BoG Maintains Policy Rate At 19%

Dr. Henry Kofi Wampah
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 19 percent.

According the Committee, the policy rate was maintained because of a positive growth outlook based on expected high cocoa and oil output, as well as the coming on stream of the Ghana gas project.

The policy rate indicates the rate at which commercial banks borrow from the Central Bank.

The Committee, at its last meeting in July, increased the rate from 18 percent to 19 percent.

The increase, according to the Bank, was to contain inflation pressures and realign interest rates in favour of domestic assets.

Dr. Henry Kofi Wampah, Governor, BoG, who was speaking at a press briefing in Accra yesterday, said fiscal pressure and the volatilities in exchange rates continued to pose challenges to the economy.

'This notwithstanding, the latest numbers suggest some stability in the foreign exchange market as the earlier policy measures including the cumulative 300 basis points increase in the monetary policy rate, the 200 basis points increase in the cash reserve ratio as well as the narrowing of the net open positions work through the system, ' he said.

In addition, Dr. Wampah said the expected inflows from the Eurobond and the cocoa syndicated loan will provide liquidity on the foreign exchange market, adding that government's fiscal consolidation efforts are expected to be strengthened under the IMF programme which will also provide additional balance of payments support.

 
Fiscal Operations
He said provisional outturn for broad fiscal performance for the period January to July 2014 suggests an overall budget deficit estimated at 5.3 percent of Gross Domestic Product (GDP) against a budget target of 5.1 percent compared to a deficit of 5.6 percent in the same period in 2013.

Dr. Wampah said total revenue and grants was
GH₵13.3 billion as against a budget target of GH₵14 billion. Of this outturn, domestic revenue was GH₵12.9 billion below the target of GH₵13.3 billion.

He said total tax revenue amounted to GH₵10.2 billion, lower than the target of GH₵10.5 billion and non-tax revenues was GH₵2.6 billion compared to the target of GH₵2.7 billion.

By Cephas Larbi
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