The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the Monetary Policy Rate at 16 per cent on the back of strong economic growth, plummeting inflation and positive external position.
This is the sixth consecutive time this year that the MPC has maintained the MPR.
The Governor of the BoG, Dr Ernest Addison who announced the new policy rate at a news conference in Accra yesterday said MPC decided to maintain the MPR due strong growth of the economy and declining inflation.
The Governor said the BoG updated Composite Index of Economic Activity (CIEA) continued to show a steady pick-up in economic activity.
“The CIEA recorded an annual growth of 4.4 per cent in September 2019, compared with 5.9 per cent in the corresponding period of this year,” he said, adding that “the key drivers of economic activity during the period were port activity, domestic consumption, tourist arrivals and DMB’s credit to the private sector.”
Dr Addison observed that inflation since last year had been on a downward trajectory and the outlook to inflation were broadly balanced.
“The latest forecast shows that inflation will remain within the target bank of over the forecast horizon, barring any unforeseen shocks. Inflation expectations, derived from the surveys, remain fairly anchored in single digits and core inflation (excluding energy and utilities) is expected to remain at low levels,” the Governor said.
On the external position, Dr Addison said the favourable commodity price development, together with increase production volumes, impacted positively on the trade account and overall balance of payment recorded a surplus of $879.9 million (1.3 percent of Gross Domestic Product (GDP) over the review period, compared with a deficit of $757.0 million (1.2 percent of GDP) in the previous year.
Though gold price slipped marginally to $1490.9 per ounce after trading above $1500 per ounce, on a year to date basis gold prices increased by 18.9 percent and the average price of cocoa increased by 11.2 percent to reach at $2,475 per tonne in October this year.
Dr Addison said since January to September this year, the country’s exports stood at 11.7 billion (3.3 percent annual growth), while imports started recovering reaching $10.0 billion (2.5 percent annual growth.)
“These developments resulted in a further improvement of the trade surplus which stood at $1.68 billion (2.5 percent of GDP), compared with $1,557.32 (2.4 percent of GDP) in the same period in 2018. Current transfers improved, resulting in a further lowering of the current account deficit of $829.5 million (1.2 percent of GDP), compared to a deficit of $1.0 billion (1.5 percent of GDP) in the same period of 2018,” he said.
Gross International Reserves, the Governor said increased by $1.67 billion to $8.70 billion as at November this year providing cover for 4.2 months of imports, compared with the end-December 2018 position of $7.02 billion (equivalent to 3.6 months of import cover.)
Touching on fiscal issues of the country, Dr Addison said provisional data on the execution of the budget from January to September this year indicated that total revenue and grants amounted to GH36.3 billion (10.5 percent of GDP compared with the projected target of GHC42.0 billion (12.1 percent of GDP) and said the revenue shortfalls were from both tax and non-tax sources.
By Kingsley Asare
