The economist Dr Adu Sarkodie has cast doubt on forecasts of Ghana’s economic growth and overall gross domestic product (GDP) after an increase in the monetary policy rate on Monday (22 November 2021).
However, he explained that the increase will help stabilise and reduce the depreciation of the Ghana cedi and further reduce the rate of inflation.
“The overall impact of this policy rate is that the government expects a reduction of the depreciation of the cedi, which will fuel exports and a reduction in the inflation rate. But it’ll have an adverse effect on the economic growth of this country. So, it puts the government’s projection of the GDP growth rate into some doubt,” he said.
The monetary policy committee (MPC) of the Bank of Ghana (BoG) has increased the policy rate by 100 basis points from 13.5% to 14.5 5%.
The policy rate signals the rate at which the central bank lends to commercial banks in the country.
In May 2021, the BoG lowered the policy rate by 100 basis points from 14.5% to 13.5%. It was the first time in a year that the central bank had lowered the policy rate.
The central bank has since then maintained the policy rate at 13.5% on two consecutive occasions.
Projected growth for 2022
During his presentation of the 2022 Budget Statement and Economic Policy, Ofori-Atta said the government expects total revenue for next year to increase by 20% of GDP, against 16% of GDP for 2021.
“Total revenue and grants for 2022 are projected to rise to GHC100.5 billion, equivalent to 20.0% of GDP, up from a projected outturn of GHC70.3 billion, equivalent to 16% of GDP for 2021,” he said
“Domestic revenue is estimated at GHC99.5 billion and represents an annual growth of 44% over the projected outturn for 2021,” he said.
Nicholas Brown
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