Bank of Ghana
briefs on remittances, inflation
Inward
dollar remittances go up by 25%
Monetary
Committee not certain about inflation for February
Inward dollar remittances go up by 25%
Accra (Greater
Accra) 26 March 2003 -"Inward private remittances including inward
transfers by embassies, non-governmental organization and non-residents abroad
through the banks and finance companies totalled 252.2 million dollars for
January and February,” the central bank has announced.
According to Dr.
Paul Acquah, Governor of the Bank of Ghana this showed a 25 per cent increase
over the amount transferred through the same sources for the same period last
year.
Dr. Acquah who was
speaking at a press conference in
The Governor, who
is the Chairman of the MPC, said purchases on the inter-bank foreign exchange
market by deposit money banks and forex bureaux for
January and February was 171.7 million dollars while sales totalled 183 million
dollars."
The amounts
represent significant increases over the levels close to 120.0 million dollars
posted over the same period in 2002.
In the inter-bank
market, the cedi recorded a cumulative depreciation of 1.9 per cent against the
US dollar from
Against the Euro,
however, the cedi lost more grounds as it depreciated by 8.8 per cent over the
same period with seven percentage points in January.
"In that
month, the US dollars similarly depreciated by 4.1 per cent against the Euro on
the international financial markets," Dr Acquah noted.
Gross International
reserves on the whole declined from 640.04 million dollars at the end of
December 2002 to some 603.6 million dollars at the end of February 2003, which
is equivalent to 2.3 months of projected imports.
Interest rates also
continued to move with a narrow band during the month of February and edged up
from 22.06 per cent in January to an average of 23.5 per cent narrowing the
spread below the BOG Prime Rate.
The 91-day Treasury
bill interest rate increased from 26.62 per cent in December 2002 to 27.24 per
cent by February 2003. Commercial Bank base rates were fixed within 28 per cent
and 30 per cent.
Under the period of
review, there was a shift in market preference in favour of short dated
securities between December 2002 and February 2003.
Foreign currency
deposits increased from 423.19 million at the end of December 2002 to 447.86
million dollars by the end of January 2003.
Giving the outlook
for inflation, Dr Acquah said it was the stance of financial policies
especially the execution of the budget for 2003 that would shape the underlying
price pressures in the economy.
"With
disciplined price setting behaviour and moderation in wage settlements in the
current round of negotiations, inflationary expectations should realign with
macroeconomic fundamentals."
Dr Acquah said
consumer price inflation should begin to ease towards the desired single digit
over the coming 12 months.
He said external
payments outlook for this year would be underlined by the cyclical high cocoa
prices and firm gold prices.
The main source of
uncertainty surrounds the aftermath of the
Total exports for
the year is projected to grow by 10 per cent to an estimated 2,310.0 million
dollars, while imports are expected to increase by 16 per cent to 3,156.3
million dollars.
He said an
important downside risk in the macro financial outlook lay in the financing of
the budget.
"The projected
level of financing is heavily dependent on donor inflows, albeit at a pace and
timing that is normally uneven and uncertain, but good treasury management and
better synchronization of budgetary spending and financing flows, especially
from the pool of donor funds but also from divestiture proceeds should minimise
the risks to the public sector domestic borrowing programme."
He said the
prudently set fiscal stance when pursued vigorously should set the economy
firmly on a disinflation path.
GRi…/
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Monetary Committee not certain about
inflation for February
However, the
Governor of Bank of Ghana, Dr Paul Acquah, who is also the Chairman of the MPC,
told a Press Conference in
Dr Acquah said the
increase in prices of petroleum products last January and the resultant
unbridled increases in the prices of goods and services "created a storm
in the scheme of things".
He said since the
last MPC meeting in January, developments in the economy showed clear signs of
continued build-up of inflationary pressures.
