2026 Mid-Year Budget Review: Key expectations | Beyond the Numbers

[00:00:00]media budget review in Parliament. Now, in November 2025, the finance minister stood before parliament to outline government's plans and projections for the year, including several new policies and other others already in progress.

[00:00:14]Now, we are more than halfway through the year. So, how much progress has been made on these promises and projections?

[00:00:22]What has been achieved so far? And what new measures should we expect as the finance minister prepares to present the media budget review? Well, here on beyond the numbers, we will take you through everything you need to know ahead of tomorrow's presentation. I am Michelle Jakum and of course Caleb Zublim is here with me. Happy Wednesday.

[00:00:43][laughter] >> When I was looking some kind of way this morning, I was hoping praying that we don't get rains like you know the June.

[00:00:51]Yeah, >> I was hoping I'd get to work before the rain. [laughter] Well, I was praying for no rain and you wanted to anyway. But I mean, uh, Caleb, the one of the biggest concerns when it comes to the budget review is that viewers, audiences, Ghanaians are looking forward to governments coming to say, okay, we're we're spending according to plan. Just some few weeks ago, we're here looking at government expenditure, some sectors that were getting more attention than the others, but overall can you say that there's been some productive spending in terms of the sectors?

[00:01:25]>> Um, so I mean we we know the challenges the economy faced before 2024. So the new government when they came in, they set up some a lot of fiscal controls.

[00:01:35]One of them is the authorization commitment that now goes to the ministry of finance. every spending by any agency need to get the final ministry's uh approval. Again, you need to explain and um explain to the ministry as to why you have to make some expenditure expenditure before you get approval. So, we know that this is one of the things that's happening. The second leg is that um the ministry or currently the government has a fiscal rule of about 1.5% of GDP. You have your primary balance needs to be 1.5% of GDP. This means that spending is very controlled.

[00:02:05]Now if you look at the first quarter fiscal and we spoke about this the last time in the first quarter the government didn't meet his expenditure. Yeah.

[00:02:11]>> If you look at where exactly the government made the expenditures majority was the transfers. So that's to get fund some of the DACF and all the the other NHL and some of the statutory transfer that needs to be done.

[00:02:23]>> Yeah.

[00:02:24]>> The next one was that government also made composition of employees. So they paid employees. Sometime you can't see you're not going to pay your employees.

[00:02:30]So government did that. But then if you look at the other leg of things that's your goods and services as well as your capital expenditure. Now that's where the government fell short especially with the capital expenditure. Now for capital expenditure majority of the shortfall came from our foreign capital exp or the foreign funded capital expenditure. Now over the past weeks we've seen reports from the world bank and other development partners saying that the finance ministry is not allowing this best. So majority for instance on the Gary project >> that's also under caps expenditure because you need to build some drains and all of that because the finan ministry did not approve some disbburments we fell short on the on the capeex side of things. So uh most of the foreign funded capeex we fell short of I think about 40% if you do the math but then the entire capeex so we fell short but if you look at the big push line item government almost met target which is a good thing for the big push project. So if uh if you say government's not spending I mean well they decided to spend in some areas but then some of the other factors like the cape goods and services and our clearance that's where the short came in. So hopefully we might see sometimes some of these expenditure items sometime the government decides to spend it at latter part of the year.

[00:03:37]>> So we might see that maybe in the latter on the second half of the year the government will now make some of these payments contractors that are being owed they pay them later in the year. So that's where we are really seeing things so far. But then again uh revenue uh we did better as compared to last year but then we still fell short of the first quarter target. So again we have to see how the government is reconciling these things. We know the VAT was restructured and hopefully that was supposed to broaden the tax base and then get more people to pay to pay VAT. But then if you look at the line items the imports VAT and then the taxes from the import side really fell short of the target. So again we'll have to see what the government is doing about this within the media budget review that going to be announced tomorrow. Well, talking about what government is going to do about this, well, uh, George Ria has joined us here and let me just move straight to you, George. It's good to have you on the show. Well, we're looking at um the midyear budget review and a lot of times when we look at government expenditure and just like Caleb mentioned, we look at the revenue mobilization as well. It hasn't been great as compared to our expenditure what we were looking at spending. Do you think there's any likelihood of maybe additional taxes, maybe renewed uh taxes of the existing ones we have like some additions or some cuts downs on our expenditure?

