Money supply growth slows...

....in response to BOG's tight monetary policies

The High Street Journal, (HSJ) says broad money supply, inclusive of foreign exchange, measured in technical terms, as M2+, grew by barely four percent during the first quarter of 2000, according to Bank of Ghana governor, Dr. Kwabena Duffour.

This is less than half the increase recorded during the corresponding period of last year.

Even more importantly, it means that if the central bank can continue its performance throughout the year, broad money supply growth will come up to about 16% a feat last achieved in 1999 when it grew by 16.1% to the applause of both Ghanaian and foreign financial economists.

Broad money supply growth M2+ is crucial to the performance of the economy since, along with the cedi's external value, it is the primary monetary determinant of inflation.

The other factor is the agricultural performance epitomized by the size and quality of Ghana's annual food harvest. The lower the rate of broad money supply growth, the lower the rate of inflation is likely to be.

The Bank of Ghana's impressive feat in curbing broad money supply growth during the first quarter of the year is made all the more, clearly illustrated by the fact that the budget target for M2+ for 2001 is 32%, twice as large as what the central bank now anticipates it can achieve if it receives the pre-requisite cooperation from government's fiscal operations.