BoG vows to maintain economic stability

THE Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has reaffirmed the central bank’s commitment to maintaining a robust and well-coordinated monetary-fiscal policy mix, in close collaboration with the Ministry of Finance, to ensure sustainable economic growth and a stable macroeconomic environment.

Dr. Addison made the pledge during a joint press conference with the Ministry of Finance, marking the conclusion of the third International Monetary Fund (IMF) review mission in Accra.

Speaking to a gathering of policymakers, financial experts, and media representatives, Dr. Addison emphasized that the Bank of Ghana remains fully committed to managing inflation, with a clear focus on bringing the rate down within its single-digit target.

“The Bank of Ghana is fully committed to bringing inflation back within our single-digit objective, and presently, the inflation outlook remains broadly positive,” he remarked. Despite recent fluctuations in inflation, the Governor expressed optimism that the Bank’s sustained efforts will stabilize inflation over the medium term.

Dr. Addison provided a detailed overview of Ghana’s inflationary trends, noting that inflation had gradually eased from 25.8% at the end of the first quarter of 2024 to 22.8% in the second quarter, and further down to 20.4% by the end of August.

However, a slight uptick to 21.5% in September, attributed to a sharp rise in food prices, was observed. Despite this increase, the Governor reassured the public that such fluctuations were not uncommon and should not detract from the Bank’s overall progress in reducing inflation.

“The key is in the trends,” Dr. Addison stated. “While there may be intermittent upticks in inflation, the Bank of Ghana will ensure that we stay the course of sound macroeconomic policies to achieve our long-term objectives.”

He further stressed that the central bank would continue to monitor inflationary pressures closely, making necessary adjustments to the monetary policy stance to keep inflation within the target range.

A key highlight of Dr. Addison’s address was his pledge to work closely with the fiscal authorities to deliver a balanced policy approach. “The Bank of Ghana and the Ministry of Finance will implement an appropriate monetary-fiscal policy mix to deliver sustainable growth in a stable environment,” he affirmed.

This commitment underscores the importance of coordination between monetary and fiscal policies to achieve macroeconomic stability in a challenging global economic landscape.

In addition to inflation control, Dr. Addison spoke about the Bank’s continued focus on building foreign exchange reserves to at least three months of import cover. This, he explained, is essential for strengthening the country’s external sector and maintaining a stable exchange rate.

The Governor credited the success of this policy to a stronger performance in key sectors such as gold production and remittances, as well as growing confidence in the economy. “Our Gold for Reserve programme has provided the economy with much-needed support, offsetting lower outputs from the cocoa sector,” he noted.

The Governor also emphasized the central bank’s commitment to ensuring exchange rate flexibility in the management of the foreign exchange market. This approach, he explained, is intended to help mitigate external shocks that could destabilize the economy.

“We remain committed to maintaining flexibility in the foreign exchange market to address emerging challenges and ensure stability,” Dr. Addison added.

Addressing the financial stability of the banking sector, Dr. Addison noted that the Bank of Ghana continues to monitor the progress of banks in their post-debt exchange recapitalization efforts.

He reported that most banks are ahead of schedule in this process, which is a positive sign for the country’s financial sector. The BoG’s focus on financial stability, he said, is a critical part of ensuring the overall health of the economy.

Dr. Addison reaffirmed the Bank’s dedication to monitoring emerging risks in the economy and responding with prudent policy measures to safeguard price and financial stability.

“The Bank of Ghana will continue to monitor emerging risks in the economy and respond with prudent policy interventions to protect our key objectives of price and financial stability,” he stated.