Cedis Depreciation Caused By External Factors - BOG

...BoG to maintain prudent monetary policy
THE Governor of the Bank of Ghana, Dr Paul Acquah yesterday gave the assurance that the bank will maintain prudent monetary measures during the remaining three months to repeat last year’s performance. He told a press conference in Accra that the immediate outlook is for a good balance in the external payments with rising external inflow, beginning with the cocoa cycle and sustained inward remittance coinciding with the seasonal demand for imports.

He submitted that restraint in fiscal operations, enhanced revenue mobilisation would provide additional impetus to macro-stabilisation and diminishing inflationary expectation.

Even though there is downside risk inherent in oil prices because of the development in the Middle East, the governor said export commodity prices will remain firm.

Giving the review of the half-year performance, Dr Acquah said the disinflation process has gone on to bring the inflation rate to 13 per cent at the end of July from 13.5 per cent in June.

Government “budget deficit for the first half of the year was below the projected ?1,723 billion with government revenue higher and expenditure lower than projected”

However, government borrowing was higher than projected during the first half because of the accelerated liquidation of government arrears.

Watchers of the economic scene cite the clearance of arrears to the Electricity Company of Ghana, Tema Oil Refinery obligation and the Volta River Authority arrears as some of the obligations.

The governor also mentioned the delay in the disbursement of donor inflows and divestiture receipts as some of the causes.

The Cedi lost ground on the foreign exchange market and depreciated by 8 per cent against the pound sterling.

Reserve, Money growth reduced from 37 per cent in July last year to 19.3 per cent this year which is close to the end of year target of 19 per cent.

However, broad money growth shot up from 35.5 per cent to 41 per cent over the same period. Foreign currency deposit increased by $50 million between last December and July this year, said Dr Acquah.

The governor was happy that the domestic money market rates continued downward through April and May this year but has since edged upwards.

In addition, the benchmark 91-day Treasury Bill rate declined from 29 per cent in December last year to 24 per cent in May this year but increased to 25.4 per cent in August, this year .

He said the Bank of Ghana Prime Rate will remain unchanged at 24.5 per cent.