The Governor of the Bank of Ghana (BoG), Dr Abdul-Nashiru Issahaku, says Ghana’s economy has gained renewed confidence after the general elections in December last year. According to him, “the latest consumer sentiments survey conducted after the December 2016 polls reflected optimism about economic prospects.” The Bank, he noted, was also confident of a boost in growth of the country’s economy this year on the back of expected increase in oil production from the Tweneboa-Enyenra-Ntomme (TEN) as well as the coming on stream of the Sankofa-Gye Nyame oil fields. The Governor was speaking in Accra during the first Monetary Policy Committee (MPC) press briefing for this year. Dr Issahaku, who announced the decision of the MPC to maintain the BoG’s policy rate at 25.5%, revealed that for the first time since 2011, the country’s provisional balance of payments in 2016 had recorded a surplus. The development, the Governor noted, was attributable to the 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,” he stated. Economic activity, according to Dr Issahaku, remained modest in spite of the policy tightness, oil and gas production challenges in the Jubilee Field and some lingering consequences of the power supply constraints. The Governor further explained that the decision to maintain the Policy Rate was largely influenced by the move to enhance fiscal consolidation. The decline in headline and core inflation was, according to him, a positive indication that informed the committee to maintain the rate. The policy rate, which is the rate at which the central bank lends money to commercial banks, was last reduced in November 2016 from 26 percent by 50 basis point to 25.5 percent due to inflation and Cedi stabilisation. Prior to the announcement, some economists were highly expectant of a reduction in the rate. The Head of Finance at the University of Ghana Business School, Professor Godfred Bokpin, had impressed upon the BoG to reduce the policy rate. Professor Bokpin had explained that a decline in the policy rate by at least 200 basis points would have relieved businesses of their current plight and reflect government’s reassurance that Ghana is open for business. “Looking at inflation that is about 15 percent, I think any reduction between 200 and 500 basis points will be ideal,” he had stated.
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