Confidence in economy growing - BoG

There is growing confidence in the Ghanaian economy in view of the positive macroeconomic fundamentals and growth prospects, Governor of the Bank of Ghana (BoG), Dr Ernest Addison has said.

He said the domination of the country’s bond market by non-residents demonstrated the confidence of both local and foreign investors in the Ghanaian economy.

Dr Addison disclosed this in response to a question on the confidence and growth prospects of the Ghanaian economy, after the Monetary Policy Committee (MPC) press conference in Accra on Monday, and said the first four months of the year saw huge investment in the country’s bond market by non-residents.

The Governor, who chairs the MPC, indicated that the economy was recovering from the growth and economic effects of the coronavirus pandemic as evidenced by the latest high frequency indicators.

He said the BoG’s updated Composite Index of Economic Activity registered a strong annual growth of 26.8 per cent in March, compared to a contraction by 1.9 per cent in the corresponding period of 2020.

“The key drivers of economic activity during the period were domestic consumption (proxied by VAT collection), construction activities, and international trading activities, resumption of industrial production activities and air passenger arrivals. The latest Ghana Purchasers Managers Index, which gauges the rate of inventory accumulation by managers of private sector firms and measures dynamics in economic activity, also improved in April 2021,” Dr Addison said.

He said the execution of the budget for the first four months pointed to some improved revenue collections and expenditure containments to ensure re-alignment to the consolidation path.

“The fiscal data shows that fiscal revenues have significantly outpaced developments a year ago but slightly lags behind target,” he said.

The Governor explained that the provisional data on budget execution for the first quarter of 2021 indicated an overall cash deficit of 2.6 per cent of Gross Domestic Product, against the target of 2.5 per cent of Gross Domestic Product.

The primary balance, Dr Addison said, recorded a deficit of 0.7 per cent of GDP compared to the target deficit of 0.4 per cent of GDP.

“Overall, the first quarter total revenue and grants amounted to GHc12.8 billion (3.0 per cent of GDP), lower than the projected GHC15.8 billion (3.7 per cent of GDP). Total expenditures and arrears clearance amounted to GHc24.3 billion (5.6 per cent of GDP) against the target of GHC26.5 billion (6.1 per cent of GDP),” the Governor said.

He explained that, the financing of the fiscal deficit in the first quarter was mainly from domestic sources which pushed up the stock of the public debt to GHc304.6 billion at the end of March 2021, compared with GHc292.7 billion at the end of December 2020.