The Bank of Ghana’s (BoG) Monetary Policy Committee (MPC) has for the sixth time running maintained the Monetary Policy Rate (MPR) at 14.5 per cent.
The decision by the Central Bank to maintain the MPR, according to Dr Ernest Addison, is due to the fact that risks to inflation in the near term are broadly balanced with headline inflation expected to return to the target band in the second quarter of 2021.
“The Bank’s forecast, however, remain broadly unchanged with headline inflation expected to return to the target band in the second quarter of 2021. Risks to
inflation in the near-term are broadly balanced, but there are emerging short-term pressures emanating from the rising crude oil prices and the direct and secondary price effects of the revenue measures announced in the 2021 budget. Monetary policy would need to remain vigilant to monitor these risks,” said Dr Addison.
“Under the circumstances, the Committee decided to keep the policy rate at 14.5 percent,” he added.
The current MPR – reduced by 150 basis points from a previous 16 per cent policy rate in March 2020 – was reached and implemented by the Central Bank as part of counter-cyclical measures to mitigate the impact shock of the coronarivurs pandemic on the country.
With no change in the policy rate, lending rates by commercial banks to businesses will remain the same.
Gross International Reserves (GIR), according to the Governor, at end-February 2021 was US$8,719.7 million providing cover for 4.2 months of imports of goods and services compared with end-December 2020 position of US$8,624.4 million, equivalent to 4.1 months of import cover.
The primary balance also recorded a deficit of 5.3 percent of GDP compared to the revised target deficit of 4.6 percent of GDP. Over the review period, total revenue and grants amounted to GH¢55.1 billion (14.3 percent of GDP), marginally higher than the revised target of GH¢53.7 billion (13.9 percent of GDP).
Total expenditures and arrears clearance amounted to GH¢100.1 billion (26.1 percent of GDP) against the revised target of GH¢97.7 billion (25.4 percent of GDP).
The BoG in a press release after its 99th MPC meeting, noted the nation’s high deficit pushed the stock of public debt to 76.1 percent of GDP (GH¢291.6 billion) at the end of December 2020 compared with 62.4 percent of GDP (GH¢218.2 billion) at the end of December 2019. Of the total debt stock, domestic debt amounted to GH¢149.8 billion (39.1 percent of GDP), while the external debt was GH¢141.8 billion (37 percent of GDP).
