Deficit Soars

Latest figures on Ghana's trade terms show that the country recorded a trade deficit of US$1,439.45 as at the end of August this year.

Monetary Policy Committee Chairman and Governor of the Bank of Ghana Dr Paul Acquah said, while the country recorded a trade deficit of US$954.4 million as at June this year, the figure had shot up to US$1,439.45 million at the end of August largely on account of the widening gap between exports and imports.

International trade remains a subject of intense debate among policy-makers and the wider public. While expanding export markets are widely accepted as beneficial, increases in imports can be seen as threatening, replacing domestic production with goods and services from abroad.

This means that while imports during the period shot up to US$5,268.58 million, exports on the other hand lagged behind reaching US$3,829.13 million.

Exports of cocoa beans and products from the beginning of the year to August amounted to US$1,023.85 million (an annual growth of 7.4 per cent) compared with US$953.06 million for the same period in 2008 having (an annual growth of 21.3 per cent).

At a news conference in Accra, it was announced that the the Monetary Policy Committee had decided to maintained the prime rate of 18.5 per cent, citing signs of improvement and stablisation in the economy. The prime rate is the rate at which the central bank lends money to the commercial banks.

Gold exports for the period amounted to US$1,624.99 million compared with US$1,601.37 million over the corresponding period of 2008, an annual growth of 1.5 per cent.

Dr Acquah said non-traditional exports amounted to US$729.14 million, compared with US$613.64 million for the same period in 2008, representing an annual growth of 18.8 per cent.

Non-oil imports at the end of August this year stood at US$4,582.35 million, a decline of 10.5 per cent from the US$5,121.55 million for the same period in 2008.

The oil import bill at the end of August increased to US$826.20 million, but compared with US$1,782.77 million for the same period of 2008, showed a significant annual decline of 53.7 per cent. Capital and intermediate goods together accounted for 68.7 per cent of total imports, down from 69.3 per cent for the same period a year earlier.

We have begun to see some signs of stabilisation in the third quarter of the year, an indication that the effects of both monetary and fiscal policies are beginning to take hold,' he said.

Dr Acquah said increases in oil prices as a result of recovery of global demand from the financial and economic crisis still posed a major threat to the economy.

The country's external payments position has benefited from the continuing terms of trade gains due to a reduction in energy bill mostly as a result of increased generation of electricity from hydro sources, along with lower oil prices.

'However, recent monthly increases have been modest and there are signs of reduced volatility in prices and in the exchange rate of the cedi against the major currencies,' he said.

Dr Acquah said the latest surveys of the Bank of Ghana showed more positive assessment of the general macroeconomic outlook and recovery in both business and consumer confidence.

Also, while fiscal consolidation is taking place, shortfalls in revenue and donor disbursements and payments of domestic arrears have meant that some payments in the pipeline would have to be settled and that could add some stimulus to the economy

Story : Suleiman Mustapha Share Your Thoughts on this article Name Email Location Comments Graphic Ghana may edit your comments and not all comments will be published