Bank of Ghana Governor, Dr. Ernest Addison, has expressed optimism about the country’s economic outlook, citing significant progress in inflation reduction and foreign exchange reserves accumulation.
Addressing a joint press conference for the 2023-2026 Extended Credit Facility (ECF) Third Review Mission, Dr. Addison noted, “The inflation outlook is broadly supportive and positive… We will stay the course of sound underlying macroeconomic policies.”
Ghana’s inflation rate has decreased from 25.8% in the first quarter to 21.5% in the third quarter, despite a marginal uptick in September due to increased food prices.
Dr. Addison emphasized that occasional inflation fluctuations are normal, stressing, “The key is in the trends in inflation… We will ensure that inflation stays within the target over the medium term.”
The Bank of Ghana aims to maintain a single-digit inflation rate and has implemented monetary policies to achieve this goal.
Foreign Exchange Reserves Boost
Ghana’s foreign exchange reserves have improved, driven by increased gold production, remittances, and improved economic confidence.
The Gold for Reserve programme has significantly contributed to this growth.
“We will continue to focus on building foreign exchange reserves to at least three months of import cover,” Dr. Addison assured.
Financial Stability and Banking Sector
The Bank of Ghana has prioritized financial stability, monitoring banks’ progress in implementing post-debt exchange recapitalization plans.
Most banks are ahead of schedule in their recapitalization efforts.
Prudent Policy Interventions
Dr. Addison concluded, “We will continue to monitor emerging risks in the economy and respond with prudent policy interventions… Our key objectives of safeguarding price and financial stability will be protected.”
This development comes amid Ghana’s engagement with the International Monetary Fund (IMF) for a $3 billion bailout package.
Background
Ghana’s economic challenges have been longstanding, with inflation soaring to 54.1% in December 2022.
The government sought IMF assistance in 2022, and the ECF programme aims to support economic recovery and stability.
The successful completion of the third review mission is crucial for the release of the next tranche of IMF funds.
With Dr. Addison’s reassurances, stakeholders await the IMF Executive Board’s approval, expected to bolster Ghana’s economic resilience.
-BY Daniel Bampoe