Ghana’s total public debt hit GH¢205 billion at the end of July 2019, the Governor of Central Bank, Dr Ernest Addison, has announced in the Bank of Ghana (BoG) latest Summary of Economic Data.
This means that the stock of public debt rose to 59.4 per cent of Gross Domestic Product (GDP) at the end of July 2019, compared with the NPL ratio which declined from 11.7 per cent to 8.9 per cent over the same comparative period.
Of the total debt stock, the Monetary Committee said domestic debt was GH¢98.4 billion (28.4 per cent of GDP), of which GH¢10.7 billion (3.1 per cent of GDP) represented bonds issued to support the financial sector clean-up, while external debt was GH¢107.2 billion (31.0 per cent of GDP).”
The Committee also touted the “marked improvement” brought by the recent banking sector reforms.
For instance, it said, prior to the reforms in August 2017, total assets of the then 36 banks were GH¢89.1 billion. Two years after the central bank’s reforms, the remaining 23 can boast of total assets of GH¢115.2 billion at end August 2019.
The Committee said in the same direction, total deposits have improved from GH¢55.7 billion to GH¢76.0 billion over the same comparative period.
It, however, justified its decision and stated that the pace of disinflation slowed within the quarter, which he attributed largely to pressures coming mainly from the recent upward adjustment of utility tariffs, ex-pump prices and transport fares.
The Committee also raised concerns about the current fiscal situation, and the need to strengthen efforts to close the deficit gap.
“The Committee was concerned about the continued revenue weakness which requires expenditure adjustments to contain a larger than projected budget deficit. This will help underpin investor confidence in the Ghanaian economy and reduce the burden on monetary policy,” he said.
It pointed out that growth has remained strong and the momentum sustained since last year driven by strong growth in the communication, mining and real estate sectors.
It further noted that Gross International Reserves (GIR) increased by US$1.2 billion to US$8.2 billion (equivalent to 4.1 months of import cover) as at end of August 2019 from US$7.0 billion (equivalent to 3.6 months of import cover) at the end of December 2018.
All these, the committee indicated, contributed to the decision of the Bank of Ghana to maintain the policy rate at 16 while monitoring developments going forward.
It asserted that NPL ratio was trending in the right direction and was expected to be sustained by continued implementation of the NPL write-off policy, intensified loan recovery efforts, and stronger credit risk management practices.
It stated that the above developments may further trigger search for higher yields, especially in emerging market economies with stronger fundamentals.
On the domestic front, it pointed out that the growth has remained strong and the momentum has been sustained since last year.
According to the Committee, the latest growth estimates released by the Ghana Statistical Service indicated a 5.7per cent GDP growth in the second quarter of 2019, driven mainly by strong growth in the communication, mining and real estate sectors.
It mentioned that the second quarter growth was higher than the 5.4 per cent recorded during the same period of last year. Non-oil GDP growth was estimated at 4.3 per cent, lower than 5.0 per cent recorded in the same review period.
It asserted that growth in the bank’s updated Composite Index of Economic Activity (CIEA) showed some slight moderation in economic activity.
It maintained that the CIEA recorded an annual growth of 2.1 per cent in July 2019, compared with 4.3 per cent in the corresponding period of 2018.
The Committee pointed out the key drivers of economic activity during the period were private sector credit expansion, contributions to SSNIT by the private sector, port activity, exports, and domestic VAT.
Latest results from the confidence surveys conducted by the Bank of Ghana in August 2019, according to the committee, show that while business sentiments improved significantly reflecting optimism about current and future economic prospects, consumer confidence softened somewhat, reflecting the latest upward adjustments in utility tariffs.
Story: Freeman KORYEKPOR AWLESU
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