Dr Ernest Addison, Governor of the Bank of Ghana (BoG), has stated that the outlook for the Ghana Cedi has improved.
This, he said, will be aided by the recent disbursement of the US$750 million loan from Afreximbank, the signing of the syndicated Cocoa Loan of US$1.13 billion, and the agreement with gold and oil companies to purchase the repatriated foreign exchange earnings of approximately US$83.9 million so far, which will help stabilize the exchange rate.
Dr. Addison made these remarks at the 108th Monetary Policy Committee (MPC) press conference on Thursday, October 6, in Accra.
According to Dr. Addison, while expenditures have been roughly on plan, revenue performance has been below expectations, hampering fiscal policy implementation.
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“Financing of the budget so far has predominantly been from the banking sector with the central bank absorbing a larger share. Persistent uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to financing of the budget, resulting in monetization of the budget deficit by the central bank.
“The Monetary Policy Committee recognizes the fact that the current condition is sub-optimal and will be interim until agreements are reached on an IMF-supported programme. The Committee assesses that the engagement with IMF has been positive and early conclusion of the programme discussions will help re-anchor stability,” he said.
He stressed “The outlook for the Ghana Cedi has improved, aided by the recent disbursement of the loan from Afreximbank of US$750 million, the signing of the syndicated Cocoa Loan of US$1.13 billion, and the agreement with gold and oil companies to purchase the repatriated foreign exchange earnings of about US$83.9 million so far, will help stabilise the exchange rate.”
According to him, inflation remains high, and the balance of risks is tilted to the upside. Although monthly inflation is expected to continue to decline, the risks are on the upside, owing to the pass-through effects of currency depreciation, the recent higher adjustment in utility rates, and growing inflation expectations. The Committee is still determined to re-anchor inflation expectations and return to a disinflationary path.
He also announced an increase in the policy rate from 22% to 24.5 percent.
“Under the circumstances, the MPC decided to increase the Monetary Policy Rate by 250 basis points to 24.5 percent,” he said.
SOURCE: 3NEWS
