Credit to the private sector has contracted, the Bank of Ghana has said at its last Monetary Policy Committee meeting on Monday, 27 November 2023.
Governor Addison said banks continue to deploy their resources towards short-term investments as opposed to extension of credit, in response to the increased risks associated with lending following the deteriorating
macroeconomic conditions and the impact of the Domestic Debt Exchange Programme (DDEP).
Private sector credit contracted by 7.5 per cent in October 2023, compared with a 57.3 per cent growth recorded in October 2022.
"In real terms, credit to the private sector contracted significantly by 31.6 per cent relative to a growth of 3.0 per cent recorded over the same comparative period", Dr Addison said.
The central bank also noted that fiscal policy implementation for the first half of the year has been in line with the performance criteria under the IMF ECF-supported programme.
Governor Addison said the targets on the primary fiscal balance on a commitment basis, non-accumulation of external debt payment
arrears, and newly-collateralised debt by central government and public entities were all attained.
Fiscal performance based on the narrow budget, he added, "shows a deficit of 2.9 per cent of GDP for the period January through October 2023, against a target of 5.1 per cent of GDP".
He noted that the pace of growth in monetary aggregates has "significantly slowed", underpinned by "tighter liquidity management". Also, he said reserve money contracted by 2.6 per cent
on a year-on-year basis in October 2023 compared to an increase of 62.7 per cent recorded for the corresponding period in 2022.
"The significant contraction in reserve money was on the
back of strict adherence to zero-financing of the budget and sustained liquidity withdrawal efforts of about GHS44.9 billion (5.3 per cent of GDP, year-to-date)".
"As a result of these, broad money supply (M2+) growth declined to 20.4 percent in October 2023, relative to 45.2 per cent in October 2022".