Current account deficit worsens by 18.4%
Ghana’s current account deficit according to the Bank of Ghana’s Quarterly Bulletin for the second quarter of 2021 worsened by some 18.4 percentage points.
The Central Bank notes in its Quarterly Bulletin that Ghana’s current account deficit increased from $654.09 million in Q2 2020 to $774.45 million in Q2 2021.
The Bank attributed the deficit increment to a reduction in remittances to the country for the period under review.
“The increase in the current account deficit was influenced largely by a reduction in net unilateral transfers (remittances), notwithstanding some declines in the services and income accounts,” said the BoG.
During the period under review, the Bank posits that the Services, Income and Unilateral Transfers’ account (components of the current account) recorded a deficit of $979.34 million compared to a deficit of $810.50 million in 2020.
The balance on the Services account reduced from a deficit of $1,086.93 million in Q2 2020 to a deficit of $1,026.12 million in Q2 2021. The balance on the income account also shrank marginally by 1.1 per cent to $672.23 million, compared to $679.89 million during the same period in 2020.
“The lower net outflow was in respect of interest payments, dividends payments and distribution of profits. Current transfers, which are mostly private remittances, decreased by 24.8 percent from $956.33 million in Q2 2020 to $719.00 million in Q2:2021,” explained the BoG.
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Meanwhile, the provisional trade balance (also a component of current account) for Q2 2021, the BoG notes, showed a surplus of $204.89 million compared to a surplus of $156.40 million recorded for the same period in 2020, noting that the improvement in the trade balance was attributable to a pick-up in exports relative to imports.
Exports for Q2 2021, it further noted, was provisionally estimated at $3,641.28 million, indicating an increase of $125.31 million or 3.6 percent, compared with the $3,505.97 million recorded in the same period in 2020.
“The rise was attributable to increasing receipts from the exports of cocoa beans, crude oil, timber, as well as other exports (other minerals and non-traditional exports),” the Bank noted.
Total value of imports for Q2 2021 on the other hand, amounted to $3,426.39 million, up by 2.3 percent compared to US$3,349.56 million recorded in Q2:2020. The rise was driven by increased demand for oil imports.
A projection by the IMF in its 2021 October Regional Economic Outlook on Sub-Saharan Africa indicates that Ghana’s overall current account deficit for 2021 will be -2.2 percent of GDP and increase further to -3.5 percent of GDP in 2022.
