BoG Eases Policy Rate To 20%

Dr Ernest Addison, BoG Governor

The Central Bank, at its 79th regular meeting of the Monetary Policy Committee (MPC) recently, has reduced its policy rate by 100 basis points to 20 percent.

Dr Ernest Addison, Governor of the Central Bank, who disclosed this to journalists at a press conference yesterday in Accra, said the reduction was occasioned by waning threats to inflation and a positive economic outlook.

Previously, the rate was at 21 percent.

Improved business confidence

Dr Addison pointed to the bank’s latest confidence surveys conducted in October which pointed to improved business and consumer confidence in the economy.

“These reflect the favourable prospects for industry, household’s financial situation and improvement in the general economic environment.”

Export prices

According to him, prices of Ghana’s major export commodities continued to firm up in the international commodities market.

“In particular, crude oil prices have strengthened in recent weeks, reflecting geopolitical tensions, supply constraints and strong demand. Also, the price of gold moderated slightly, though still high, as the global economic recovery gained traction. However, cocoa prices remain depressed by excess supply due to favourable weather patterns across the West African sub-region.”

Economy expanding

He said developments in the real sector showed an expanding economy.

“Provisional real GDP estimates from the Ghana Statistical Service (GSS) showed that the economy grew by 6.6 percent and 9.0 percent in the first 3 and second quarters respectively, and was projected to end the year at 7.9 percent driven mainly by the oil sector. Non-oil GDP growth was 3.9 percent in the first quarter and 4.0 percent in the second quarter.”

Meanwhile, the Bank’s updated Composite Index of Economic Activity recorded an annual growth of 3.2 percent in September 2017 compared to 3.1 percent in the same period last year.


The banking sector, he said, remained liquid and solvent although non-performing loan ratio remained high.

Total asset base of banks increased to GH¢88.9 billion in October 2017, representing an annual growth of 20.5 percent compared to 23.7 percent same period last year.

The growth in assets was mainly funded by deposits which went up by 18.2 percent on a year-on-year basis.

“The quality of banks’ loan portfolio has improved marginally since the last MPC meeting. The Non-Performing Loans (NPLs) ratio declined from 21.9 percent in August to 21.6 percent at the end of October. Similarly, NPL ratio net of provisions declined from 11.3 percent to 10.5 percent. The industry’s Capital Adequacy Ratio (CAR) averaged 15.0 percent at the end of September 2017, significantly above the 10.0 percent prudential requirements.”


Total public debt stood at GH¢138.9 billion (68.6% of GDP) at the end of September 2017 from GH¢138.1 billion (68.3% of GDP) in August 2017.

Of the total, domestic debt declined to GH¢63.3 billion while external debt went up to GH¢75.5 billion.

Of the domestic debt, the share of the 91-day and 182-day treasury bills declined from 16.6 percent in December 2016 to 8.4 percent in October 2017.

On the other hand, the share of long dated instruments (7 – 15 years) went up from 0.8 percent in December 2016 to 5.1 percent at the end of October 2017.

By Samuel Boadi