BALANCE OF PAYMENTS POSITION

Provisional estimates of the balance of payments Ghana for the first nine months of 2006 indicated that the economy recorded a surplus of $77.7 million in the overall balance compared to a deficit of $195.8 million in the same period of 2005. Revised projections for the entire 2006 indicate that the balance of payments (BOP) will record a surplus of US$178.8 million compared to the surplus of $84.34 million in 2005. The improvement is attributed to strong export performance, strong growth in remittances, donor resources and debt relief. The projections suggest that by the end of the year, a Net International Reserve build up of US$ 406.0 million will be recorded which will raise the level of gross international reserves to about US$ 2.0 billion, enough to cover more than three months of imports of goods and services.

Balance on Current Account

The current account (excluding official transfers), registered a deficit of $707.44 million over the first nine months of 2006 and is expected to record a deficit of US$ 1,278.72 million (10.5 per cent of GDP) in the review year, compared with a deficit of US$1,378.50 million (14.3 per cent of GDP) in 2005. However, including official transfers, this deficit declined to $20.91 million over the nine-month period and is expected to reduce to a deficit of US$555.23 million (4.56 per cent of GDP), compared to US$811.56 million (8.8 per cent of GDP) in 2005.

The improvement in the current account position in the review year over the nine month period was due to improvements in the services, income and unrequited transfers.

Exports

Exports were estimated to have grown by 39.7 per cent during the first nine months of the year to $2,927.6 million and it is projected to end the year at US$3,857.7 million. The growth in exports was partly attributed to improved coverage at the ports by the TRADENET system, as well as improved commodity prices, particularly cocoa and gold within the period.

Cocoa exports (beans and products) amounted to $1,004.1 million over the nine month period and is expected to reach US$1,269.8 million by the end of the year. The cocoa crop in the review year benefited from both productivity growth and increases in average export prices. Quantity of beans exported increased from 433,726 tonnes in the first nine months of 2005 to 569,112 tonnes in the same of period of 2006, and is expected to reach 715,660 tonnes by the end of 2006.

Year-to-date earnings from the exports of 50,824 tonnes of processed cocoa products were estimated at $101.4 million and are expected to reach $131.52 million by end year.

Gold exports, in value terms, went up significantly within the review year, more on account of price increases than on account of quantity exported. While the quantity exported increased by 13.2 per cent to 1.575 million fine ounces, realized average prices went up significantly by 26 per cent to $543.84 per fine ounce. It is expected that by end year, Gold will record a total export of 2,086,351 fine ounces.

Exports of timber products recorded a decline in growth on a year-on-year basis. In the review period, timber exports were estimated at US$148.8 million compared with US$171.9 million in the previous year and are expected to reach $196.7 million by the end of 2006.

All other products, including exports of aluminum ingots from VALCO (valued at US$132.2 million), accounted for the residual value of US$830.9 million which is projected at $1,089.1 million by December, 2006.

Imports

The year 2006 saw a lot of volatility in crude oil prices as a result of increasing global demand, as well as geopolitical factors. The level of crude oil prices has been high over the course of the year. Consequently, the high prices fed into our oil import bill, which reached US$993.4 million over the first nine months of the year, compared with US$725.9 million over the same period in 2005, and indicating a rise of 36.8 per cent.  Oil imports are projected at $1,405.2 million by the end of 2006.

Non-oil merchandise imports were estimated to have gone up by 18.7 per cent during the first three quarters of the year, to US$3,805.8 million from US$3,205.1 million in 2005. The total import bill, therefore, stood at US$4,799.2 million, showing a growth of 22.0 per cent, when compared with the out-turn for 2005 of US$3,931.0 million. Total imports are projected at $6,852.4 million by the end of 2006.

Unrequited transfers

Net unrequited transfers increased from a level of US$1,458.1 million recorded in 2005 to an estimated US$1,970.9 million in 2006, indicating a 35.2 per cent rise.  Private un-requited transfers rose from US$ 1,015.8 million in September 2005 to $1,284.4 million in September 2006 and are forecasted to reach US$1,812.5 million by the end of 2006.

Net Private Transfers (Remittances) 2000-2006

Reserve Assets

In the first nine months of 2006, the Bank of Ghana accumulated net international reserves of US$263.5 million, compared with US$7.5 million during the same in 2005. The level of gross international reserves as a result went up to US$1,782.69 million which was enough to provide cover for 3.3 months of imports of goods and services.

Source:  Ministry of Finance / 2007 Budget, Ghana