The Bank of Ghana says inflationary pressures have increased; with headline inflation rising from 11.5 per cent in August to 13.1 per cent in October. Dr Henry Kofi Wampah said non-food inflation was the main driver as it picked up from 14.2 per cent to 17.7 per cent while food inflation declined from 7.9 per cent to 6.9 per cent.

Dr Wampah who was presenting the Bank’s Monetary Policy Committee’s (MPC) Report in Accra said the updated real Composite Index of Economic Activity (CIEA) data suggests a continued rise in economic activity in the third quarter of 2013. He noted that at the end of September 2013, the real CIEA grew by 7.5 per cent from the 5.8 per cent recorded in July.

The Governor said the key drivers of economic activity for the third quarter were Deposit Money Banks (DMBs) credit to the private sector, industrial consumption of electricity, Social Security and National Insurance Trust contributions and port activity.

He said: “The consumer and business confidence indices fell during the period. The overall consumer confidence index stood at 89.3 in October, down from 97.2 in August. Similarly, the business sentiments indicator dipped to 90.8 in September from 92.4 in June. “The surveys also indicated heightened inflation expectations by both consumers and businesses.”

He said provisional data on the execution of the 2013 budget for the first nine months of the year show that both revenue and expenditure fell short of their respective targets. However, the shortfall in revenue was much higher than the reduction in expenditure.

Dr Wampah said total revenue and grants amounted to GH¢13.9 billion (15.9 per cent of GDP) falling short of the target of GH¢16.3 billion (18.4 per cent of GDP). He said the shortfall in government receipts was mainly the result of lower than budgeted domestic revenue collections on account of lower import volumes, decline in commodity prices on the world market and slowdown in economic activity during the first half of the year, due partly to the energy crisis.

“Total expenditure, including payments made for the clearance of arrears and outstanding commitments, was GH¢21.2 billion (24.3 per cent of GDP) compared with the budgeted ceiling of GH¢22.7 billion (26.1 per cent of GDP).

“Compensation of employees of GH¢6.6 billion and interest payments of GH¢3.3 billion, represented 74.1 per cent of domestic revenue. “The overall budget deficit for the first nine months of 2013, was GH¢7.3 billion equivalent to 8.4 per cent of GDP, against a target of 7.2 per cent.

The deficit was financed mainly from the domestic sector, resulting in a Net Domestic Financing of the budget of GH¢5.1 billion (5.9 per cent of GDP), compared with the budget target of GH¢4.7 billion (5.4 per cent of GDP), he stated.

The Governor said the total public sector debt stock as at end of September 2013 was GH¢46.1 billion (53.5 per cent of GDP), up from GH¢35.1 billion at the end of December 2012. He said the total public sector debt was made up of a domestic debt stock of GH¢24.9 billion, up from GH¢18.5 billion in December 2012 and external debt stock of US.8 billion, up from US.8 billion as at the end-December 2012.

The Governor said based on their MPC's report the bank had maintain its policy rate at 16.0 per cent, adding that the upside risks to inflation, though elevated, are mainly structural and therefore might not need to be addressed by a policy rate adjustment at this time.