Governor’s Speech at Ghana Economic Forum 2021






October 18-20, 2021

Kempinski Hotel, Accra

Dr KK Sarpong, Chairman and CEO of the Ghana National Petroleum Corporation,

Honorable Ministers and Deputy Ministers present Deputy Governors, Bank of Ghana

Regional Director, MasterCard Foundation

CEOs and representatives of the financial sector and the business community

Distinguished Guests

Ladies and gentlemen

  1. I wish you all a very good morning and allow me first of all to thank the organizers of the program for the kind invitation to address this gathering. For the past ten years, this forum, initiated by the Business and Financial Times and other partners, has provided a unique platform for policy discourse and agenda setting in the economy. The foresight and courage of the organizers in institutionalizing this annual program should be commended. This year’s theme on Strengthen local policies to support the national digitization drive and shared financial prosperity“seeks to address one of the most current issues of recent times, especially at a time when the country is recovering from the pandemic and policies are being put in place to restore stability and economic growth.
  2. As always, there is a need to take stock of the macroeconomic situation and try to place the discussions in the context of emerging policy priorities. So I will do three things; I will first take stock of the macroeconomic landscape and go

to discuss how the pandemic has contributed to the acceleration of digitization


and therefore financial inclusion; and conclude with policies to strengthen domestic digitalization and regulation to address emerging risks in the digital financial services space.

Macroeconomic landscape

  1. Ladies and gentlemen, it has been almost twenty months since the shock of COVID-19 pandemic to the Ghanaian economy. The unprecedented negative global consequences continue, but the good news is that the Ghanaian economy has absorbed the shock well and the economy has started to recover very strongly, to build back better. Cautious and timely political support – it can be called “home”, removal of restrictions, reopening of business activities and increased vaccinations, have worked together to systematically support the recovery process.
  2. Recent economic indicators show a steady recovery. First, the impact of the pandemic has pushed inflation out of the medium-term target range at 11.4% in July 2020. Since then, inflation has declined steadily and remained around the central path of the 8% target range. More recently, impacted mainly by rising domestic and global food prices, inflation has moved steadily outside the target bank, now standing at 10.6% in September 2021. The September 2021 forecast for the Bank, however, indicate that inflation will remain within the target range in the medium term, but closer to the upper limit in the short term, in the absence of new unexpected shocks.


  1. Notwithstanding the foregoing, the Bank of Near-term economic momentum shows that economic activity continues to recover and maintain steady momentum since the last quarter of 2020. Second quarter data from the Ghana Statistical Service indicates annual GDP growth at 3.9% in the second quarter of 2021, compared to the 3.1% recorded in the first quarter. Second-quarter growth was somewhat dampened by the mining and quarrying sectors, which have yet to return to pre-pandemic production levels. Looking beyond the second quarter, the latest high-frequency indicators, monitored by the Bank, show some optimism about a more robust recovery from the pandemic. The composite index of economic activity (CIEA) increased by 20.0% (year-on-year) in July 2021, compared to growth of 3.9% in the same month last year. And the growth in the indicators was somewhat broad-based, with port activity, imports, domestic VAT and air passenger arrivals coming out on top.
  2. The external payments position remained strong despite the decline in the trade surplus due to stronger import growth, as the economy continues to reopen. The trade surplus narrowed while the current account deficit widened marginally but adequately financed by external inflows from portfolio investment and foreign direct investment, leading to surpluses in the balance of payments. This allowed a the accumulation of the country’s gross international reserves, which increased to around 5.2 months of import cover in August 2021 and provided some buffer for the local currency to withstand pressures. Cumulatively, the Ghana Cedi has achieved


sharply with a year-to-date depreciation of 1.9% as of October 12, 2021, compared to 3.0% in the same period last year.

  1. Emerging market policymakers are watching global financial markets and the direction of U.S. policy regarding the tapering of asset purchases, which may pose currency risks for emerging markets and frontier economies, such as Ghana. However, the strong reserve the accumulation and inflows of foreign exchange from the recent allocation of SDRs and the expected proceeds from syndicated cocoa loans should help ease currency pressures in the near term.
  2. Comprehensive reforms and recapitalization provided banks with strong capital buffers before the onset of the COVID-19 shock. In addition, the financial sector received a further boost with macroprudential regulatory reliefs to ease liquidity constraints and enabled them to provide financial support to critical sectors of the economy amid COVID-19 policy responses. Following these interventions, the banking sector remained stable, liquid and profitable. The latest stress tests and macroprudential risk assessments on the sector show that banks are strong enough to withstand mild to moderate liquidity and credit risk shocks.
  3. A persistent problem has been credit growth to the private sector which has not fully recovered for pre-pandemic levels due to uncertainties surrounding the trajectory of the pandemic. As the momentum of economic activity picks up


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Bank of Ghana published this content on October 18, 2021 and is solely responsible for the information contained therein. Distributed by publicunedited and unmodified, on October 18, 2021 11:51:00 AM UTC.

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