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BoG increases prime
rate at 13.5%
Accra, Nov. 06, Ghanadot/GNA - The
Monetary Policy Committee (MPC) of the Central Bank on
Tuesday increased the prime rate from 12.5 percent to 13.5
percent citing reasons such as rising food and fuel prices
which posed threat of taming inflation.
Dr. Paul Acquah, Governor, Bank of Ghana and Chairman of the
Committee who announced this on Tuesday said, "if the
economic fundamentals of the country have not been strong,
the economy will not have been that resilient and robust in
terms of GPD growth," but explained that the balance of
risks informed the decision.
He said the economy was resilient to the energy supply
interruptions and load shedding and rising fuel prices
associated with increases in oil prices on the international
market but said strong fiscal discipline and monetary
tightening were required.
Dr Acquah said the Bank's Composite Index of Economic
Activity (CIEA) picked up during the third quarter of 2007
rising from 15.2 points (5.10 percent) over the June 2007
level of 299.43 to 314.71 points in September.
He said individual components that underpinned this growth
over the June 2007 were recorded in port activities, sales
of key manufacturing companies, credit to the private
sector, imports, tourists' arrivals and domestic VAT
collections.
The Governor however, added that, this was off-set
by decreases in cement sales, employment and exports.
Provisional data available for the third quarter of 2007, he
said showed that from September 2006 to September 2007
banks' credit to the private sector and public institutions
has increased by 1,348.5 million Ghana cedis (59.9 percent)
to 3,600.3 million Ghana cedis compared with an increase of
542.1 million Ghana Cedis (38.9 per cent) over the same
period in 2006.
Dr Acquah said the private sector's share in the credit was
77.5 per cent (1,045.4 million Ghana Cedis) mainly an
account of the services sector which absorbed 29.1 percent
of the credit flow, followed by electricity, gas and water
(16.4 per cent) Miscellaneous (including personal loans and
mortgage) 15.9 percent and import trade of 10.6 percent.
He said annual inflation adjusted credit over the same
period was 44.4 percent higher compared with 17.9 percent in
the corresponding period of 2006 noting that the growth in
credit was funded mainly by deposits.
Dr Acquah said the oval developments in the banking system
through September 2007 showed a strong assets growth of 56.2
per cent to 7,114.1 million Ghana Cedis (51.7 Percent of
GDP) compared with 28.4 percent the same period in 2006
(39.6 percent of GDP).
He said the average base rate quotations of the banks
remained generally unchanged at 19.36 percent by the end of
the third quarter within the range of 18.000 and 21.45 after
it was revised downwards by 1.41 basis points in the first
quarter.
Similarly, he said lending rate of banks remained unchanged
within the range of 15.0 percent and 33.5 percent in the
year through September 2007.
He said the quality of the banking industry's loan portfolio
remained strong with Non Performing Loans (NPL) declining
from 7.0 percent at the end of June 2007 to 6.1 percent in
September.
In the year-on-year terms, Mr Acquah said provisional data
indicated that broad money (M2+) grew by 33.6 percent to
4962.6 million Ghana cedis at the end of September this
year.
He said foreign exchange component of broad money of it
increasing by 30.0 percent to the equivalent of 1,124.9
million dollars at the end of September and accounted for
21.1 percent.
The Governor said of the 638.3 million Ghana Cedis total
budget deficit recorded in 2007, 426.2 million Ghana Cedis
was financed through domestic borrowing and 211.5 million
Ghana cedis foreign sources including 70 million Ghana Cedis
from HIPC debt relief.
He said total public domestic debt at the end of September
stood at 3,588.9 billion Ghana Cedis, an increase OF 57.9
percent over the stock position at the same period in 2006.
On the balance of payment position, Dr. Acquah said a
deficit of 197.73 million dollars was recorded during the
quarter compared with a surplus of 210.81 million dollars
during the second quarter.
He said private inward transfers from January to September
was 4.78 billion dollars which represented 13.4 percent
increase over those for the corresponding period in 2006.
At the financial exchange front, the Governor said
transactions by banks and forex bureaux over the first three
quarters of 2007 amounted to 6.22 billion dollars, which
29.0 percent increase over purchases and sales over the same
period in 2006.
GNA
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