Dr. Ernest Addison, the Governor of Bank of Ghana (BoG), in a press briefing after the 111th Monetary Policy Committee (MPC) meetings divulged that prices of Ghana’s major export commodities traded mixed in February 2023 relative to the same period in 2022.
The BoG Boss noted that prices of commodities like Brent crude oil, which had been on a downward trend during the latter part of 2022, increased in the first two months of 2023 as China gradually relaxed its COVD-19 restrictions.
“Brent crude oil dipped by 11.0 percent to US$83.9 per barrel in February 2023 from US$94.3 per barrel in February 2022. For the same period, cocoa beans traded at US$2,677.8 per tonne compared to US$2,681.1 per tonne. In contrast, gold prices recorded some marginal gains of 0.1 percent to settle at US$1,858.9 per fine ounce in February 2023, driven largely by weak US dollar and expectation of further interest rate hikes by the Federal Reserve Bank.”
Dr. Ernest Addison
That notwithstanding, Dr Addison indicated that there has been an improvement in trade balance in the first two months of this year, 2023.
“Despite the mixed performance in the prices of Ghana’s major commodities, the trade balance improved in the first two months of 2023 mainly on the back of higher export volumes. In the first two months, total exports expanded by 11.2 percent year-on-year to US$2.8 billion, driven mainly by higher gold, cocoa, and other export receipts.”
Dr. Ernest Addison
Gold Exports Increase
Dr. Ernest Addison intimated that the value of gold exports amounted to US$1.1 billion, representing an increase of 35.8 percent, driven mainly by a 38.5 percent increase in export volumes to 619,373 ounces. Similarly, he noted that cocoa beans and product exports increased by 15.5 percent and 3.3 percent to US$387.6 million and US$159.3 million respectively, mainly on the back of higher production volumes.
Meanwhile, BoG indicated that earnings from ‘other’ exports, including non-traditional exports, were estimated at US$538.2 million, representing a 10.8 percent year-on-year growth. In contrast, exports of crude oil declined by 18.3 percent to US$562.6 million, largely due to lower export volumes.
The total import bill on the other hand, declined by 11.8 percent year-on-year to US$2.0 billion, driven by compression in non-oil imports. Non-oil imports dipped by 17.6 percent to US$1.4 billion, while oil and gas imports increased marginally by 4.8 percent to US$622.9 million. The combination of exports growth and lower imports resulted in a trade surplus of US$752.8 million for the first two months of 2023, higher than the trade surplus of US$205.8 million recorded for the same period in 2022.
For the year 2022, Dr. Ernest Addison noted that the overall balance of payments recorded a deficit of US$3.6 billion. The capital and financial account recorded a net outflow of US$2.1 billion (2.9 percent of GDP), mainly on account of lower FDI flows and significant portfolio reversals. These, together with the current account deficit of US$1.5 billion (2.1 percent of GDP), resulted in the deficit of the overall balance.
“As a result, Gross International Reserves for 2022 declined by US$3.5 billion to US$6.2 billion. Net International Reserves, which adjusts Gross reserves for the Heritage and Stabilization funds as well as other encumbered funds also declined by US$3.7 billion to settle at US$2.4 billion by December 2022. Gross International Reserves further declined to US$5.9 billion at the end of February 2023, providing cover for 2.8 months of imports of goods and services. However, Net International Reserves improved to US$2.6 billion, reflecting a slight decline in encumbered funds.”
Dr. Ernest Addison
