Fiscal Development Ghana's economic growth conditions weak - BoG

According to the central bank, this is underpinned by weak global demand, declining commodity prices and disruptions in the production of oil and gas.

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play Dr Abdul-Nashiru Issahaku
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Ghana's growth conditions remain weak and below trend, the Bank of Ghana (BoG) has said.

According to the central bank, this is underpinned by weak global demand, declining commodity prices and disruptions in the production of oil and gas.

"Other factors include weak private sector credit growth as a result of the tight credit stance and fiscal consolidation efforts," the BoG said. "These tight conditions are expected to prevail in the outlook."

This was made known by the Bank of Ghana Governor, Dr Abdul-Nashiru Issahaku, when he announced the new monetary policy rate.

After almost 10 months, the monetary policy rate was reduced marginally from 26 percent to 25.5 percent.

Dr Issahaku also acknowledged that growth has remained subdued for the most part of 2016 largely due to tight credit conditions and the downturn in commodity prices.

"The Bank’s updated Composite Index of Economic Activity (CIEA) recorded a modest year-on-year growth in the third quarter, compared with the same period last year. The increase in the CIEA was driven by exports, port activities, industrial consumption of electricity and domestic VAT," he said.

Speaking on the country's fiscal deficit, the governor noted that provisional data on government fiscal operations in the year to September showed a budget deficit of 5.9 percent of GDP, compared with a target of 3.9 percent of GDP.

He attributed the high deficit to lower revenues arising from significant shortfalls in oil revenues, while expenditures were broadly on track.

He said, "the deficit was financed mainly from domestic sources. The fiscal outlook hinges on strengthening revenue mobilization and sustained efforts at containing expenditures."

In addition, Dr Issahaku said business confidence has improved.

"Overall, assessment of economic prospects was generally positive. This is also affirmed by the successful debut of the 10-year bond, which attracted about 75 percent foreign investor participation. In the immediate outlook, risks to growth remain the current tight policy stance alongside uncertainty in the global economic environment, especially commodity prices," he said.

And that the country's external debt performance remains strong.

He said: "The provisional data shows significant improvement in the external trade deficit in the year to September, relative to 2015.

"This improvement was on account of higher export receipts, mainly from gold, combined with lower imports.

"The outturn of the trade balance has significantly 3 improved the provisional current account deficit to 3.1 percent, relative to target 5.0 percent of GDP.

"This, together with foreign inflows from the Euro bond, the pre-export finance facility for cocoa and other expected inflows from development partners will support efforts to build up external reserves."

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