By Toma Imirhe
Ghana’s ongoing macro-economic turnaround is finally being rewarded by significant improvements in its key economic performance indicators and this in turn is engendering strongly growing confidence in the fortunes of businesses and consumers alike, going forward.
Data released by the Bank of Ghana last week, following the latest meetings of its Monetary Policy Committee, points to lowering inflation, fiscal discipline, the tight monetary policy stance and favourable external sector developments as key ingredients behind the country’s improving economic performance.
Headline inflation has declined consecutively in the first four months of the year by 2.6
percentage points to 21.2% in April 2025, driven by the lowering of both food and non-food inflation.
“A confluence of factors, including tight monetary policy stance, stepped-up liquidity sterilization efforts, downward revisions in ex-pump petroleum prices, and exchange rate stability havesupported the gradual decline in inflation” BoG Governor, DrJohnson Asiama explained last week when delivering the decision of the Monetary Policy Committee to retain its benchmark Monetary Policy Rate at 28%. “The Bank’s core inflation measure, which excludes energy and utility prices, as well as inflation expectations of consumers, businesses, and the banking sector point to easing inflationary pressures.”
Similarly, the recently installed President John DramaniMahama administration has reigned in the fiscal slippages that its predecessor government often fell prey to.
“Fiscal policy implementation so far has been broadly aligned with the 2025 Budget. In the first
quarter of 2025, provisional data on budget execution indicated that although revenues fell below target, some expenditure rationalisation took place to accommodate the revenue shortfall” affirmed Dr Asiama. “The primary fiscal balance (on commitment basis) has also improved in the first quarter. Continued maintenance of a strict fiscal consolidation for the 2025 Fiscal Year will further strengthen the ongoing recovery process and firm up macroeconomic stability.”
Key to the ongoing turnaround has been the external sectorwhich has continued to improve, with a record provisional current account surplus of US$2.1 billion in the first quarter of 2025, driven mainly by higher prices and increased production volumes of gold and cocoa, and strong remittance inflows. The current account surplus, together with net outflows in the capital and financial account, resulted in an overall Balance of Payments surplus of US$1.1 billion. The strong external performance resulted in significant reserve accumulation. Gross International Reserves (GIR) amounted to US$10.7 billion in April 2025, equivalent to 4.7 months of import of goods and services.
“ Broadly, the external sector outlook remains favourable, largely anchored on expectations of increased gold and cocoa export receipts, as well as inflows from remittances” enthused Dr Asiama last week. “The cedi has rebounded strongly against the major trading currencies driven by a combination of factors, including tight monetary policy stance, ongoing fiscal consolidation, record reserve accumulation, strict enforcement of foreign exchange market rules, and improved marketsentiment.”
Indeed in the year to May 21, 2025, the cedi had appreciated against all the major currencies
– 24.1 percent against the US dollar, 16.2 percent against the British pound, and 14.1 percent
against the euro.
“The latest forecast points to continued easing of inflationary pressures on the back of tight
monetary policy stance, exchange rate stability, and fiscal consolidation” the BoG Governor enthused. “Inflation is expected to ease faster towards the medium-term target in the first quarter of 2026 as opposed to the second quarter as earlier envisaged, barring unanticipated shocks.”
This looks set to deliver palpable rewards. The BoG’s high frequency real sector indicators point to a sustained pickup in economic activity. The updated Composite Index of Economic Activity increased by 2.3 % year-on-year in March 2025, compared with 1.0% over the same period last
year, mainly driven by exports, credit to the private sector, and construction activities. In addition, the Ghana Purchasing Managers’ Index rose above the 50-benchmark as output and new orders increased, signaling improved growth prospects. Based on easing inflationary pressures and optimism about macroeconomic conditions, the latest confidence surveys conducted by the BoG showed significant improvement in consumer and business expectations going forwards, the highest in the last seven years.
