Currency outside banks dropped significantly in the last quarter of last year, signaling low money in circulation during the period, the Summary of Economic and Financial Data of the Bank of Ghana has revealed.

This may have affected aggregate supply and demand during the last quarter of 2021 and subsequently the rate of economic growth.

According to the data, currency outside banks grew by 10.3%, 1.1% and 4.4% in October 2021, November 2021 and December 2021 respectively.

It begun the year with a growth of 46.3% in January 2021, but fell to 25.2% in June 2021. 

It further went down to 20% in July 2021 and subsequently in August (18.3%) and September (14.7%).

The numbers for the last quarter of 2020 when the Presidential elections took place were no different from the first four months of 2021. 

The reduction in money supply could slow the country’s post covid-19 economic recovery programme. 

However, the release of the 2021 Gross Domestic Product by the Ghana Statistical Service later in the year will determine whether this was a true reflection of the 4th quarter figures.

In most part of last year, government struggled to borrow from the treasury market, as quiet a number of T-Bills sale were undersubscribed. This was as a result of liquidity tightening on the interbank market.

Growth of demand deposits, usually current and call accounts also witnessed a decline in the last four months of this year. It grew by 16.5%, 19.4%, 19.6% and 19.4% in September 2021, October 2021, November 2021 and December 2021 respectively.

This is compared with 36.0%, 28.0%, 28.3%, 22.0%, 20.6% and 25.2% in January 2021, February 2021, March 2021, June, 2021, July 2021 and August I2021 respectively.

Importantly, banks prioritized demand deposits because it comes with virtually no cost. It rather support profitability of the financial institutions.

For Savings & Time Deposits, it also witnessed significant decline in growth in the last quarter of last year.