What Latest Figures from the BoG mean for the Economy

PHOTO: citifmonline.com

by Jerome Kuseh

The Bank of Ghana (BoG) has released the summary of economic and financial data for September 2015. The summary comprises data from October 2014 to August 2015. In this post I’ll examine the data and what it says about the economy. Find my analysis of the previous data here.

Inflation is falling but it’s still too high

Inflation for August was 17.3%, lower than the 17.9% recorded in July. This is the first time since January that the year-to-date inflation rate has fallen. The rate is still too high and the BoG’s target of 8% (plus/minus 2%) for the fourth quarter would not be achieved especially with utility tariffs set to go up.

Lower commodity prices have wrecked exports

Total export revenue for August was US$730.2 million, 15% lower than the revenue for July and the lowest recorded this year. Oil exports fell to US$102.1 million, 55% lower than the July value and also the lowest recorded this year. It appears that the fall in commodity prices is negatively affecting Ghana’s export revenue. Imports were up 8% to US$1,131.2 million in August. Oil imports were down to US$161.3 million, the lowest since February. The current account deficit for Q2 was 1.1% of GDP up from 0.6% in Q1.

Cedi recovered slightly

The BoG figures show that the cedi had depreciated by 13.8% against the dollar this year (as at 8th September). The figure was better than at the end of August which showed a year-to-date depreciation of 20.9%. Figures from currency trading platform, Oanda showed a recovery of 1.64% since August 31. The recovery could be due to the disbursement of US$116 million to the country by the IMF.

Fiscal deficit is slowly climbing

After the good news last month that Q2 fiscal deficit was smaller than expected, it appears to have risen to 3% of GDP in July from 2.3% in Q2. Ghana is targeting a fiscal deficit of 7.3% of GDP by the end of the year.

Public debt is up

Public debt has risen to GH¢94.5 billion representing 70.9% of GDP as at June. The figure is up from 67.1% of GDP in May. The increasing debt of the country is sure to worry investors who are already fleeing from emerging economies. They will certainly fear that the country may default on its debts especially with commodity prices falling and not being projected to recover anytime soon.


Jerome Kuseh

Accountant | Economist-in-Training | Finance Blogger

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