Debt standstill, trade improvements propel current account to $1 billion surplus – BoG
In its 115th Monetary Policy Committee (MPC) press release on Monday, November 27, 2023, the Bank of Ghana (BoG) disclosed a notable shift in Ghana’s economic landscape, reporting a current account surplus of US$1.0 billion for the third quarter of the year.
This marked a substantial turnaround from the US$1.8 billion deficit recorded during the same period in 2022.
The buoyancy in the current account was attributed to several key factors, including improvements in the trade account, a significant decrease in income payments, and robust growth in remittance inflows. The income account, particularly, experienced a substantial boost due to a debt standstill, leading to a remarkable 56% reduction in net income payments, amounting to US$1.4 billion.
Interest payments on public debt also saw a staggering 89.8% decline to US$134 million, compared to US$1.3 billion in the corresponding period in 2022. Remittance inflows surged to US$3.2 billion, up from US$2.5 billion in 2022.
The press release highlighted that the capital and financial accounts benefitted from reduced portfolio outflows and lower amortization payments. Although the capital and financial accounts still recorded a net outflow of US$1.5 billion, this was slightly lower than the US$1.6 billion outflow in the same period a year earlier.
Lower portfolio payments, reduced government amortization, and a decrease in portfolio outflows from US$1.9 billion to US$195 million contributed to this improvement. Government loan amortization also saw a notable decline of 41.7% to US$523 million due to the debt standstill, while foreign direct investment moderated to US$926 million from US$1.1 billion in 2022.
The positive developments in the current account, coupled with improvements in the capital and financial accounts, had a favorable impact on the balance of payments. By the end of the third quarter of 2023, the overall balance of payments deficit had reduced significantly to US$617 million, compared to a deficit of US$3.4 billion during the same period in 2022. The report underscores the resilience of Ghana’s economy amidst global challenges and the strategic measures taken to address economic imbalances.
