Ghana central bank holds rate as currency slide slows disinflation

AFRICAN BUSINESS AND ECONOMYMay 30, 2024 at 11:03 AM UTC

TLDR

Ghana's central bank maintains main interest rate at 29% for the second consecutive meeting due to slower decline in inflation.
Despite marginal reduction, consumer inflation remains high at 25.0% year-on-year in April, significantly above the central bank's 8% target.
Country, a key producer of cocoa, gold, and oil, undergoing debt restructuring after defaulting on external borrowing to recover from severe economic crisis.

Ghana's central bank has maintained its main interest rate at 29% for the second consecutive meeting, responding to a slower decline in inflation driven by the local currency's depreciation.

Despite a marginal reduction in consumer inflation to 25.0% year-on-year in April from 25.8% in March, it remains significantly above the central bank’s target of 8%, with a 2 percentage point margin of error.

The country, a major producer of cocoa, gold, and oil, has been restructuring its debt after defaulting on most of its external borrowing in December 2022. This move is part of efforts to recover from its most severe economic crisis in decades.

Key Takeaways

Ghana recently received a draft memorandum of understanding from its bilateral creditors, including China and France, to restructure $5.4 billion in debt. The country is currently reviewing the document and will sign it once agreed upon. This agreement is crucial as it will enable the International Monetary Fund (IMF) to approve a disbursement of $360 million next month under Ghana's $3 billion bailout program. The program aims to alleviate economic uncertainty. Besides the restructuring memorandum with official creditors, Ghana is negotiating with holders of around $13 billion in international bonds and has already restructured most of its local debt.

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