The Bank of Ghana is warning that growth may remain below potential levels on account of rising cost of living amid significant uncertainty in the outlook.

The Bank’s Composite Index of Economic Activity (CIEA) has already contracted year-on-year in the third quarter, on the back of weakened consumption, trade, and construction activities. It contracted by 1.2% in September 2022, compared with 11.1% growth, a year earlier.

The main indicators that dragged down the Index were domestic VAT, ports activity, and cement sales.

It disclosed in the Monetary Policy Report that these trends signal that growth may remain below potential levels on account of rising cost of living amid significant uncertainty in the outlook.

“Both business and consumer sentiments continue to soften and remain at low levels. Despite these trends, private sector credit growth, in real terms, remains relatively strong and provides scope for the real sector to continue on the path of sustaining a positive outlook for economic activity”, it stated.

We need steadfast implementation of debt exchange operation - BoG

Meanwhile, the Central Bank says the broad expectation is for steadfast implementation of the debt exchange operation measures to foster confidence, improve the debt-metrics and complement the current monetary policy stance at tackling current inflationary pressures.

The 2023 Budget Statement has committed to reset fiscal policy and firmly place it on the course of fiscal consolidation.  New revenue measures and expenditure rationalization measures have also been announced.

“To guarantee debt sustainability over the medium term, a debt exchange operation is proposed to be undertaken to support the consolidation agenda”, the Central Bank mentioned.

The broad expectation is for steadfast implementation of these measures to foster confidence, improve the debt-metrics and complement the current monetary policy stance at tackling current inflationary pressures.