Bank of Ghana Monetary Policy Committee Press Release
Global, Africa, Ghana
The potential adverse effects of COVID-19 on growth, along with the sharp fall in commodity prices, will weigh heavily on economic activity in emerging market and frontier economies. In response, major central banks have already cut policy rates, in addition to other measures, to stabilise global financial markets, given that inflation remains subdued.
The Bank’s internal assessment shows that the pandemic could impact Ghana through a number of channels. First, the dampened global demand could significantly impact Ghana’s crude oil export earnings with major implications for foreign inflows and tax revenues. There is also a likelihood of export restrictions from advanced economies and other emerging market economies which could create supply chain shortages for Ghanaian businesses, with significant impact on imports of intermediate and capital goods, as well as consumption goods. This is expected to negatively affect inputs in the domestic production channels with severe consequences for growth and tax revenues which could become more pronounced by the second or third quarter. In addition, crude oil prices have declined sharply to historically low levels, and already creating negative shocks on exports, albeit with some offsetting effects from rising gold and cocoa prices.
Under these circumstances, the Bank of Ghana’s MPC has decided to lower the Monetary Policy Rate by 150 basis points to 14.5 percent.The Bank of Ghana has agreed with banks and mobile money operators on measures to facilitate more efficient payments and promote digital forms of payments for the next three months, subject to review, effective March 20, 2020.