Economy

Ghana’s total export earnings hit $9.6 billion

Ghana’s total earnings from gold, Cocoa and crude oil have declined marginally ending August 2020.

According to data released by the Bank of Ghana, it declined from 10.5% billion in August 2019 to $9.6 billion in August 2020.

This was contained in the September 2020 Economic and Financial Data released by Bank of Ghana after its Monetary Policy Committee met from September 23 to 25.

Breakdown of the Export Earnings

According to the Bank of Ghana Data, earning from Gold ending August 2020 stood at 4.3 billion dollars compared to 4.1 billion cedis secured by the country in August 2019.  

Cocoa as at the end of August this year has brought in 1.7 billion dollars compared to 1.5 billion secured, while Crude Oil exports, decreased from 3 billion dollars in August 2019 to 1.9 billion dollars in 2020.

However, when you look at the import side, the country’s total import bill ending August this year stood at $8.3 billion compared to $9.1 billion in August 2019.  

It looks like the declining oil import bill might have contributed to this. 

Government spent $1.2 billion to finance oil imports in 2020, compared to $1.7 billion in August 2019. When it came to other imports, $7 billion has been spent ending August compared to $7.4 billion.

The development shows that the country’s import bill declined by about 800 million dollars from August last year to August2020.

This means that Ghana’s Trade Balance, as at the end of August 2020 stands at $1.3 billion, compared to 1.4 billion dollars in 2019.

Based on the Bank of Ghana data, our capital and financial accounts balance as at the end of August 2020 stood at $437 million.

Implications of declining export earnings   

The marginal decline in Ghana’s total export earnings could impact on the country’s international reserves. That is how much the Bank of Ghana will have in its foreign currency accounts to back the Ghana cedi and finance the country’s imports over a given period.

However, it appears the outlook is not that bleak or bad for the country and there is the likelihood of things improving.  This is because, from the Bank of Ghana data, it was clear that declined earnings from crude oil was one of the main reason for the drop that we realized from the exports, gold, cocoa and oil.

But with projections of crude oil picking up, because some economies opening up, following their ability to manage the spread of Covid-19. Oil prices are expected to rebound again.

Also, gold prices are expected to pick up strongly after doing so well, during these Covid-19 times. So it is likely Ghana’s situation in terms of earnings from crude, gold and cocoa may pick up strongly by the end of the year. 

The Data also shows that earnings have started picking up from March this year.

Ghana’s International Reserve Position 

 Ghana’s gross International Reserve Position as at the end of August this year stood at $8.5 billion compared to 8.2 billion dollars in the same period for last year and 8.4  billion dollars ending December 2019.  

The Total Gross International Reserves should be able to cover 4 weeks of import cover. However, when you look at the data from the beginning of 2020, you realise that it reached slightly over $10 billion in February and started declining to hit  8.5 billion cedis in August 2020.  

Ghana’s total Gross International Reserves of $765 million is from the Heritage and Stabilization Fund. However, the net International Reserves stands at $4.5 billion ending August 2020.