The Bank of Ghana, BOG, on Monday raised its main policy rate by 100 basis points to 25.0 percent to offset the risk of inflation, its governor Henry Kofi Wampah said.
Inflation in the West African nation stood at 17.3 percent in August, down from 17.9 percent the previous month, and Wampah said the Bank tightened its rate in order to reach the full-year target of 13.7 percent.
“It (the decision) is based on what we expect within the next few months or quarters,” Wampah told a news conference. “We have noted that in the next quarter we are going to have a lot of liquidity …. That can have an inflationary impact.”
Ghana is set to begin a road show on Sept. 22 for a Eurobond of up to $1.5 billion. The government is also due to sign a $1.8 billion loan on Thursday to finance its cocoa sector ahead of the 2015-2016 crop.
It is also expecting to raise utility prices.
Inflation above the regional average is one indication of the fiscal problems facing a country that for years was one of the strongest economies in sub-Saharan Africa due to its exports of gold, oil and cocoa.
Ghana started a three-year aid program worth $918 million with the International Monetary Fund in April to kick-start growth, reduce its fiscal deficit, lower a debt-to-GDP level over 70 percent, and help stabilize its currency.
Follow Us