Monetary Policy
MPC Press Release - August 2004
Tuesday, 31 August 2004 00:00

Available data indicates that economic activity continues to pick up and domestic demand is robust driven by strong external sector performance. The Bank of Ghana’s Composite Indicator of Economic Activity shows an increase of 4.5% in the second quarter of 2004, compared to 0.9 percent in the first quarter of 2004 and 6.1 percent in the second quarter of 2003. The Bank of Ghana Survey of Business Confidence also indicates that businesses continue to maintain a positive view of the economic outlook and expectations that are consistent with business plans and forecasts.

The annual growth of domestic bank credit to the private sector and public enterprises at the end of June 2004 was 50.0 percent compared with 9.6 percent in June 2003. About 68 percent of the credit went to the private sector. The increases in credit to the private sector were broad-based, but the major recipients were manufacturing (15.5 percent), commerce and finance (12.8 percent) services (8.8 percent), cocoa marketing (6.9 percent) agriculture, as well as forestry and logging (5.5 percent). The miscellaneous category, which includes personal loans, accounted for 28.3 percent of the increase in credit to the private sector.

The financial sector remains in a relatively strong position, with the banking sector well-capitalized, liquid, profitable and showing resilience to declining interest rates. Non-performing loans of the banking sector have declined from a peak of 21.3 percent in June 2003 to 18.52 percent by June 2004.

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