Dr Henry Kofi Wampah, Governor of the Central Bank, has said increased production and consumption of local rice and the advent of gas production are alternative sources for sustainable exports and foreign exchange earnings for Ghana.
He made the observation at the 56th Monetary Policy Committee (MPC) meeting’s press briefing held in Accra on Wednesday.
The Committee maintained the policy rate at 16 per cent.
Dr Wampah called for increased support for production and consumption of local rice and appealed to households especially women to urge their households to favour made-in-Ghana rice over foreign ones.
He said annual rice imports cost the nation more than 500 million dollars.
On gas production, Dr Wampah expressed optimism that the gas plant when completed would cut down on the amount the country spent on importing oil.
He appealed to Government to widen the base to rake in more foreign exchange earnings for the country.
Dr Wampah gave the assurance that the country was running a sustainable budget deficit, stressing that Ghana’s current deficit of 43.9 per cent was within the required threshold of 70 per cent of Gross Domestic Product.
He said the inflation forecast had shifted marginally since the last MPC meeting saying that the Committee noted that the forecast for end-year inflation was likely to be close to the upper band.
Dr Wampah said subject to the rate and timing of the adjustment in utility tariffs, the forecast could return to the central path by the first quarter of 2014.
He said the prospects for the global economy remained uncertain for the rest of the year adding that the contributory factors include: the slackening growth in emerging market economies; the continued dip in commodity prices in international markets; and the slow growth in the US economy which posed a significant risk to the external outlook.
He said the developments in the external sector continue to weigh on the domestic economy, despite the improvement in the trade balance and added that the out-turn was moderated by a slowdown in import demand.
Dr Wampah said it was expected that the proceeds from the cocoa loan syndication and the Eurobond, amounting to a total of almost US$2.0 billion during the second half of the year, would shore up the international reserves and further calm pressures in the foreign exchange markets.
He said the Committee had noted with concern the lingering fiscal pressures arising from the huge wage bill and outstanding commitments.
Dr Wampah said Government had put in measures to address the shortfall in revenues and to reduce expenditures and measures include the re-introduction of the fiscal stabilisation levy, imposition of a levy on imports, and the environmental tax.
Expenditure control measures include, refinancing of the domestic debt to reduce interest costs, regular adjustment of petroleum prices, rationalisation and standardization of allowances under the Single Spine Salary Scheme, and a moratorium on new projects.
It is also expected that there would be a gradual reduction in subsidies on utilities.
Dr Wampah said the Committee had taken notice of potential risks to growth including the continued softening of commodity prices on the world markets, the ongoing fiscal consolidation as well as worsening business expectations.
He said in assessing the outlook for inflation, the Committee noted that the upside risks include: potential pass-through effects of further petroleum price adjustments, possible adjustment of utility tariffs, and pressures arising from the impending public sector wage settlement.
He said these could be moderated by the tight monetary policy stance, the ongoing fiscal consolidation and favourable seasonal factors arising from the oncoming harvest season.