Comparatively, Ghana’s Policy Rate Is Better Than The Previous Year

Governor of the Bank Of Ghana, Dr Ernest Addison

The Bank of Ghana (BoG) has cut its benchmark rate, the policy rate by 100 basis points (bps), flagging a re-visitation to monetary easing following a time of fixing.

The bank has decreased the rate from 14.5 percent to 13.5 percent subsequent to closing its 100th Monetary Policy Committee meeting on May 29.

According to the Governor of the Central Bank, Dr Ernest Addison the decrease in the rate followed the winding down in dangers to the expansion and growth viewpoints, which had occasioned a supported rate-hold between May 2020 and March this year.

The Central Bank expected the rate slice to mix with existing financial and monetary arrangements to boost growth when information showed a more grounded bounce back in economic activities.

Meanwhile, some analysts have surveyed the rate cut, and think it was astounding, given that inflation had not completely balanced out disregarding tumbling from 10.3 percent in March to 8.5 percent in April.

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As indicated by Dr Ernest Addison, in the wake of cutting the rate by 150bps in March 2020, the bank was met by a dull growth and rising inflation on the rear of the COVID-19 pandemic.

Shockingly, a year ago was additionally Ghana’s election year, thus the BoG couldn’t reduce the rate, particularly when they were uncertain of the entirety of that position comparative with inflation and growth. They needed to keep the rate where it was.

Nonetheless, presently global growth is gradually picking up and in a good position when contrasted with 2020, where Coronavirus was more intense.

Dr Addison said in a recent address at a conference that, in the previous few months, they have seen non-resident investors come in strongly to take our bonds and we have seen inflation come down in April.

The reduction in the rate also showed that the committee was confident that the recent increments in fuel prices, taxes and other price administrations would not result in higher inflation in the coming months.


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On the execution of the budget, the Governor said provisional data indicated that the budget registered a cash deficit of 2.6 per cent of gross domestic product (GDP), against the target of 2.5 per cent of GDP in the first quarter.

He said the essential equilibrium also recorded a deficiency of 0.7 percent of GDP contrasted with the objective shortage of 0.4 percent of GDP.

Over the principal quarter, complete income and awards added up to GH¢12.8 billion (three percent of GDP), lower than the projected GH¢15.8 billion (3.7 percent of GDP). Complete expenditure in arrears added up to GH¢24.3 billion (5.6 percent of GDP) against the objective of GH¢26.5 billion (6.1 percent of GDP),” he said.

He added that the shortfall was generally financed from homegrown sources and that pushed the supply of public debt up to GH¢304.6 billion at the end of March 2021, compared with GH¢292.7 billion at the end of December 2020.

He said the homegrown component of the debt was GH¢163.6 billion (37.7 percent of GDP), while the outside debt was GH¢141.0 billion, comparable to 32.5 percent of GDP.

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