Saturday, 13 July

Ofori-Atta: 1.1% positive current account 'monumental turnaround', as gross int'l reserves hit $5bn

Finance Minister Ken Ofori-Atta

Ghana's Gross International Reserves (GIR), as of September 2023, stood at US$5.0 billion (2.3 months import cover) compared to US$6.3 billion (2.7 months of import cover) at end-December, 2022, Finance Minister Ken Ofori-Attahas said.

Presenting the 2024 budget to parliament on Wednesday, 15 November 2023, Mr Ofori-Atta said "we are yet to reflect IMF/WB and Cocoa syndication of approximately $2 billion by year end". 

Also, he said the current account turned positive at 1.1 per cent of GDP at end-June 2023, a monumental turnaround from the deficit of 2.1 per cent of GDP at end-December 2022.

Likewise, he mentioned that "the trade balance improved to a surplus of 2.6 per cent of GDP as of end-August 2023, from 0.7 per cent of GDP surplus at end-December 2022".

He said though interest rates moderated from December 2022 to the first 

quarter 2023, they picked up again as T-bills remained the key debt 

instrument in the debt market after the DDEP.

"For instance, the 91-day Treasury declined from 35.5 percent in December 2022 to 18.5 per cent in March 2023, but increased to 29.8 percent as of Monday, 13th November 2023", he reported to the house.

The overall budget deficit on commitment basis as of end-August 2023, he indicated, was a deficit of 3.0 per cent of GDP, outperforming the targeted deficit of 4.6 per cent of GDP. 

The outturn, he pointed out, "largely reflects improvement in revenue mobilisation and slower execution of expenditure". 

He said the corresponding primary balance on commitment basis was a deficit of 0.7 per cent of GDP, also outperforming the target surplus of 0.9 per cent of GDP.

Also, he said public debt accumulation has "slowed down significantly", as the government continued "to consolidate its public finances, and also reflects the impact of the domestic debt exchange programme, and the ongoing external debt restructuring". 

Total public debt, according to Mr Ofori-Atta, "has declined from 73.1 per cent of GDP at the end of 2022 to 66.4 per cent of GDP as of September, 2023".

The completion of the external debt restructuring, he noted, is expected to further improve Ghana’s debt situation.

Real GDP growth averaged 3.2 per cent in the first half of 2023 compared to 2.9 per cent in same period in 2022, signaling a strong rebound. 

Robust growth in the Services (avg. 6.3%) and Agriculture (avg. 6.2%) 

sectors were the key drivers. 

Mr Ofori-Atta also told the house that "it is instructive to note that the average growth of 3.2 perc ent for the first two quarters of 2023 is higher than the 2023 revised growth target of 1.5 per cent".

He said price developments indicate that "inflation is on a declining path in response to ongoing fiscal consolidation, appropriate tightening of 

monetary policy, and relative stability in the exchange rate". 

"Headline Inflation declined by 16 percentage points, from 54.1 percent in December, 2022 to 38.1 percent in September, 2023. Core inflation has 

also declined sharply from 53.2 per cent in December 2022 to 39.0 

percent in September 2023. Just yesterday, when I was preparing to 

come here, the Ghana Statistical Service announced that the inflation for 

October 2023 is 35.2 per cent".

Furthermore, he said the cedi has stabilised against the US dollar since early 2023 with a year-to-date, cumulative depreciation of 25.7 per cent compared to 54.1 per cent over the same period in 2022. Specifically, the cedi has only depreciated by 6.4 per cent on cumulative basis since February 2023 compared to 53.9 per cent over same period in 2022.

"The stability of the cedi largely reflects the positive impact from the restoration of economic activity, including robust economic growth, improvement in the current account position, improvement in forex liquidity following IMF ECF inflows, Bank of Ghana’s domestic gold purchase programme, and reduced speculative FX speculative demand as market confidence rebounds".