The Monetary Policy Committee of the Bank of Ghana decided to maintain its current tight monetary policy stance, keeping the reverse repo rate at 24% and repo rate at 18%. Ghana's real GDP grew by 7.1% in 2013 and 6.7% in the first quarter of 2014, with services and industry contributing most to GDP. Money supply declined in 2013 due to monetary operations and a weak external sector. Inflation ended 2013 above target at 13.5% despite interest rate increases, while the stock exchange rose 78.8% due to company earnings. The central bank increased its policy rate and minimum capital requirements for new banks to support price stability.

1. Ghana’s monetary policy committee tightens rates
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has decided to hold on to its
current tight policy stance while re-aligning rates in the money market within the interest rate
corridor. The Committee has, set the interest rate corridor at 300 basis points around the monetary
policy rate, meaning the Reverse Repo rate would be maintained at the current level of 24 per cent
and the Repo rate at 18 per cent.
Ghana’s macroeconomic performance
Real GDP growth has since declined to 7.1% in 2013, while in the first quarter of 2014; real
GDP grew at 6.7% year-on-year. The sectoral growth can be summarised as follows
1) The Services sector contributed about 50.6% to total GDP for 2013 and grew by 9.2%
2) The industry sector contributed 28.1% to total GDP in 2013 and grew by 9.1% for the
year
3) With the discovery of oil, the agricultural sector has seen decline from 29.8% in 2010
to 21.3% in 2013.
4) During the first quarter of 2014, the Agricultural sector recorded the highest growth of
12.7%; while, the Industry Sector recorded a negative growth rate of -1.1%. In
comparison, the year-on-year GDP growth rate for the first quarter of 2013 was 9.0%.
Monetary sector
Money supply
The year to September 2013 showed a decline in the supply of Broad Money (M2+) by
17.7% compared with a growth of 28.8% for the comparable period to September 2012. This
was driven by continued strong monetary operations and a generally weak external sector
condition as reflected in an expanded Net Domestic Assets (NDA), the impact of which was
moderated by a rather low Net Foreign Assets (NFA). The year on year growth in reserve
money (RM) as at December 2013 was much slower at 15.1%.
Interest rates
The Bank of Ghana’s monetary policy rate was raised by 1 percentage point in April 2013
to16.0% in response to developments in macroeconomic fundamentals. Similarly, the various
types of T-bills recorded decreases in interest rates as at December 2013.
Government securities 2013 2014
91 day 19.22% 24.09%
182 day 18.66% 21.28%
1 year note 17.00% 22.50%
2 year note 16.80% 23.00%
3 year note 19.20% 24.40%
5 year note - -

2. The average 3-month deposit rate of banks was at 12.5% in December 2013,the same level
recorded for the period to December 2012, whilst average lending rates for Deposit
Mobilisation Banks (DBMs) declined marginally to 25.6% in 2013.
Exchange rates
2013 was characterised by large formal and informal sector demand for foreign exchange
within the domestic foreign exchange market. The result was a considerable depreciation in
the value of the cedi against the major trading currencies. The supply of foreign exchange
was however boosted by purchases from banks, swaps and inflows from the 3-year and 5-
year bonds, as well as the proceeds from the Euro Bond. The table describes the depreciation
rates of Cedi.
INTERBANK EXCHANGE
RATES
31st
Dec 2013 30th
Jun 2014
US dollar 2.16 3.00
Pound Sterling 3.57 5.11
Euro 2.99 4.09
Inflation & stock market developments
Headline inflation ended 2013 at 13.5%, which was above the target band of 9±2 per cent for
the year. The Ghana Stock Exchange (GSE) in 2013 witnessed a bullish performance driven
partly by earnings performance of listed companies. At the end of December 2013, the GSE
Composite Index (GSE-CI) closed higher at 2,145.2points, representing a cumulative gain of
78.8%.
Monetary policy rates
The Bank of Ghana policy rate was increased from 15% to 16% in May 2013 and was
maintained at that rate to the end of the year. The Bank of Ghana implemented a new Base
Rate formula, which seeks to ensure the transparency and uniformity in loan pricing in the
banking industry.
Minimum capital requirement
The Bank of Ghana reviewed upwards the minimum capital required for new banks to
operate in the country. New commercial banks are required to have a minimum stated capital
of GHS 120 million (cedi).
On foreign exchange markets, the MPC observed continued stability and improved sentiments on the
market which, supported by earlier policy measures, inflows from the Eurobond and the cocoa pre-
export finance facility which had increased liquidity on the markets. It was expected that a successful
conclusion of ongoing negotiations with IMF would provide some balance of payments support and
might facilitate other donor flows to sustain this stability going forward. The experience of Ghana
shows that while monetary policy regimes matter fiscal policy regimes matter even more. What is
therefore required is a period of macroeconomic stability long enough for it to be the expected norm

3. by market participants. This takes commitment to the goal of price stability and a monetary policy
framework that is transparent and market driven to be able to anchor inflationary expectations
Reference
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