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Ghana’s economy continues to suffer the impact of the pandemic as growth is yet to get back to pre-pandemic levels, and this could be compounded by the war in Ukraine. The development is expected to raise global prices for several key commodities, including foods, fuel, fertilizers, and metals used in manufacturing, adding to prior inflationary pressure in Ghana.
The central bank has identified five key reasons for the woes of the local currency.
- The strength of the US dollars
- Investor reaction to Credit Rating Downgrade
- Non-Roll over of maturing Bonds
- The Sharp rise in crude oil and impact on the oil Bill.
- Loss of External Financing
The measure introduced to resolve these, according to the BoG, is the “Gold Purchase program to increase foreign exchange reserves;
Special Foreign Exchange Auction for the Bulk Distribution Company (BDCs) to help with the importance of petroleum products; Bank of Ghana is entering into a cooperative agreement with the mining companies to provide BoG with the opportunity to buy gold when it becomes available.
The recent approved USD750,000,000 Afriexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.
“The Cocoa Loan is expected in the last quarter of the year. This facility will also help provide more foreign currency to help address the Cedi depreciation. In the short term, we expect that when the IMF programme is finalised, it will also go a long way to help restore the confidence in the economy and drive portfolio flows.”