Ghana suffers BoP deficit of 3.5% of GDP at end-June 2022
Ghana’s Balance of Payment (BoP) deficit at the end of June 2022 stood at $2.49bn translating into some 3.5% of Gross Domestic Product (GDP).
Per data contained in the Central Bank’s July 2022 Summary of Economic and Financial Data, Ghana’s BoP deficit increased from $934m in March 2022 to the recorded figure of $2.49bn in June 2022.
The increment in the country’s BoP deficit was despite recorded increases in trade balance (trade surplus) from January to June.
Per the data, Ghana’s trade balance has been on a steady growth rising from $115m (0.2% of GDP) in January 2022 to $1.43bn (2% of GDP) in June 2022.
The steady rise in the country’s trade balance reflected the extra foreign exchange earned from exports as against foreign exchange lost due to imports.
A breakdown of the BoP indicates that the Current Account Balance which measures both visible and invisible trade as well as foreign remittances received into the country, recorded a deficit of $1.09bn (1.5% of GDP).
The Capital and Financial Account which measures foreign direct investments into the country as well as the country’s foreign assets and returns from the assets, recorded a deficit of $1.28bn (1.8% of GDP).
Given the present BoP deficit of 3.5% of GDP, the country’s request to seek for a Balance of Payment (BoP) Support Programme from the International Monetary Fund (IMF) seems to be a step in the right direction.
The BoP Support Programme from the IMF is expected to restore the country’s BoP position from that of deficit to surplus.
Meanwhile, the country’s foreign reserves according to the Bank of Ghana in the July 2022 Summary of Economic and Financial Data, is some $7.68bn.
Net foreign reserves however, stands at $3.58bn.
This contrary to the erroneous $3bn total foreign reserves the Finance Committee in Parliament noted to be at the Central Bank last week, as it sought for the House’ approval for a $1bn loan facility – Parliament however, only approved $750m for the government.
According to the BoG, the $7.68bn foreign reserves translates into 3.4 months import cover.
