30 percent, given indications of greater macroeconomic stability evidenced by the recent decline in inflation.

The MPC insisted an adherence to tight monetary policy and relative exchange rate stability were integral in driving the ongoing disinflation trend.

Similarly, speaking at the cocktail event finance minister Ken Ofori-Atta said: “The next 12 months present opportunities to build hope and hitch all our wagons together”.

He spotlighted establishing the Consolidated Bank of Ghana; the Development Bank raising US$10billion in Eurobonds; and other “near-impossible feats” in government’s seven years.

The minister said 2024 will see continued boundary-pushing policies “to guarantee economic freedom and social mobility for all”.