Minister of Finance, Dr. Mohammed Amin Adam (MP), has hinted that the Ghana cedi has been largely stabilised since early 2023 against the major trading currencies, even though it is seeing some pressures on the cedi in recent times.
The Minister made these revelations while addressing the media in Accra.
Speaking at Tuesday's monthly economic update, he said "The cedi cumulatively depreciated against the US Dollar by 27.8% at the end of December 2023 down from the depreciation rate of 30.0% at the end of December 2022 and 50% at the end November 2022"
"February to December 2023 depreciation against the USD was only by 9.1% compared to 29.8% over the same period in 2022, showing significant stabilisation over the last 11 months of 2023"
Explaining further, he noted that the high depreciation of the cedi against the US Dollar in January 2023 (20.6%) was largely on the back of realignment of the foreign exchange market between the official and the forex market.
"The Cedi’s stability has continued into 2024, with a cumulative depreciation of 6.8% as at 20th March 2024, compared to 22.1% recorded in the same period in 2023. We encourage the Bank of Ghana to continue with its intervention to sustain the stability of the currency"
"However, the exchange rate has witnessed some pressures in the last few weeks due mainly to the strengthening of the US Dollar against major trading currencies. Additionally, payments made for energy and corporate sectors, compounded by the delays with the disbursement of the 2nd tranche of the cocoa loan and the World Bank DPO1 have placed further pressures on the cedi"
"According to the Bank of Ghana, these pressures have been mitigated somewhat by the continued inflows from remittances and mining companies, and from the domestic gold purchase programme"
"To further stabilise the currency, we are expecting a total disbursement of about US$1.2 billion from our Development Partners namely the IMF, the World Bank, and the African Development Bank before the end of 2024. Additional planned disbursements from ongoing projects will also support our growth interventions and strengthen the currency. In this vein, we kindly request Parliament to approve the US$150 million World Bank facility for the GARID project to enhance flood protection at the local level"
"Gross International Reserves (GIR) including encumbered assets and petroleum funds stood at US$5.9 billion (2.7 months of import cover) at the end of December 2023 from US$6.3 billion (2.7 months import cover) at end December 2022. The GIR improved to US$6.2 billion at the end of February 2024 compared to US$5.9 billion in the corresponding of 2022"
"The GIR is supported by BoG’s Gold-for-Reserve Programme and the government’s Gold-for Oil Programme. In addition, external inflows from the IMF and World Bank as well as the Cocoa Syndicated Funds have helped shore up the GIR"
"The IMF has so far disbursed US$1.2bn since May 2023 and the World Bank is disbursing US$300mn following the recent parliamentary approval of the World Bank DPO"
On monetary sector developments, he said "The Monetary Policy Rate was lowered by 100 basis points to 29% in Jan 2024 (116th MPC) in response to the disinflation process that started in Jan 2023. At its 117th meeting, the MPC maintained monetary policy rate at 29%"
"Although interest rates moderated from 35.5% (91-day TB) in Dec 2022 to 19.7% in Apr 2023, the Minister explained that the rates increased to 29.36% as at end-Dec 2023 on the back of T-bills remaining the main source of domestic financing after the DDEP"
"However, the first twelve auctions in 2024 have witnessed a consecutive decline in interest rates with the 91-Day Treasury Bill rate at 26.0% as of 25th March 2024"
On fiscal performance, Dr. Adam stressed that the fiscal balances are also improving adding that provisional data on government’s fiscal operations for end- 2023 show that Ghana met its primary balance (commitment) target.
"The overall budget deficit (on commitment basis) improved from a deficit of 11.8% of GDP (Ghs72.2 billion) in 2022 to a deficit of 3.9% at the end of 2023, and lower than the target of 5.7% of GDP (GH¢49.0 billion)".
"The Primary balance (on commitment basis) also improved from a deficit 4.3% of GDP at the end of 2022 to a deficit of 0.3% of GDP (GH¢2.5bn). The 2023 outturn was lower than the target deficit of 0.5% of GDP"
"The overall budget balance (on cash basis) also saw an improvement from a deficit of 10.7% of GDP in 2022 to a deficit of 3.2% of GDP (GH¢27.4 billion) and lower than target of 6.4% of GDP)"
He further explained that total revenue and grants collection of 15.8% of GDP (GH¢134.9bn), representing a 39.6% growth in revenues with respect to 2022 revenue collections.
"Total Expenditures (commitment), on the other hand, reduced by 0.2% to GH¢168.4bn (19.7% of GDP) in 2023 from the 2022 outturn of GH¢168.8bn (27.7% of GDP). The 2023 Expenditure outturn was contained within the target of GH¢183.9bn (21.5% of GDP)"
Touching on public debt, Dr. Amin Adam said "The Public Debt trajectory is improving as the debt to GDP ratio reduced to 71.4% of GDP at the end of 2023 from 73.5% of GDP at the end of 2022"
Story by: Joshua Kwabena Smith
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