BoG awaits US$2.05b to shore up reserves
By Elorm Desewu
The Bank of Ghana is expecting a total of US$2.05 billion in the next couple of months to shore up the country’s Gross International Reserves.
Already, the US$750 million loan from the African Export Import Bank (AFREXIMBANK) has hit the accounts of BoG and now waiting for the US$1.3 billion cocoa syndication loan.
The BoG is hopeful that this money would help the central bank to build a strong reserves, imrpove on the country’s balance of payment and also stabilize the local currency, the cedi which has continue to depreciate since the beginning of this year.
it is likely that the country reserves would hit a record high of US$9.75billion if all the monies hit the central bank’s account.
The Gross International Reserves declined significantly to US$7.7 billion at the end of June 2022, equivalent to 3.4 months of import cover, compared with US$9.7 billion which was 4.3 months of imports at the end of December 2021.
The decline in the reserve buffer, alongside unfavourable global financing conditions, exerted significant pressures on the foreign exchange market. On the interbank forex market, the
Ghana Cedi cumulatively depreciated against all the three major currencies; 19.2 percent against the US dollar, 8.8 percent against the Pound Sterling, and 10.0 percent against the Euro as at July 20, 2022.
Parliament approved a plan by the government to borrow up to $750 million from the African Export-Import Bank for the 2022 budget.
The loan proceeds are expected to make room for the country to reduce domestic borrowing and put it in a stronger position to support the local currency.
The government is on course to seek a funded program with the International Monetary Fund after a decision early in the year to cut budget expenditures by as much as 30% failed to stem a sell-off in its international bonds.
Ghana’s recent debt woes were caused by a sweeping clean-up of the banking sector, energy-sector loans, the impact of the coronavirus pandemic and the fallout from Russia’s invasion of Ukraine, driving its debt ratio to 78.3% of gross domestic product at the end of June from 76.6% at the of December, 2021. The country hopes to receive about $3 billion from the IMF program to enhance the home-grown policies it is already implementing.