[00:04:48]>> Not necessarily. I mean, if we go with the the classical presentation of a midyear budget review, you look at the budget being and why is the minister doing this?

[00:04:59]>> The budget is presented in November 2 months before the actual financial year.

[00:05:04]Yeah. And the financial data is based on data ending September 2025.

[00:05:11]>> So when you get to that actual year, you have the full endear numbers >> which again would impact on your macroeconomic targets. Yeah.

[00:05:19]>> And so half year the financial administration act actually requires the finance minister to appear before the house and update them in terms of these numbers whether based on having seen about 8 months after the budget was presented. Do you still want to stick to those macroeconomic numbers h going forward again in terms of expendit in terms of revenue? So those are the classical things that we always look up for or why the minister is doing this.

[00:05:47]In previous instances we've seen where there been a supplementary budget. This is a situation where revenue is not doing well and they have their guys there who want to extrapolate and project and say that based on the way things are going you need to move these taxes here adjust the taxes here and all those things. So if we want to stick to that classical media review of the estimates in the budget then you wouldn't hear anything about taxes and all those things. But if things are looking that bad in terms of the revenue and if you extrapolate and you see that based on maybe things improving and measures that has been introduced working then maybe the minister might be forced to see whether they can hide behind certain levies or taxes >> as we speak right now and don't forget that the minister is supposed to do a presentation to cabinets and all those things. We haven't heard anything from government sources about any taxes or levies being reviewed.

[00:06:42]>> But if revenue is not doing well as of now and it is likely not going to change going forward then >> there might be some cut back again in terms of expenditure >> because the argument also being that even though government itself is celebrating and they've been put into expenditure some also argue that the numbers are not good.

[00:07:01]>> Mhm. So if you are not making enough revenue and just coming from an IMF program also you want to send some signals that you are capable of managing your economy. So if revenue is not doing well >> the best thing to do is to cut back.

[00:07:15]>> But again you heard from some people or some party members that listen we need jobs. You hear some from Ghanaians that we need to 24-hour economy women's bank and all those things.

[00:07:27]>> Government has to expand. Mhm.

[00:07:30]>> Government has to do things to expand the economy. Where is revenue going to come from? Is it going to come from the same revenue or you may have to borrow?

[00:07:40]The minister classical for has given the signals that he's not interested in going out to borrow money >> to finance the budget and all the rest.

[00:07:50]>> Whether pressures might see him changing that stance, >> we might get some signals here. So I'm just trying to give some two scenarios that >> if the minister wants to go with that classical media budget review, they don't expect any new thing. This is not a budget presentation.

[00:08:05]>> He's just coming in to review the estimates in macroeconomic numbers.

[00:08:09]>> But if things are that bad and going forward, you need to look at something about the the road construction, the how the the the weather and the flood situation has exposed our road network.

[00:08:20]>> Yeah, >> some money is needed. Gold is doing well >> but going forward can gold still be the driver of bringing the required revenue or not? Bank of Ghana's reserves has gone down by more than 1.2 billion.

[00:08:33]>> That means that going forward the bank of Ghana is going to hold back >> in terms of its intervention to support the city.

[00:08:39]>> So he's cutting between a hard rock and the deep blue sea. What is he going to do? So again too early days yet we have picked some information but knowing how these things pan out you don't want to stick your neck out and say that at first is going to do xyz >> things can even change even a minute to the presentation I'm sure by now there are new budget revisions going on at the ministry of finance as we speak >> but then again like George said you know speaking from the um getting additional revenue or getting loans to support the budget we know that the government says um they're not really going to the external markets yet >> that is the push for >> a to for >> I don't think that it's it's a whole government decision. There are some who think that looking at the improve micro numbers it is time to go out and raise funds to finance the budget.

[00:09:27]>> If you look at the the government or the finance ministry's uh debt projections for the next quarter that July September they put in there that they might come for domestic bonds. So we might see an additional bond insurance before September ends. you know, we've got the first one at the seven year.

[00:09:42]>> There's a critical question about whether the the local economy can support all these funding they want to raise as well. Don't forget as well the cocoa board is also going to come in as well.

[00:09:51]>> Yeah.

