The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) will hold its 123rd 3-Day Meeting starting from Monday, 24th March, 2025, after which the Committee will announce its decision on the benchmark Policy Rate (PR).
At its last two meetings held in November and March, the MPC kept the PR unchanged at the previous rate of 27.00%, decisions that the Committee indicated were in response to higher inflation risks.
As was to be expected, the opinion of the public was divided as to the justification for these decisions, depending on where they perceived the relative risks to lie with respect to economic instability, on the one hand, and economic growth and employment, on the other hand.
The MPC faces an even more challenging decision this time round in the midst of persisting difficult economic environment, characterised by high inflation, unstable currency, still high debt, high unemployment and sub-optimal growth, amid a myriad of problems.
Inflation has been stuck in the low twenties for more than two years, recording 23.2% in 2023 and 23.8% in 2024, with the latest rate at the end of February being 23.1%, all of them much higher than the BoG’s target of (8+/-2)%.
In the last two years or so, the cedi has depreciated markedly by 28% in 2023, 19% in 2024 and 5.4% between January 1 and March 18 this year. While this year’s depreciation is lower than the 6.2% recorded in the same period of 2024, it is still significant.
The overall fiscal deficit was -5.2% of GDP (on cash basis) in 2024, slightly above the limit of -5.0% in the suspended Fiscal Responsibility Act (FRA). Economic growth in 2024 was, notably, significant at 5.7% (up from 3.1% in 2023), fuelled by the services, construction and mining sectors.
Against this generally gloomy economic backdrop, the Minister of Finance, on Tuesday, 17th March, presented the Government’s first Budget and Economic Policy for 2025 to Parliament.
The key macroeconomic projections in the Budget included: i) Fiscal deficit (cash) of -4.1%; ii. End-of-period inflation of 11.9%; iii. Economic growth of 4.0%; and iv. Gross international reserves of at least 3 months of import cover.
