Monetary Policy Set To Support Long Term Economic Stability

The efforts of the Bank of Ghana to maintain price and financial stability and the impact that those efforts have on confidence in the broader economy were among the issues explored in a wide-ranging interview that Ernest Addison, the Central Bank’s Governor, gave recently to Oxford Business Group (OBG).

 Addison said that while the potential impact of external shocks on Ghana’s relatively small and open economy has heightened the importance of monitoring risks, the outlook for the country is encouraging. Addison expects an increase in foreign reserves and a reduction in year-end inflation of 11.2%.

“Domestic pressures on the cedi are moderate, although we anticipate some seasonal demand pressures from importers as the Christmas holidays approach,” he told OBG’s team. “However, foreign currency inflows from cocoa sector syndicated loans – which are received in the last quarter of each year – should moderate those pressures.”

One aspect of the central bank’s mandate involves improving financial inclusion and transaction efficiency, which it is aiming to do through the expansion of cashless methods: mobile money, e-commerce and card usage. Addison told the global research and consultancy firm that Ghana had made “significant progress” in facilitating the setting up of the payment technology required and introducing the regulations to govern them.

“The Electronic Money Issuers guidelines allow for the licensing and authorisation of non-bank institutions to work alongside banks in order to provide innovative e-products,” Addison told OBG. He added that encouraging full adoption at retail payment stage marked the “final challenge” in implementation.

The full interview with Addison will appear in The Report: Ghana 2018, OBG’s forthcoming publication on the country’s economy. In the interview, Addison gives his views on a number of issues, ranging from inflation targeting and borrower risk to expectations in the short to medium-term for the exchange rate.

OBG’s interview with Addison comes as Ghana looks to boost FDI and increase the role of the private sector in a bid to reach a target of 6.3% economic growth. The goal is an ambitious one, against a backdrop of high inflation, a sizeable fiscal deficit and GDP expansion of just 3.5% in 2016, a 25-year low.

 The Report: Ghana 2018 will explore these and the many other developments taking place across the national economy. It will be a vital guide to the many facets of the country, including its macroeconomics, infrastructure, banking and other sectoral developments. The publication will contain a detailed, sector-by-sector guide for investors, alongside contributions from leading personalities, including Nana Akufo-Addo, President of Ghana, Mahamudu Bawumia, Vice-President of Ghana, Ken Ofori-Atta, Minister of Finance and R. Yofi Grant, CEO, Ghana Investment Promotion Centre. The report will be available in print and online.

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