[00:09:52]>> Do we have the funds? If you speak to some pension managers, some fund managers, they've argued that they're looking for places to invest.

[00:09:59]>> But will these funds be enough to finance all these things? We can go with the pushion that Ghanaians can do it.

[00:10:06]The reality on the ground also is that you don't want to crowd out the private sector. If government decides to come in to borrow cocoa board, borrow for infrastructure projects, what about the private sector as well?

[00:10:18]>> And that is where I see the minister again being caught up in a very difficult position about >> how do you free the domestic space?

[00:10:25]>> Yeah.

[00:10:26]>> For you and I and the private sector to borrow. So if the international market is an avenue, maybe in terms of philosophy, he might not be for it. But the reality is that he might be forced to do that.

[00:10:40]>> Well, let's look at I I mean we we've had conversations about the macroeconomic outlook and we've all we all agree that the government has done some good work, but how realistic are the Ghanaian the ordinary Ghanaian people feeling it? Um well that's the real sector and we keep speaking about how this going to affect the real economy and I think one of the major measures of how government um actions affect the real economy is with your spending on capeex and goods and services because the other expenditure items do not really affect the economy.

[00:11:08]>> I mean there's there's a way to affect the economy in the long run but then for direct um access to the real economy you need to focus on your capeex and your goods and services. Now these two line items for the first quarter the numbers on the finance ministry's website the government didn't meet their targets. So again some of these things reinforce the you know the arguments people say that well government is spending but they're not spending on the right areas because the spending that needs to drive up economic activity we are falling below um the projection that were made again speaking about all these things you need to understand that you only spend what you make in revenue and this is what Joel was was speaking about when he said that well if your revenue is not doing well either you cut back on your expenditure or you find uh additional revenue elsewhere that's through loans and all of that and we know um the finance minister's position on you know getting on extend additional debt and that's even why sometimes some of the world bank funded projects and some of the multinational institution their projects the finance minister does not want to draw down too much because that's also adding to our deskto and this morning we had our deskto gone up by about 47 billion but majority of that was also because of the exchange rate movement I think about 28 28 billion was from the exchange rate movement and only 19 billion for actual fresh debt which is in line with the finance ministries's about 15 billion every 3 months so I think additional debt at this point is really not something that the fiscal authorities are looking at but then again might be surprised tomorrow when the budget is read. Uh maybe the minister might indicate as to the local bond that they are looking forward to within the next quarter. Hopefully we might see some indications from the minister out there. But then uh to ask to answer your question again for us to feel the impact on the ground and for businesses and the market to feel the impact spending needs to be directed towards capex and goods and services and then we are not meeting the target yet.

[00:12:48]I I think that one of the biggest challenge that maybe at our force might be dealing right now >> may have to do with posturing philosophy and the reality and also government trying to make a case about the fact that they can manage this economy. one you're dealing with the previous administration >> and trying to show that listen when it comes to us we are better managers of the economy >> just coming out of an extended credit facility program as well >> the signal that you want to send across about you can manage the economy the reality is that you can starve yourself to have a good body to show to the those who are auctioning for models for maybe world or something but the reality is that is that starving yourself giving you an ulcer or not So outwardly the numbers could show that yes you're doing good >> but are you again developing another medical challenge >> that could worsen your situation because there are still a lot of people who are pushing for jobs. They are pushing for our road networks and all the rest.

[00:13:48]>> You need money to finance it. If you start spending what could be the impact of that on inflation?

[00:13:55]>> What could be the impact again on your your budget numbers when it comes to overance deficit and all the rest?

[00:14:02]You've set very high target for yourself trying to show the international community that listen we are we can manage our economy even without the IMF.

[00:14:10]So >> there's the posturing bit there's the philosophy bit there's a political economy signals you want to send and the reality on the ground that as a developing economy you need to spend to stimulate growth.

[00:14:24]>> Yeah. And these are the things that he'll be battling with if he meets with his cabinet people in trying to see what should be the way forward. Whether you want to go with a classical media review and just come and see that growth you think that growth will do this we are done and go >> or look out for an opportunity to do a supplementary budget which I'm not saying that's what's going to happen or a situation where you have to >> do some things to improve the region situation in terms of revenue. So this is what I think he might be battling with right now in terms of dealing with all these things. Fund program pressures from Ghanaians from party people say we need jobs and all the rest. How do you need jobs? This is a classical economy where >> a government has to spend to stimulate growth and even spending in the right sectors >> where are you going to get the money from?

