Dr. Ernest Addison
Ghana’s trade surplus has been surged by 1.4 per cent in the first quarter of this year to a new record after a marginal fall in export receipts and cheaper oil prices lowered its import bill, the Bank of Ghana (BoG) has said.
Governor of BoG, Dr. Ernest Addison, indicated that the trade balance came in at US$936.4 million in March, beating market expectations for a surplus of 1.4 % Gross Domestic Product (GDP) as compared to US$642.4 million (1.0% of GDP) recorded for the same period in 2019.
Speaking at the central bank’s monetary policy committee meeting last Friday, the governor said the performance of the country’s external sector for the first quarter of 2020 had been strong, despite “the unfavourable global developments.”
He stated that this had reflected in the higher trade surplus and higher capital inflows, intimating that the “outturn was on account of lower imports and a marginal fall in export receipts.”
Dr. Addison added that the lower oil imports value was primarily as a result of a switch in the energy generation mix in favour of domestically produced gas, and said that demand for non-oil imports also dropped in line with the slowdown in economic activity.
According to him, the Eurobond secured by the government earlier this year, coupled with the Rapid Credit Facility (RCF) financing from the IMF, also helped in building up the reserve of US$1.5 billion (2.2% of GDP).
He disclosed that the Gross International Reserves, under the period, increased from US$8.4 billion at the end of December 2019 to US$10.3 billion at the end of April 2020, providing for the nation 4.8 months of imports cover.
“This strong reserve position has helped to ensure stability in the foreign exchange market, even as external financing conditions tightened and emerging and frontier economies saw capital flow reversals as a result of the heightened global uncertainty,” he argued.
Dr. Addison revealed that the central bank had concluded a billion dollar Repurchase Agreement (Repo) facility with the US Federal Reserve under its Repo facility for Foreign and International Monetary Authorities (FIMA Repo Facility) to further boost Ghana’s foreign exchange liquidity.
He asserted that the facility was expected to be available for at least six months and would provide an important foreign exchange buffer to boost dollar liquidity amid the coronavirus pandemic, adding that it would also enhance the BoG’s dollar liquidity.
By Ernest Kofi Adu