GHANA’s current account deficit widened to US$1.1 billion, compared with US$762.0 million recorded in the same period of 2021.
This was in spite of the significant improvement in the trade surplus.
The weakening in the current account was primarily due to higher net outflows from the income and services account, in particular, repatriation of profits and dividends, which offset the gains in the trade account.
Dr. Ernest Addison, Governor of the Bank of Ghana, who disclosed this at a Monetary Policy Committee (MPC) presser in Accra, said the capital and financial account recorded significant portfolio reversals and net outflows in the other investment accounts, as well as lower foreign direct investments.
Balance Of Payments Deficit
“The combined effect of the widened current account deficit and higher net outflows in financial account resulted in an overall balance of payments deficit of US$2.5 billion at end-June 2022, compared with a surplus of US$2.4 billion in the same period last year,” the Governor intimated.
Reserves
According to him, Ghana’s Gross International Reserves declined to US$7.7 billion at the end of June 2022, equivalent to 3.4 months of import cover, compared with US$9.7 billion (4.3 months of imports) at the end of December 2021.
“The decline in the reserve buffer, alongside unfavourable global financing conditions, exerted significant pressures on the foreign exchange market.”
Local Currency
Commenting on the interbank forex market, Dr. Addison said the Ghana Cedi cumulatively depreciated against all the three major currencies; 19.2 percent against the US dollar, 8.8 percent against the Pound Sterling, and 10.0 percent against the Euro as at July 20, 2022.
He added, “In the corresponding period of 2021, the Ghana cedi depreciated by 0.6 and 0.7 percent against the US dollar and the Pound Sterling, and appreciated by 3.3 percent against the Euro.”