The governor of the Bank of Ghana, Dr Ernest Addison, has said the budget implementation through September 2020 was broadly in line with the revised mid-year Budget estimates following the introduction of fiscal measures to combat the COVID-19 pandemic. Provisional data for the first three quarters of 2020, showed an overall budget deficit of 9.0 percent of GDP against the target of 8.9 percent of GDP. The primary balance also recorded a deficit of 4.1 percent of GDP, marginally above the target of 4.0 percent of GDP.
Speaking at the Monetray Policy Committee (MPC) press conference on Monday November 23, he said Over the review period, total revenue and grants amounted to GH¢36.3 billion (9.4% of GDP) compared with the target of GH¢35.7 billion (9.3% of GDP). Total expenditures and arrears clearance amounted to GH¢70.9 billion (18.4% of GDP), marginally above the target of GH¢70.0 billion (18.2% of GDP). The deficit was financed
mainly from domestic sources.
These developments impacted the stock of public debt which was 71 percent of GDP (GH¢273.8 billion) at the end of September 2020 compared with 62.4 percent of GDP (GH¢218.2 billion) at the end of December 2019. Of the total debt stock, domestic debt was GH¢135.3 billion (35.1% of GDP), of which the financial sector bailout accounts for 4.0 percent of GDP, while external debt was GH¢138.5 billion (35.9% of GDP).
Money supply showed significant expansion in the first ten months of 2020, reflecting the complementary monetary policy and fiscal stimulus measures takento support efforts to minimize the impact of the COVID-19 pandemic. M2+ grew by 30.0 percent, year-on-year compared with 16.3 percent in the corresponding
period of 2019. The increase in total liquidity was mainly driven by the net domestic assets of the central bank and the commercial banks. Net domestic assets increased sharply by 36.1 percent year-on-year in October 2020,
compared with 17.1 percent in the same period of last year, while net foreign assets moderated by 6.0 percent from 13.4 percent over the same comparative period. In terms of components, the growth in M2+ reflected mainly in currency outside banks and demand deposits.
Net outstanding claims on the private sector, which also captures repayments to the banking sector, show some moderation since the beginning of the year. With respect to new advances, the data shows that cumulatively from the beginning of the year, new loans to support economic activity stands at GH¢27.4 billion compared with GH¢21.3 billion for the same period of last year.