The Central Bank of Ghana (BoG) has disclosed in its March 2023 Summary of Economic and Financial Data that Ghana’s net international reserves improved slightly to $2.62 billion, about 2.8 months of import cover in February 2023. This is from the $2.24 billion recorded in December 2022, about 2.7 months of import cover.
However, Ghana’s Balance of Payment (BoP) at the end of February 2023, recorded a deficit of $3.63 billion, approximately 5% of Gross Domestic Product. This was as a result of a significant decline in the Capital and Financial Account Balance which stood at a deficit of $2.17 billion in December 2022, compared with a surplus of $3.30 billion in December 2021.

The negative Capital and Financial Account Balance was a result of net portfolio of investments outflow of $2.05 billion in December 2022.
The Current Account Balance of the BoP also stood at a deficit $1.516 billion in December 2023, approximately 2.1% of GDP, with net international reserves declining from $6.07 billion in January 2022, about 4.4 months of import cover, largely due to the selling of investments by foreign investors.
Average Lending Rates Rises Marginally To 36.64%
Meanwhile, according to BoG’s data, the average lending rates shot up marginally to 36.64% in February 2023, from 35.58% recorded in December 2022. This is equivalent to 3.02% interest rate on loans per month.
In January 2023, the average cost of borrowing stood at 35.85%. Nonetheless, with the Monetary Policy Committee of the Bank of Ghana expected to announce developments in the Ghanaian economy, with focus on its key lending rate – policy rate, today March 27, 2023, it is expected that the policy rate will remain unchanged for the next two and half months. This will keep lending rates still at high.

According to BoG, average lending rates have been increasing sharply for the past one year. In actual fact, it has gone up by 16.48% since January 2022. It stood at 20.16% in January 2022, but shot up sharply to 24.27% in June 2022 and then to 26.46% in July 2022.
The lending rate again went up to 27.96% in August 2022 and later to 29.81% in September 2022. It continued its rising trend reaching 33.87% in November 2022 and 35.58% in December 2022 respectively.
However, the higher lending rates have been caused by a record inflation rate and significant exchange rate depreciation, which has consequently increased the cost of doing business in the country.
In spite the fact that BoG announces a fixed policy rate to be used by banks in their lending, the average lending rates, however, vary among the banks based on the respective sectors they lend to and risk profiles. Some banks offer loans equivalent to the Ghana Reference Rate of 33.25%, whilst others charge rates as high as 43%.
Again, some banks, some perceive lending to the agriculture and construction sectors as riskier, and therefore credit to these sectors are expensive.
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