Global Risks Threaten Ghana’s BoP

Even though economic activity globally is projected to improve on the back of the pro-growth agenda of the new US administration and some turnaround in commodity prices, especially crude oil, certain underlying global risks could adversely impact Ghana’s balance of payments, fiscal operations and the inflation outlook.

Dr Abdul Nasir Issahaku, Governor of the Bank of Ghana (BoG) and chairman of the Monetary Policy Committee (MPC), who dropped the hint yesterday in Accra during a press conference, said such risks included a stronger US dollar and rising global bond yields on the back of expected hikes in the Fed funds rate.

“For the first time since 2011, the provisional balance of payments in 2016 recorded a surplus. This was attributed to a narrowing of the current account deficit driven largely by improvement in the trade balance. The improvement more than compensated for the moderation in the capital and financial accounts arising from lower official foreign inflows.”

Overall BoP as at December 2016 was US$247.4 million, representing 0.6 percent of GDP while gross foreign assets recorded an amount of US$6161.8 million, representing 3.5 months of import cover.

Foreign exchange

According to Dr Issahaku, Ghana’s foreign exchange market witnessed some volatilities in the run-up to the December polls, as demand pressures mounted, adding that the pace of depreciation had since slowed down.

“In 2016, the Ghana cedi recorded a cumulative depreciation of 9.6 percent against the US dollar compared to 15.7 percent in 2015. In the outlook, the tight monetary policy stance, renewed confidence in the economy and improved balance of payments outturn are expected to support stability in the foreign exchange market.”

Headline inflation

He also said there were concerns regarding the inflation outlook, which could be impacted by the pass-through effects of the recent exchange rate volatility, persistent increases in food inflation and the fiscal outturn.

“There is therefore the need to return to the path of fiscal consolidation to complement the tight monetary policy stance to deliver on the medium term inflation target.”


The BoG Governor stated that although growth conditions remained modest, prospects were positive, underpinned by improved oil and gas production from the new oil fields, gradual rebound in growth in private sector credit and improved sentiments and expectations.

“In the outlook, the risks to growth include policy uncertainties, especially in the global environment.”

Policy rate

The MPC maintained the monetary policy rate (MPR) at 25.5 percent.