Ghana’s current account worsens
By Elorm Desewu
Figures from the Bank of Ghana, (BoG), show that Ghana’s current account has worsened further for the first half of 2022 primarily due to higher net outflows from the income and services account, in particular, repatriation of profits and dividends, which offset the gains in the trade account.
Notwithstanding the significant improvement in the trade surplus, the current account deficit widened to US$1.1 billion, compared with US$762.0 million recorded in the same period of 2021.
The capital and financial account recorded significant portfolio reversals and net outflows in the other investment accounts, as well as lower foreign direct investments. The combined effect of the widened current account deficit and higher net outflows in financial account resulted in an overall balance of payments deficit of US$2.5 billion at end-June 2022, compared with a surplus of US$2.4 billion in the same period last year, according to BoG.
At the end of June 2022, the trade account recorded a surplus of US$1.4 billion, representing a year-on-year growth of 62.1 percent.
The improvement stemmed from higher export receipts from crude oil, gold, and non-traditional exports.
Crude oil exports went up by 61.3 percent year- 8 on-year to US$42.8 billion, non-traditional exports increased to US$1.4 billion, up by 21.7 percent, and gold exports was US$3.0 billion, higher by 13.1 percent, respectively. However, earnings from cocoa beans declined by 31.0 percent, mainly due to a 28 percent reduction in production volumes.
Merchandise exports for the first half of 2022 reached US$9.0 billion, compared with US$7.6 billion for the same period in 2021.
Total merchandise imports amounted to US$7.6 billion, up by 11.9 percent on year-on-year basis, and driven mainly by oil import bill. Oil and gas imports increased by 87.8 percent to US$2.3 billion, while non-oil imports dipped by 4.7 percent to US$5.3 billion at the end-June 2022.
Gross International Reserves declined 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 (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. In the corresponding period of 2021, the Ghana cedi depreciated by 0.6 and 0.7 percent against the US dollar and the Pound Sterling, and appreciated by 3.3 percent against the Euro.