For a country that depends heavily on the exports of its raw materials like crude oil, cocoa and gold, a slight appreciation in the international commodities market is likely to result in improvement in its trade surplus. That was exactly what happened when prices of Ghana’s three main exports, oil, gold and cocoa edged higher, the Bank of Ghana says.
According to the Bank, provisional estimates in the year to March 2019 suggest prices for crude oil edgd higher. It said international benchmark crude oil price rose by 12 per cent in first quarter 2019 to an average of $67.43 per barrel. It notes that supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC), and its allies, including Russia, coupled with oil sanctions on Venezuela and Iran, contributed to the rise in prices.
“On average, prices of gold firmed up by 5,5 per cent to settle at $1,320 per fine fine ounce. This was supported by a marginal retreat in the US dollar and affirmation that the Federal Reserve would stick to its dovish stance on monetary policy,” the Governor of the Bank, Dr. Ernest Addison told journalists some three weeks ago in Accra.
The Bank indicated that cocoa prices however eased by some 5.1 per cent from the average of $2,199 per tonne traded in January 2019. This, the Bank said was attributed to improving weather outlook in West Africa which has boosted supply expectations of cocoa.
“These price developments, alongside fairly improved production levels, especially in crude oil, translated to a provisional trade surplus of $899.0 million (1.3 per cent of GDP) for the first quarter of 2019, compared with a surplus of $724.5 million (1.1 per cent of GDP) in the same period of last year. This trade surplus translated into a current account surplus of $194.5 million (0.3 per cent of GDP) in the first quarter of 2019. The projected current account surplus for the first quarter of 2019, together with the inflows into the capital and financial account, driven mainly by the March 2019 Eurobond will result in a provisional overall balance of payments surplus of some $3,135.0 million (4.6 per cent of GDP) for the first quarter of 2019. Excluding the proceeds from the Eurobond, the first quarter overall balance surplus is estimated at $449.0 million, compared with a deficit of $614 million (0.9 per cent of GDP) same time in 2018,” Dr. Addison added.
The Bank said its Gross International Reserves (GIR) rose significantly from $7 billion (equivalent to 3.6 months of import cover) at the end of December 2018 to $9.9 billion (equivalent to 5.0 months of import cover) as at end- March 2019, mainly reflecting the Eurobond inflows.
However, provisional fiscal data for January 2019 indicated an overall deficit (on cash basis) of 0.8 per cent of GDP against the target of 0.7 per cent.
“Total revenue and grants amounted to GH¢3.1 billion compared with the programmed target of GH¢3.8 billion, mainly due to shortfalls in international trade taxes. On year-on-year basis, the revenue outturn was up by 14.8 per cent,” the Governor said.
By Emmanuel K. Dogbevi
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