By Toma Imirhe
A combination of surging gold prices on one side and the reduced availability of foreign exchange due to the closure of Ghana’s access to international capital markets, coupled with the inordinate cost of international trading currencies, have supported an improvement in the country’s merchandize trade performance to a long term surplus position in 2024. Last year, Ghana recorded a merchandise trade surplus of US$4,980.0 million, which was 46% higher than the surplus of US$2,694.5 million earned in 2023. This helped to support both a primary account balance and an improved balance of payments position, illustrating the fact that the intense pressure on the cedi’s exchange rate is the result of portfolio investment and debt servicing outflows, lac k of confidence in the national currency by currency traders and to a lesser extent forex leakages through illegal transfers abroad of monies and natural resources, particularly gold and cocoa.
The import bill has resumed its upward trend, after recording rare declines in 2023, following the cedi’s sharp depreciation which had made imports less competitive against locally produced alternatives. In 2024, the overall import bill rose by 8.7% to US$15,231.2 billion, up from US$14,008.5 in the previous year. Importantly though, the increase in the oil import bill was negligible, rising to US$4,481.7 million last year, from US$4,475.3 million in the previous year. Indeed the rise in import value came almost entirely from non-oil imports of intermediate production inputs and finished goods which increased by 12.9% from US$9,533.2 million in 2023 to US$10,759.5 million in 2024, as the economy enjoyed faster than anticipated growth during the year.
But the main driver of the improved overall merchandise trade performance was the substantial 21.1% increase in Ghana’s exports last year to US$20,221.0 million, up from US$16,703 million in 2023. However this increase was entirely fuelled by a 53.2 % increase in gold exports from US$7,600.8 million in 2023 to US$11,641 million in 2024. Conversely, oil exports stagnated in value, its US$3,868.3 million hardly higher than the US$3,837.3 million earned in the previous year. Cocoa fared even worse, earning just US$1,696.1 million in 2024, down 21.2% from the US$2,153.0 million generated in 2023.
”The external sector position improved significantly in 2024 on account of increased trade surplus and lower capital outflows” Dr Ernest Addison, Governor of the Bank of Ghana has enthused. “The current account recorded a provisional surplus of US$3.8 billion, compared with a surplus of US$1.4 billion in 2023, driven mainly by higher gold and crude oil exports, as well as strong remittance inflows” he has further revealed. “This, together with a lower net outflow of US$588 million in the capital and financial account, relative to a net outflow of US$733 million in 2023, contributed to an improved balance of payments position for the year. The lower outflow in the capital and financial account reflects Ghana’s successful debt restructuring and the International Monetary Fund’s Extended Credit Facility programme. These favourable developments resulted in an improved balance of payments surplus of US$3.1 billion, compared to a surplus of US$518 million recorded in 2023.”
This strong external sector performance in last year means that international reserves build-up was faster than programmed in 2024. Gross International Reserves (GIR) increased to a stock position of US$8.98 billion at the end of 2024 and was enough to cover 4.0 months of imports, exceeding targets under the IMF programme. This compares favourably with the end-December 2023 GIR of US$5.92 billion (2.7 months of imports).
“In the outlook, the external sector is expected to remain strong as commodity prices remain favourable amid improvements in production” predicts Dr Addison, based on the central bank’s research and the Monetary Policy Committee’s assessment. “Overall, while the external
sector conditions are expected to provide an anchor to exchange rate stability, key risks in the outlook including challenges in the energy sector will have to be closely monitored.”
