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Ghana’s Reserves: Finance Committee and BoG data conflicting

Adnan Adams Mohammed

In the wake of International Monetary Fund (IMF) engagement, as data credibility is key to ascertain true state of the economy, the Bank of Ghana and the Finance Committee of Parliament have released conflicting data on the country’s international gross reserves.

The Finance Committee and the Central Bank have released different figures purporting to be the current level the country’s reserves as US$3.0 billion and US$7.6 billion respectively.  

This is a disturbing development which might affected all data credibility that government will be submitting to the IMF team during the data reconciliation stage of the engagement for a possible ‘balance of payment support’. Aside, data credibility acceptance fear by the IMF, the reserve levels have great influence on the forex exchange rate as a low reserve level promote rush for the US dollar which results in hoarding and black-market control. A report of the Finance Committee on a Loan Facility Agreement between government of Ghana and the AfreximBank for a loan of up to US$750 million released, last week, indicated that, the country would have gone bankrupt without approval of the loan amount.

“These challenges are further exacerbated by the rapidly dwindling reserves of the Bank of Ghana which has declined from $9 billion to about $3 billion”, the report of revealed. “With a monthly demand of over $600 million, the reserves of the central bank may be exhausted in a few months if urgent steps are not taken to shore up the countries reserves.” 

Contrary, a Bank of Ghana document as published by Joy Business shows that, Ghana’s reserves has declined from $8.1 billion in May 2022 to $7.6 billion in June 2022, a 3.4 months of import cover.

This has necessitated the Chairman of Parliament’s Finance Committee, Kweku Kwarteng, expected to make a statement on the floor of parliament about the committee’s report on the AfreximBank Loan Agreement and Ghana’s International Reserves.

The committee report further revealed that, the Finance Minister, Ken Ofori-Atta, explained to parliamentarians that, the country needed this loan amount to shore up the reserve position of the Central Bank.

“The Minister further indicated that, there is an urgent need for the government to secure the $750 million facility to help shore up the reserve position of the Bank of Ghana to avoid the country defaulting on its international commitments and also to avoid the country moving into insolvency.”

The Minister said despite the facility seeming expensive in its face, it’s a reflection of the overall market conditions.

The report mentions 11 projects the loan amount will be used to finance including the Ofankor – Nsawam road, the Suame Interchange and local road network project as well as the completion of the flower pot interchange.

Parliament has since approved the loan agreement between the government of Ghana and the African Export-Import Bank (AfreximBank).

Ghana’s Gross International Reserves dipped to $8.34 billion in April 2022, from $9.70 billion recorded in December 2021, data from the Bank of Ghana has revealed.

This was equivalent to 3.7 months of import cover.

In January 2022, the country’s Gross International Reserves stood at $9.76 billion, about 4.4 months of import cover.

It further dropped to $9.54 billion (4.2 months of import cover) in February 2022 and $8.81 billion (3.9 months of import cover) in March 2022.

According to the figures on External Sector Developments, the Heritage and Stabilisation Funds in April 2022 stood at $939 million. This is compared with  $971.4 million in December 2021.

Ghana records $1.33bn trade surplus in April 2022

Ghana recorded a trade surplus of $1.33 billion in the first four months of 2022, higher than the $1.107 billion recorded in the entire 2021.

This is approximately 1.9% of Gross Domestic Product (GDP).

According to the Bank of Ghana Summary of Economic and Financial Data, total exports in the 4-months of 2021 was $6.10 billion. This is against total imports of $4.77 billion.

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