The Bank of Ghana sees an economic growth recovery of up to 2.5 per cent in 2020, underpinned by large fiscal stimulus packages, supportive monetary policies and widespread easing of restrictions.
Dr Ernest Addison, the Governor of the Bank speaking at a press conference on the Monetary Policy Rate said the economy has also begun to experience some recovery as price pressures that resulted from the pandemic-related restrictions and lockdown measures in March 2020, were easing.
The recovery is, however, expected to be gradual.
He said headline inflation, after edging up sharply to 11.4 per cent in July 2020, has started going down, now at 10.5 per cent in August, on the back of declining food prices.
He said food inflation has steadily declined from 15.1 per cent in May to 11.4 per cent in August, partly reflecting seasonal effects.
“Non-food inflation has, however, increased from 8.4 per cent to 9.9 per cent over the review period with underlying inflationary pressures also easing,” he added.
Dr Addison said inflation expectations of businesses, consumers and the financial sector, derived from the Bank’s latest round of surveys, had moderated.
The Bank’s core inflation measure, which excludes energy and utility, also declined marginally.
He said the fiscal policy, provisional data on budget execution for the first seven months, showed an overall budget deficit of 7.4 per cent of Gross Domestic Product as against the revised target of 7.2 per cent of GDP during the COVID-19 pandemic.
The primary balance also recorded a deficit of 3.7 per cent of GDP, above the planned target of 3.4 per cent of GDP.
Over the review period, total revenue and grants amounted to GH¢27.7 billion compared with the target of GH¢26.8 billion.
Total expenditures and arrears clearance amounted to GH¢56.2 billion, above the target of GH¢53.3 billion.11.
These developments impacted the stock of public debt which rose to 68.3 per cent of GDP (GH¢263 billion) at the end of July 2020, compared with 62.4 per cent of GDP (GH¢218.2 billion) at the end of December 2019.
Of the total debt stock, domestic debt was GH¢125.1 billion (32.5 per cent of GDP), while external debt was GH¢138 billion (35.8 per cent of GDP), representing 52.4 per cent of the total public debt.