Current account deficit widens by $400m in 2021
Ghana’s current account deficit widened by $400m reaching $2.5 billion at end-2021 from the end-2020 figure of $2.1 billion.
According to data made available by the Bank of Ghana (BoG) in its Monetary Policy Report for January 2022, higher investment outflows arising from increased interest payments and dividend repatriation resulted in the widened current account deficit.
“Developments in the trade account, together with higher investment income outflows arising from increased interest payments, profits and dividend repatriation, resulted in a widened current account deficit of US$2.5 billion at the end of 2021, compared with US$2.1 billion recorded at the same time last year,” it stated.
The BoG in the repost asserts that it expects a further deterioration in the country’s current account deficit driven by lower trade surplus and higher outflows in the investment and services account.
“Initial projections under the baseline scenario suggest a drawdown in reserves in 2022 based on a projected widening in the current account deficit and lower inflows into the financial account. The expected deterioration in the current account will be driven by a lower trade surplus, and higher outflows in the investment and services account,” the BoG averred.
Inflows to the Capital and Financial Accounts for the review period, the Central Bank further noted were more than enough to finance the country’s current account deficit.
With an accumulated amount of $3.3 billion in the Capital and Financial Accounts from foreign direct investments, Eurobond proceeds and IMF-SDR allocations, financing of the country’s current account deficit will have resulted in a balance of payments surplus of $510 million – compared with the surplus of the $377.5 million recorded in 2020.
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Trade account balance, the apex bank noted recorded a lower surplus of $1.1 billion during the year compared with a surplus of $2.0 billion recorded for the corresponding period of 2020.
The decline in the trade balance, it asserts, was due to a higher import outturn, driven mainly by increased demand for refined petroleum products imports during the year.
Consistent with a pick-up in economic activities, total imports, the apex bank furthered, rose by 3.0 percent year-on-year to $13.6 billion. Both non-oil imports and oil imports rose during the year by 6 percent and 8.5 percent, respectively.
With regard to exports, earnings amounted to $14.4 billion, up by 1.8 percent. The marginal growth in exports was, however, below the pre-pandemic growth of 5.9 percent.
Improved receipts from cocoa and crude oil boosted exports performance notwithstanding the decline in gold receipts. Gold earnings declined sharply from $6.8 billion in 2020 to $5.1 billion in 2021 largely as a result of a 26.8 percent shortfall in output
According to the BoG, the stock of Gross International Reserves, during 2021, increased to $9.7 billion at the end of December 2021, equivalent to 4.4 months of import cover.
This compares with the reserve level of $8.6 billion, representing 4.0 months of import cover at the end of December 2020.
