Economy
is satisfactory - Governor
Governor
gives reason for depreciation of cedi
Bank
of Ghana maintains prime rate
Oil
indebtedness poses risk to banking system
Economy
is satisfactory - Governor
Accra (Greater Accra)
25 November 2002 - The Governor of the Bank of Ghana on Friday on said the
economy has performed well over the last year but cautioned that the government
needs to sustain its macroeconomic policies with emphasis on consolidating
efforts on fiscal and monetary policy.
Dr Acquah told
journalists after the first meeting the Monetary Policy Committee (MPC) set up
by the central bank to monitor interest rates that the government budget added
some impetus to the economy.
"Revenue growth
was robust and on target, but the pace of government expenditure was more
rapid. Considerable amounts of arrears accumulated over the past years and that
remained in the system were cleared."
Inflation slumped from
a high of 41.9 per cent in March 2002 to 12.9 per cent last September but this
has inched up to 13.2 per cent in October. He said government borrowing increased
to 4.7 per cent of Gross Domestic Product - ¢2,247bn - in mid November.
The borrowing was
financed on the domestic money market in the form of treasury bills, he said,
adding that the increase was "significant" as it goes to hold money which
otherwise should go to finance private sector operations.
Government borrowing
from the Bank, he said, was almost close to the statutory 10 per cent ceiling
under the Bank of Ghana Act. Reserve money growth as at October was 19.3 per
cent, slightly above the end year target of 19.0 per cent with broad money
growth on the other hand at 18.4 per cent in September.
"On a
year-on-year basis, broad money growth was 43.0 per cent in September, and was
driven by an increase in foreign currency deposits as well as time and savings
deposits in the banking system," he added.
Dr Acquah said private
inward remittances at the end of September through the banks and finance
companies amounted to 540.06 million dollars. This is higher than the estimated
400 million dollars in 2001.
Cumulative total
foreign exchange purchases during the year through to the end of October was
$744.30m, compared to the total sales of $724m over the same period. This
represents a 30 per cent increase over the same period last year.
The increase in
private remittances and bank purchases and sales of foreign exchange means that
there has been an increase availability of foreign exchange in the economy this
year.
GRi…/
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Governor
gives reason for depreciation of cedi
Accra (Greater Accra)
25 November 2002 - The cedi depreciated by 13.1 per cent in dollar terms during
the year, against an annual inflation of some 13.0 per cent, the Central bank
said on Friday.
It said this follows a
significant realignment of major currencies on the international foreign
exchange market over the same period. The Central Bank said the dollar
appreciated against the Euro and the British pound by 7.6 per cent and 6.8 per
cent respectively.
It said the real
exchange rate index of the cedi at the beginning of the year was 127.6 per
cent, increasing by 5.8 per cent to 133.4 as at October. "Over the last
three months, however, the cedi has appreciated in real terms of just 0.3 per
cent," the Governor of the Bank of Ghana, Dr Paul Acquah told journalists
in Accra.
He said Ghana
continues to show an upward trend of Gross International Reserve position,
noting that it went from 235.4 million dollars in May 2001 to $488.8m by end of
October, 2002.
Gross reserves in
months of imports increased from one month last April to two months as at the
end of October. Dr Acquah said interest rates have remained steady with low
volatility and benchmark 91-day Treasury Bill rate moving marginally from 26.06
per cent in August to 26.09 per cent by October.
The yield on 182-day
bill and one-year note remained flat at 26.9 and 27.0 per cent respectively between
August and October, 2002 after the rapid declines in the year. The Governor
said within the inter-bank market, money market interest rates declined sharply
from 21.9 per cent in September to 16.9 per cent in October 2002. Commercial
bank base rates remain within a range of 26 and 29 per cent.
GRi…/
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Bank
of Ghana maintains prime rate
Accra (Greater Accra)
25 November 2002 - The prime rate, the rate at which commercial banks borrow
from the Central Bank, remained unchanged at 24.5 per cent on Friday after the
first meeting of the Monetary Policy Committee (MPC) of the Bank of Ghana since
its inauguration last September.
This follows a look at
the balance risks in the outlook of the economy within the context of an
appropriate budgetary framework for 2003. Dr Paul Acquah, Governor of the Bank
of Ghana and Chairman of the MPC, noted that the market needs consolidation
before any changes are made to the prime rate.
"The market
should factor into its expectations, the long-term strategy of planning the
economy firmly in a non-inflationary path and avoid volatility in prices and
election tricks." He said the economy has experienced 21 months of
consecutive declines in the rate of increases in the national consumer price
index. Inflation dropped from a peak of 41.9 per cent in March 2001 to 12.9 per
cent in September this year.
Giving an outlook, Dr
Acquah said there was the need for an improved external payments position. He
said he was expecting a surge in cocoa prices along with firm prices for gold,
which should boost export proceeds and provide some depth to the foreign
exchange market and cover for the seasonal increase in demand.
Dr Acquah, however,
said the economy could respond to the risk inherent in oil prices given
developments in the Middle East.
GRi…/
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Oil
indebtedness poses risk to banking system
Accra (Greater Accra)
25 November 2002 - The increasing financial difficulties at the Tema Oil
Refinery pose a risk to the entire banking system, Central Bank Governor, Dr
Paul Acquah said on Saturday.
Speaking at the annual
dinner of the Chartered Institute of Bankers in Accra, Dr Acquah said the huge
indebtedness of TOR called for a fundamental structural rationalisation of the
oil industry as well as appropriate pricing of petroleum products.
The savings from such
rationalization, he said, would be very significant in deepening the foreign
exchange market. TOR is said to be indebted to the tune of about ¢3.4 trillion.
According to him while
TOR was accumulating huge financial losses through subsidies on fuel,
distributors were pocketing their margins. Dr Paul Acquah said the debt
situation should not be allowed to continue since it had to be ultimately borne
by government budget and the taxpayer.
Touching on the idea
for a single currency, the Governor said member countries of the West African
Monetary Zone would need to take tough decisions, especially on public finances
and structural reforms, if the idea was to succeed.
Dr Acquah said while
the single currency idea was one that everybody would subscribe to, a lot of
hard work was required to attain the desired goal. According to him, the policy
changes and structural reforms in all the participating countries were
necessary to underpin and deliver fiscal discipline in order to achieve
convergence and to help integrate members into a single economic and financial
space.
Countries in the Zone
in November in a communiqué after a meeting in Conakry agreed to push the
period for adoption of a single currency from January 2003 to July 2005, after
most member countries had failed to meet the convergence criteria.
The criteria included
a single digit inflation rate by the year 2000 and of five per cent by 2003,
Budget deficit (excluding grants) to GDP ratio of not more than five per cent
by 2000 and four per cent by 2002. The others were, Central Bank financing of
budget deficit to be limited to 10 per cent of previous year's tax revenue and
Gross external reserves to cover at least three months of imports by end-2000
and six months by end 2003.
Dr Acquah expressed
regret that while the process of a monetary integration was on a fast track,
that of economic integration in the sub-region had generally been slow, saying
that the gains of ECOWAS Trade Liberalization Scheme were yet to be realized by
businessmen and traders within the sub-region.
He said there was the
need to remove the barriers that inhibited the movement of goods and people
across the sub-region to give meaning to the numerous protocols signed on
immigration, trade and communications by ECOWAS member countries.
"It is important
that countries implement these protocols otherwise the benefits of integration
will be elusive. Trade barriers among member countries will need to be reduced
and tariffs also harmonized within a multilateral framework," Dr Acquah
emphasized.
GRi…/
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