Annual consumer
price inflation as measured by the Consumer Price Index (CPI), turned in at
16.3 per cent in January, edging up from 15.2 recorded in December 2002. The
national CPI recorded an estimated jump of close to 12.8 percentage points in
February.
"This was well
above normal cost-price adjustment in the markets for goods and services. The
data for March should shed light on the extent to which these price changes
have become embedded."
Dr Acquah said data
for January and February of the current year indicated that the growth of the
monetary aggregates was slowing, adding that broad money supply and reserve
money both declined relatively faster with the seasonal unwinding of the stock
of currency associated with the financing of the cocoa crop.
He said impulses
underlying the upturn in the inflation rate since the beginning of the fourth
quarter of 2002, were the result of public sector borrowing to meet the demands
of the 2002 budget, liquidity injection of currency for purchases of the
unexpectedly large 2002-2003 cocoa crop. The country expects a cocoa harvest of
some 450,000 tonnes.
"The others
are the downward pressures on the exchange rate, growth in domestic liquidity
as well as the effect of the sharp depreciation of the US dollar vis-à-vis the
Euro and Pound Sterling.
"The
underlying consumer price inflation increased considerably in February mainly
on the strength of the pass-through effects of the corrective adjustments to
fuel prices made in January."
Mr Kaseem Yahaya, Director of Public
Affairs, told Journalists after the briefing that the situation was not clear
because there was turbulence and imbalance just after the increase in the
prices of petroleum products.
"The 29 per
cent being quoted as the inflation figure for February could be right but one
would realise that the calculations were done during a period of imbalance and
turbulence.
"What we have
to do is to wait for the Prime Rate and inflation for March. Then we would know
if the figure is embedded in it. Indeed we cannot make policy with unusual
figures." - GNA’s account
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According to the bank, the sharp rise of 12.8 per cent for
the month of February was well above normal cost-price expectations as a result
of the fuel price adjustments.
At the end of January, the rate of inflation as measured by
the consumer price index stood at 16.3 per cent and the cumulative effect of
the sharp rise in the rate at the end of February brought the rate to 29.1 per
cent.
Dr Paul Acquah, Governor of the Bank of Ghana, said at a
press briefing on the activities of the Monetary Policy Committee (MPC) in
According to the Statistical Service, the national index for
February, 2003, represents a rise of 29.4 per cent over the index for the month
of February, 2002.
It said this is not unexpected, given that no policy measure
as significant as the price increases in petroleum products was taken in
January, 2003.
“The yearly inflation for February 2003 as a consequence,
showed a relatively small rise from 14.6 per cent in January, 2003, to 15.6 per
cent,” it said.
The service, the institution charged with the responsibility
of dealing with the Consumer Price Index, explained that monthly change
measures the rate of price change from month to month, while the annual change
represents change in price levels over a period of one year.
Also, a decline of the rate of inflation from one period to
the other does not necessarily mean that actual prices are falling. For, so long as the change remains positive, it means that price
levels are increasing but at a decline rate.
Dr Acquah, however, stated that the government’s domestic
revenue collection so far has been on track in relation to the established
budget targets. He said domestic total revenue amounted to ¢2.7 trillion and that payments were kept at the same level.
On the foreign exchange activities, the Governor said the
market activity shows a good degree of buoyancy with reduced volatility and
that purchases on the interbank foreign exchange by
deposit money banks and forex bureaux for the
two-month amounted to $171.7 million while sales totalled $183 million.
He said these figures represent significant increases over
the level close to $120 million recorded over 2002.
He said inward private remittances which include inward
transfers by embassies, non-governmental organisations and non-resident, abroad
totalled $252.2 million for January and February.
On the value of the cedi against major international currencies,
Dr Acquah said the cedi recorded a cumulative depreciation of 1.9 per cent
against the dollar and 8.8 per cent against the euro.
He said gross international reserves declined from $640
million to $603 million at the end of February, which he said, is equivalent to
2.3 months of projected imports. – Graphic account
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