Accra:Ghana's gross international reserves currently provide about 4.2 months of import cover, but the Bank of Ghana (BoG) has warned that the country's external position could face increased pressure in the third quarter.
According to Ghana Web, Governor Dr. Johnson Asiama, speaking at the 132nd Monetary Policy Committee meeting, identified several factors that could weaken Ghana's external buffers. These include a projected current account deficit, a possible decline in reserves, and the suspension of gold exports by the Ghana Gold Board since mid-August.
Dr. Asiama emphasized the need for close monitoring of these developments, particularly as the demand for foreign exchange typically increases during the fourth quarter. Rebuilding reserves will be a key priority for the Bank in the coming months, with the outlook for Ghana's reserves expected to feature prominently in the MPC's deliberations.
Inflation has also become a growing concern, with headline inflation rising from 3.2% in March to 5.0% in August, a 1.8 percentage-point increase over five months. Although inflation is below the lower limit of the BoG's medium-term target range, the recent upward movement demands attention.
The Governor noted that policymakers must assess whether the expected rise in inflation will be temporary or could become more persistent, potentially influencing inflation expectations. The MPC is considering the interaction between renewed inflationary pressures and the country's weakening external position.
Additionally, the Committee will evaluate whether the current policy rate of 14% remains suitable amid changing domestic conditions and developments in the global economy. This decision will be closely watched by businesses and financial markets for indications of the Bank's approach to balancing inflation, reserve accumulation, and economic growth.