BoG maintains policy rate at 13.5%
The Central Bank has maintained its monetary policy rate (MPR) of 13.5 percentage points.
Announcing its decision to maintain the policy rate at 13.5 percent, the Central Bank via a press release on Monday, July 26 noted, “Headline inflation has eased sharply and reverted within the medium-term target band, driven mainly by the tight monetary policy stance and some base drift effects. The latest forecast remains broadly unchanged with inflation projected to remain within band and around the central path in the forecast horizon barring any upside risks from fiscal pressures.”
“On the whole, the Committee assessed that the risks to inflation and growth were broadly balanced and decided to keep the policy rate at 13.5 percent,” added the BoG.
The Central Bank at its last Monetary Policy Committee (MPC) in May, reduced its MPR by 100 basis points from 14.5 percent to the current 13.5 percent as part of continuous counter-cyclical measures implemented by the BoG to mitigate the impact shock of the coronavirus pandemic on the economy.
With no change in the policy rate, lending rates by commercial banks to businesses are expected to remain the same.
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Meanwhile, Gross International Reserves (GIR) per data contained in the press release stood at $11 billion equivalent to 5.0 months of import cover at the end of June 2021. At end-December 2020, Gross International Reserves stood at $8.6 billion equivalent to 4.0 months of import cover.
The primary balance also recorded a deficit of 1.6 percent of GDP compared to the target deficit of 0.9 percent of GDP. Over the period, total revenue and grants amounted to GH¢22.6 billion (5.2 percent of GDP), below the projected GH¢26.0 billion (6.0 percent of GDP).
Total expenditures and arrears clearance amounted to GH¢42.7 billion (9.8 percent of GDP), marginally below the programmed target of GH¢45.0 billion (10.4 percent of GDP).
According to the BoG, the country’s total expenditure, budget deficit and primary balance deficit impacted the stock of public debt which increased to 76.6 percent of GDP (GH¢332.4 billion) at the end of May 2021, compared with 76.1 percent of GDP (GH¢291.6 billion) at the end of December 2020.
Of the total debt stock, domestic debt was GH¢170.8 billion (39.4 percent of GDP) while the external debt was GH¢161.5 billion (37.2 percent of GDP).
