Ghana’s central bank held its main interest rate steady at 29% (GHCBIR=ECI), opens new tab for the second meeting in a row on Monday, as a slide in the local cedi currency has slowed inflation’s decline, according to Reuters.
The West African cocoa, gold and oil producer, which defaulted on most of its external borrowing in December 2022, has been restructuring its debts as it tries to emerge from its worst economic crisis in a generation.
“The latest forecast shows a slightly elevated inflation profile on account of recent exchange rate pressures,” Bank of Ghana Governor Ernest Addison told a news conference, adding that inflation was expected to fall to between 13% and 17% by the end of 2024.
Consumer inflation fell marginally last month to 25.0% year-on-year (GHCPIY=ECI), opens new tab from 25.8% in March, but it remains well above the central bank’s 8% target with a margin of error of 2 percentage points either side.
Addison said the cedi had been partly hurt by speculative foreign currency buying but that the central bank had enough reserves to support the market.
Godfred Alufar Bokpin, professor of finance at the University of Ghana, said there was not much scope to ease monetary policy given current risks to the cedi and a general election later this year.
Last week Ghana received a draft memorandum of understanding from its bilateral creditors including China and France to restructure $5.4 billion of debt, which it is currently reviewing before signing.
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Once agreed, the document will pave the way for the International Monetary Fund’s executive board to meet next month to approve a disbursement of $360 million under the country’s $3 billion bailout programme, which Addison said helped clear uncertainty.
“We are very happy and quite certain that the Fund meeting will happen in June,” Addison told Reuters on Monday.
In addition to the restructuring memorandum with official creditors, Ghana is seeking a deal with holders of about $13 billion in international bonds. It has restructured most of its local debt.
