BoG projects 3% growth for 2023

By Isaac AIDOO, Accra

Governor of the Bank of Ghana (BoG), Dr Ernest Addison is projecting a 3 % growth target for Ghana by end of 2023, double the target projected by the International Monetary Fund (IMF) under Ghana’s Extended Credit Facility (ECF) programme.

Dr Addison told journalists in Accra during a Monetary Policy Committee (MPC) press briefing yesterday that his outfit would meet the visiting IMF team to discuss government’s improving economic indicators which he was confident would culminate in doubling the 1.5% growth target the programme had projected.

“This is the opening meeting with the IMF and we have to convince them that from the indicators that we are seeing, we think that the 1.5% projection is too low,” he said.

The Governor indicated that government would provide the evidence to the IMF team which evidence will include data from the Ghana Statistical Service(GSS) and the  real composite index of economic activity,  “that we have seen which makes us think that we will do better than the 1.5% that the fund is projecting.

Dr Addison argued that the major economic indicators were improving and was confident the economy would soon be set on a growth path.

Inflation, Dr Addison noted was trending downwards and “ as we continue to make progress on that front, we expect interest rates to correct and then the interest rates would also be moving in the right direction.”

The Bank has projected inflation at 29% by close of 2023. Dr Addison reiterated his 29% projection, saying, “ the environment has stabilised so the situation cannot get any worse than where it is.”

He maintained that “we are beginning to see some evidence which is pointing at different numbers and we are ready to discuss those with the IMF, including  the outlook of 29% that we are projecting for the rest of the year, and what that means for monetary policy going forward,”

The Institute of Economic Affairs (IEA) in May this year described the economic growth projections for Ghana under the $3 billion ECF programme of the IMF as “unambitiously low”.

Under the programme, Real Gross Domestic Product (GDP) is projected to grow at 1.5% in 2023, 2.8% in 2024, 4.7% in 2025, 5% in 2026 and 5% in 2027.

Real GDP per capita is also projected to grow at negative 1.1% in 2023, 0.2% in 2024, 2.1% in 2025, 2.3% in 2026 and 2.4% in 2027.

IEA observed that the projections would take the country at least 20 years to double its real GDP per capita from the current $2,500 to $5,000.

Director of Research at the Institute, Dr John Kwakye wondered, “when are we going to be able to close the gap with those who currently have real GDP per capita of $30,000-50,000?

“We have abundant natural and human resources,“ he added,  projecting a growth target of  between 7 to 10% over  the next five years for the economy.

With the improving conditions, Dr Addison announced the MPC had maintained the benchmark interest rate at 30% citing lower inflation, a stable exchange rate and relatively strong economic growth.

Banks profitability remains robust

According to the Governor, banks’ profitability remained strong in the first eight months of 2023.

The industry recorded profit-after-tax of GH¢5.7 billion, representing a 41.4% annual growth, compared with 26.5% growth recorded last year. Specifically, net interest income increased sharply by 37.9% to GH¢13.5 billion, while net fees and commissions went up by 27.3% to GH¢2.9 billion.

The industry’s total assets increased to GH¢244.7 billion in August 2023, from GH¢204.6 billion in August 2022.

The growth in banks’ assets was funded by deposits, which grew sharply by 38.9% to GH¢189.9 billion from GH¢136.7 billion in the same comparative period.