Bank of Ghana Governor Dr Ernest Addison has said as far as the execution of the budget is concerned, “provisional data released by the Ministry of Finance as of November 2020, showed an overall broad cash budget deficit of 10.8 per cent of GDP against the target of 11.4 per cent of GDP for the year”. Chairing the Monetary Policy Committee meeting on Monday, 1 February 2020 at which the policy rate was maintained at 14.5 per cent, Dr Addison said: “The primary balance also recorded a deficit of 4.9 per cent of GDP which was marginally above the target of 4.8 per cent of GDP”. “Over the review period, total revenue and grants amounted to GHS46.5 billion (12.1 per cent of GDP), marginally higher than the revised target of GHS46.0 billion (11.9 per cent of GDP)”, he reported. Total expenditures and arrears clearance amounted to GHS88.2 billion (22.9 per cent of GDP) against the revised target of GHS88.4 billion (22.9 per cent of GDP), he noted. The “elevated fiscal path”, he indicated, “has impacted the stock of public debt which rose to 74.4 per cent of GDP (GHS286.9 billion) at the end of November 2020 compared with 62.4 per cent of GDP (GHS218.2 billion) at the end of December 2019”. “Of the total debt stock, domestic debt was GHS147.3 billion (38.2 per cent of GDP), while external debt was GHS139.6 billion (36.2 per cent of GDP)”, Dr Addison added. Read the full statement below: Good morning, Ladies and Gentlemen of the Media. Welcome to the 98th Monetary Policy Committee (MPC) press briefing, and the first in the year 2021. The MPC met last week and reviewed recent global and domestic developments including the outlook for the economy. Permit me to share with you highlights of the developments and key considerations that informed the decision of the Committee on the Policy Rate. 1. The global economy was projected to contract by a larger margin in 2020 due to the adverse effects of the COVID-19 pandemic, but the contraction has turned in better than earlier forecasted. The resurgence of infections and emergence of new variants of the virus since the last quarter of 2020 has, however, resulted in the re-imposition of restrictions and partial lockdowns in some economies and will likely soften the growth recovery momentum in early 2021. Notwithstanding the anticipated softening, global growth is expected to strengthen in the second half of 2021, conditional on continued policy support and successful rollout of COVID-19 vaccines. Prospects for 2021 look more positive, and the January update of the IMF’s World Economic Outlook projects a rebound in the global economy from the 3.5 per cent contraction in 2020 to a 5.5 per cent growth in 2021, amid uncertainties. 2. Global financing conditions remained accommodative throughout 2020, reflecting the massive policy support which induced lower borrowing costs, boosted equity valuations, enhanced investor risk appetite, and narrowed sovereign bond spreads across Emerging Market and Developing Economies. These developments helped ease pressures on emerging and frontier market currencies, while sovereign risk spreads for most sub-Saharan African countries declined steadily in the year. In the near-term, financial market indicators point to optimism about medium-term prospects. Nonetheless, rising debt levels and increasing interest burdens across several emerging markets and developing economies pose significant financing risks. 3. Global inflationary pressures remained subdued, weighed down by weak global demand and significant slack in labour and product markets during 2020. In Advanced Economies, inflation is projected to rise to 1.3 per cent in 2021 from 0.7 per cent in 2020, while in Emerging Market and Developing Economies, inflation is expected to ease slightly to 4.2 per cent from 5.0 per cent over the same comparative period. In emerging market and frontier economies, currency movements and COVID-related supply-side constraints are expected to dictate price movements, going forward. 4. In Ghana, after recording strong growth of 6.5 per cent in 2019 and firm growth of 4.9 per cent in the first quarter of 2020, growth was dampened in the second quarter due to COVID-related factors. However, following the lifting of restrictions and strong policy support, signs of recovery begun to emerge in the third quarter. Data released by the Ghana Statistical Service showed that real GDP growth provisionally contracted by 1.1 per cent in the third quarter of 2020 compared to the 3.2 per cent contraction recorded in the second quarter. In particular, non-oil GDP recorded a more measured contraction of 0.4 per cent in the third quarter of 2020, compared to a contraction of 3.4 per cent in the second quarter. 5. The Bank of Ghana’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 11.9 per cent in November 2020, compared with 3.4 per cent growth a year ago. The key drivers of economic activity during the period were construction, port activity, imports, manufacturing, and credit to the private sector. 6. Results from the Bank’s latest confidence surveys conducted in December 2020 showed improvements in both consumer and business confidence. Consumer confidence remained firm at pre-lockdown levels reflecting optimism about current economic conditions following the gradual lifting of the COVID-related restrictions. Business confidence improved significantly, reaching pre-lockdown levels, for the first time, as businesses met short-term company targets and expressed positive sentiments about growth prospects. 7. Price developments in 2020 were broadly driven by COVID-related factors, especially the spike in inflation observed during the second quarter which was on the back of events preceding the partial lockdown. This was followed by the subsequent easing in inflation pressures in the third and last quarters, as the restrictions were removed. Two readings since the last MPC meeting indicated that headline inflation eased from 10.1 per cent in October to 9.8 per cent in November and then, subsequently rose to 10.4 per cent in December 2020. The inflation uptick in December was mainly driven by food inflation, which moved up to 14.1 per cent from 11.7 per cent in November. Non-food inflation, however, eased to 7.7 per cent from