The Governor of the Bank of Ghana, Ernest Addison, stated on Monday that recent data suggests the country’s economic growth is more robust than expected. He projected that the GDP would expand by approximately 3% this year, a figure significantly higher than the International Monetary Fund’s (IMF) forecast of 1.6%.
Ghana, a West African nation famed for its cocoa, gold, and oil production, has been grappling with its worst economic crisis in decades. The crisis is characterized by double-digit inflation and rapidly increasing public debt. Despite these challenges, Addison expressed optimism about the country’s economic outlook.
“The consensus view of the Monetary Policy Committee is that we should see stronger growth than projected under the IMF programme,” Addison told reporters. This statement was in reference to a $3 billion support package from the IMF conditional on debt restructuring.
For the third consecutive day, Accra, Ghana’s capital city, witnessed anti-government protests fueled by these economic hardships. These protests led to numerous arrests.
However, positive outcomes have been observed from the economic reform programs supported by the IMF after their first four months of implementation. The relatively high economic growth in Q1 and Q2 of this year, coupled with a stabilized exchange rate regime and lowering inflation, were indicators pointing to a successful outcome of the program so far.
In August, Ghana’s inflation rate decelerated to 40.1% on a year-on-year basis, down from 43.1% in July. While this figure still significantly exceeds the central bank’s target band of 6%-10%, it shows progress in the right direction.
“The policy mix under the three-year IMF extended credit facility is beginning to yield results. Economic activity is rebounding strongly. The exchange rate is stabilising. Inflation is declining, and the level of foreign exchange reserves has improved,” Addison said.
He also mentioned that the central bank expects continued disinflation but is prepared to take action should that not occur. In July, the bank raised the main interest rate by 50 basis points to prevent a disinflation trend from being blown off course.
Addison noted that negotiations with external creditors are currently underway. He anticipates that the IMF’s next tranche of financing and other inflows will help maintain stability.
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