Energy crisis hitting economy

...but prime rate still 12.5 per cent
Accra, May 22, GNA - The Central Bank has said the energy crisis was forcing a source of weakness in economic outlook. Addressing the Monthly Monetary Policy Committee Meeting, Dr Paul Acquah, Governor of the Bank of Ghana, said the economy had been robust through the first quarter of the year, adding that indications of performance in the composite index of economic activity was above its trend growth, corporate profitability, with turnover strong in both the non-financial corporate (listed companies) and the financial sector. He said the MPC kept the Prime Rate at 12.5 per cent adding that the strong private sector deposit growth in the banking system was supporting rapid credit expansion, which was becoming increasingly broad-based across sectors.

Core Consumer Price Index CPI inflation excluding energy and utility continued to track inflation at below or close to the single digit threshold.

He explained that the downside risks in the outlook was associated with managing the output and cost pressures inherent in the load shedding and supply uncertainties in the energy sector, with the current round of wage settlements in the public sector as an added factor. "The economic fundamentals are strong, notwithstanding the difficulties of the energy crisis and the impact on industry." He described external payments outlook as favourable with commodity prices firm and inflows steady.

Dr Acquah said data on the budget underlined the stimulus government spending was imparting to the economy. "The lack of balanced synchronisation of spending with budgetary resources has enlarged the public sector borrowing requirement that will need unwinding later in the budget cycle," he added.