Bank of Ghana Affirms Stability and Recovery in Macroeconomic Conditions

The Bank of Ghana (BoG) has affirmed that domestic macroeconomic conditions remain stable, with key indicators showing resilience and signs of sustained recovery. This development was highlighted in the Central Bank’s Monetary Policy Committee (MPC) statement, which reviewed the performance of the economy through October 2024.

The Bank reported that Ghana’s economic growth has been robust, with data pointing to a stronger performance in the second half of 2024. Leading indicators suggest that economic activity is gaining momentum, supported by improving business and consumer confidence. According to the MPC, “Growth outturn so far has been strong, and leading indicators of economic activity project stronger growth in the second half of the year. Business and consumer confidence is slowly turning around, core inflation remains broadly stable, the financial sector’s inflation expectations remain anchored, reserve build-up has been sufficient to provide confidence, and the currency is recording some appreciation.”

The Central Bank highlighted that core inflation, a critical measure excluding volatile items like food and energy prices, has been broadly stable, signalling a steady grip on price pressures. It also emphasized the financial sector’s positive outlook, with inflation expectations remaining well-anchored. These factors collectively underscore a gradual stabilization of Ghana’s economic environment, bolstering confidence among investors and consumers alike.

Another encouraging development is the performance of the Ghanaian cedi, which has recorded some appreciation against major trading currencies in recent months. This improvement is partly attributed to the Bank’s successful foreign reserve accumulation, which has been sufficient to inspire market confidence. The build-up in reserves enhances the Central Bank’s ability to intervene in the forex market when necessary, providing a buffer against external shocks.

The MPC statement also pointed to positive developments under Ghana’s ongoing $3 billion Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF). The IMF’s third review of Ghana’s programme implementation resulted in a Staff-Level Agreement, signalling confidence in the government’s reform agenda. The IMF Executive Board is expected to meet later this month to assess the progress made so far and to provide forward-looking guidance. A successful assessment could lead to the disbursement of an additional $360 million in December 2024, according to the Central Bank. This anticipated inflow is expected to strengthen Ghana’s macroeconomic stability further and provide the government with additional fiscal space to support critical sectors of the economy.

The Central Bank underlined that these developments, coupled with its prudent monetary policies, are key drivers of the current economic stability. The potential IMF disbursement, in particular, is seen as a catalyst for enhancing investor confidence, supporting fiscal and monetary objectives, and boosting the overall resilience of the Ghanaian economy.