[00:15:13]>> Mhm. Well, having said all of these things, uh, George, so I'm I'm asking is this fiscal the position of the finance minister to ensure that there's some amount of level of, uh, fiscal discipline, is it is it is it the right I mean, the level of fiscal discipline, is it the right level of fiscal discipline? Because regardless, we still need some spending as well.

[00:15:34]>> I mean, that's what I'm saying. Where's the money going to come from?

[00:15:37]>> There are economic theorists that believe or some economic classical theory that believe that as a developing economy, you need to spend. You cannot go with an aggressive fiscal consolidation >> to get the required results for an economy like Ghana and have to do something about it. That's what I'm saying that there is nothing wrong but again >> there are immediate shocks when it comes to spending >> and long-term shocks when it comes to spending. Looking at what is happening in the Middle East and all those things, it appears that >> things might not be good for us going forward. I I think that it is something he'll be struggling right now to see what would be the best approach going forward. M >> you can keep the brakes and have inflation still being single digit but it is not creating the jobs that you want and again don't forget that >> we are a year away going to election.

[00:16:25]>> Yeah >> there's a challenge of the fiscal discipline to ensure that we are not hit by the election curse >> where we spend at nobody's business and also to ensure that listen how do I keep the a good report card to present to the electorate in an election year.

[00:16:40]>> Yeah. So listen I don't want to be a fun minister at this time because [laughter] listen >> it is a tough time for the minister if you want to be real if you want to be practical >> and also an economics they will say there is the political economy that you have to deal with >> also minister of finance >> well Caleb ahead of tomorrow what are the three biggest um statements that you're looking out for from the finance minister >> well I think the first one I'm looking out for is the primary balance rule now that was adjusted by the EU government to 1.5% of GDP. Now that's very high. If you want to be spending it should it shouldn't be 1.5%. But then again this is one of the things that's really locked the hands of the government and the finance ministry because you need to meet that rules within the the amended PFM the the the act that was amended by the finance ministry. So again the IMF is alo in town they they about to release their staff their staff level agreement. I think should be out somewhere next week. The IMF is also saying that probably the government can't consider lowering the rule from 1.5 to about 0.5%. And you still meet your debt to GDP targets because we're already within that band anyway. So I think hearing an indication from the ministry tomorrow that maybe at the end of this year we might you know tweak the fiscal rule from 1.5% to now 0.5%.

[00:17:53]That's going to free up the finance ministry and they can spend more which is what everybody's is calling out for.

[00:17:57]The next thing will to understand their debt framework for the rest of the year whether they are going to you know get more domestic debts issue more domestic bonds whether coco is also coming through and how that's going to >> how that's going to be introduced into the market and finally also how the government is going to do their new economy you know we heard indication that the media budget is going to touch from that I was expecting it to be in the main budget in 2027 but then we've heard indication that that might come within the media budget so again how the government >> you're right on that because again there also indications that we picked that from Some of our colleague at the desk is saying that maybe we may not have the minister speak about the new economy thing in this media budget but it could happen in the main budget the president will talk about it. So >> the there's still some fluidity when it comes to these things >> because media you can't really implement most of the policy >> but I will say that with some of these things is never say never and sometimes >> do not stick your neck out because >> anything could change in the last minute when it comes to some of these things.

[00:18:55]Yes, we've pieces of information and nothing stops us from sharing with our viewers or listeners. But again to be more and stick your neck out and say this is going to happen, there are indications that he could go that way. There are also indications now from some of the people at the ministry of finance that he may not talk about that you should leave for the main budget and all those things and this is what some of our colleagues at the desk have picked up as well. So let's see how things will pan out. As I said, let's see whether we see an media review where I just come and look at the estimator and go >> that window of opportunity to look at all some of these things as well. Yeah.

[00:19:32]>> Well, I'm I'm actually looking forward to the government's projects. I mean there are campaign projects like the twin for our economy and the big push agenda as well because I I don't know but >> there are not rumors because it has actually happened. we see some um government uh stateowned companies or agencies that have started rolling out the twin for our economy.

