Ghana's cedi will be more stable in 2018 than last year, helped by lower inflation outlook and higher oil production, the central bank said on Monday. The currency of the major commodity exporter declined 4.88 percent to the dollar in 2017, its best performance in five years, compared to a 9.6 percent slip in 2016, according to Bank of Ghana interbank reference rate.
Ghana is in the last year of a $918 million International Monetary Fund deal signed in 2015 to rebalance state finances and stabilise the cedi, which plunged 31 percent in 2014. Steve Opata, head of financial markets at Bank of Ghana, told Reuters that, with monetary, fiscal and inflation indicators all heading in the right direction, the 2018 objective was to have a year-end decline of less than 4.8 percent.
The objective was also to foster broadbased economic growth partly through an easing of interest rates, he added. Ghana's current account deficit narrowed to 4.6 percent last year from 6.6 percent in 2016 while its trade balance recorded a surplus of 2.3 percent in 2017, compared to a 4.2 percent deficit. The surplus was driven mainly by oil exports.
The West African country, which began pumping oil from its offshore Jubilee reserves in late 2010, is set to nearly double national output to 200,000 barrels daily as additional fields come on stream this year. Opata said Ghana was on course to achieve its medium-term inflation target of 6-10 percent by the end of June. Consumer inflation stood at 11.8 percent in December, slightly above a target of 11.2 percent. The IMF said it was upbeat about Ghana's economy for 2018, provided the government continued fiscal consolidation and expanded domestic revenue collection.
"In general, we are optimistic in terms of economic growth, monetary policy and a more stable exchange rate supported by a declining current account deficit," its Ghana chief Natalia Koliadina said. There could be an IMF staff assessment mission in Accra at the end of February, she added.