Dr Johnson Asiama, the Bank of Ghana (BoG) Governor, has revealed that Ghana’s dollar reserves have been facing intense pressure over the past four months due to the Middle East war.
According to Dr Asiama, the Middle East has put significant pressure on Ghana’s international reserves in recent months.
The BoG Governor highlighted that Ghana had faced a challenging period as global developments affected its reserves.
He disclosed that the global events have forced the central bank to provide support to critical sectors of the economy.
Speaking during Part Two of Time with the Governor, an engagement with students from the Department of Economics, University of Ghana, and the University of Ghana Business School (UGBS), Dr Asiama stated, “The past three to four months have been quite challenging for us when it comes to the country’s International reserves.”
Dr Asiama added: “I am therefore not surprised that we lost 1.2 billion reserves.”
The July Economic and Financial Data released by the Bank of Ghana, Ghana’s international reserves fell from US$14.1 billion to US$12.9 billion.
The BoG Governor also used the engagement to highlight the importance of maintaining strong reserves to cushion Ghana against global economic shocks, maintaining that adequate reserves were particularly important at a time of heightened global economic uncertainty.
“This is why we can say that one of the good things we did last year was to build some high reserves for interesting times like this”, he stated.
Also, the BoG Governor pointed to the need to increase earnings from cocoa exports and non-traditional exports, highlighting that non-traditional exports currently account for about 10% of Ghana’s exports and argued that this should be increased to 15%.
Dr Asiama also detailed the potential of remittances to support the country’s reserves and broader economic development, making a case for channelling the more than US$8 billion received through remittances into productive investments rather than consumption.
In related news, the BoG Governor had earlier cautioned that the Middle East conflict poses fresh inflation risks for Ghana.
The BoG governor disclosed that the escalating tensions in the Middle East could threaten Ghana’s improving inflation.
Dr Asiama highlighted that the Middle East tension is disrupting major global energy and shipping routes.
He further explained that the tension is creating an increasing volatility in global oil markets.
Speaking at the opening of the 129th Monetary Policy Committee (MPC) meeting, the BoG governor stated, “A significant external development has entered the picture, and that has to do with the escalation of the conflict in the Middle East. This conflict is disrupting key energy and shipping corridors”.
“It is increasing volatility in global oil markets, and it is introducing new uncertainty into the trajectory of global inflation,” he said.
He added, “For Ghana, the transmission channels are clear. Sustained oil price increases could raise the risk of imported inflation and could also tighten global financial conditions.”
“Geopolitical uncertainty tends to support gold prices… This could benefit our trade balance,” he added.
The BoG Governor highlighted that Ghana’s macroeconomic indicators have improved, but there is a need to carefully weigh global risks before making any decision.
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