[00:19:56]>> Oh my lord. [laughter] >> No, the time he said, "Oh, there's you said there's a DVLA branch that actually operates till 10." [laughter] That's not till 10. That's >> no ident runs 24hour, but till 10 is not part of the 24hour. But anyway, I'm looking forward to some comments around that. Anyway, >> I I I would want to look at the expenditure and whether >> government is going to review this expenditure target for the year as well and when it comes to revenue >> whether government wants to cut back or it will he will send some signal of >> an expansionary budget going forward and that will give us an indication about whether government would then want to borrow more to uh finance these infrastructure projects. So I'll be I'll be looking out for expenditure and revenue. These are the two key things for me.

[00:20:46]>> Well viewers, this has been analysis on this particular issue, but of course we're taking a breather. We'll be back with big analysis. Please stay. It still be on the numbers.

[00:20:58][music] You're welcome back and thank you for staying with us. Today on big analysis, the monetary policy committee of the bank of Ghana will this afternoon announce its decision on the policy rate. Will the committee increase the rate, reduce it, or maintain the current rate? What are the key economic conditions and indicators that will influence this decision? And what does the outlook for inflation, the exchange rate, and economic growth tell us? Well, we'll take you through the key factors behind the decision and importantly explain what the outcome could mean for businesses, consumers, and the wider Ghanaian economy. Definitely, the team is still here. Callum Ziblim and George Rafi are here. Um guys, I uh let's before we get into the conversation, let's look at the inflation rate and then we can look at what if a hold could mean.

[00:21:54]>> Um so you know the one of the main uh reasons we do the MPC meetings is to control inflation and over the past few months we've seen inflation go up from 3.2% to now 5.3%. And this is mainly on the back of what's happening in the Middle East. The you know the higher energy prices has fed into the economy through transport cost and holage services. So those are the main reasons why we are seeing the >> inflation rates go up. Now for the MPC meeting today they are going to oh that they just had and they come to announce the decision. Um they were going to or they went through the numbers to tell whether this uptick in inflation is going to be persistent and if it's going to be persistent they need to use their tools to control inflation. again not just if it's going to be persistent but then whether businesses and then the consumers the expectation for them is that inflation has you know come to stay and one of the the main uh problems with inflation is your expectation because once say I go and buy a good and I expect that the price is going to increase for some time even though the >> uh economics of it doesn't warrant an increment >> if someone tells me the price has gone up I'll not be surprised and I'll still buy the good anyway but if I'm not expecting the price of the good to go up I might hold back and or wait for the price to come back down.

[00:23:04]So once expectations have been entrenched within the consumers and business, it's very hard to get inflation in check. So this is one of the main reasons why the MPC meeting sits they go through the data and they try and try to you know understand whether the current uptick we are seeing in inflation is because of something that is entrenched within the guardian economy and if it is >> the MPC rates or the policy rates might you know be adjusted to >> uh fight that inflation. M >> the last MPC meeting the the BG decided to hold the rate at 14%. And you know that was very expected for everyone because at the time you know the economic the global uncertainties were very high. So it would have been you know >> very interesting to see that the BG would have either reduced the rates because they were in an easing cycle. So the before the conflict erupted we're all expecting that the BG continue reducing the rates but then because of the uncertainty the BG decided to hold the rates and not hike it. Now this time around there's a very there's a possib there's a possibility for a hike because if the BG says that inflation might get out of control they need to hike the policy rates but then again we need to understand some of the factor that the MPC comm the the committee goes through to determine whether this is in check or this not in check >> and then again we so one of the major factors is crude oil prices now this was as of this morning but before I came on air I checked again >> it's around 94 >> it's about 94 and WCI [laughter] is around 90 88 8. So this is very high considering we came down to the lows of 70 69 for WCI and then 72 for Brent. So >> things are out of control at the moment.

[00:24:33]We don't know how things are going to continue within the um >> the Middle East conflict. Last week we all happy over here because we thought the com come to an end after the 60-day agreement has been reached between the US Israel and Iran and then for things to just get out of control again. And then for the past six months of the year, we are spending about $150 million more in energy imports because of the higher crude oil price. That's fed into the refinary cost. Again, uh petrol and diesel the pumps have also gone up again. Um currently diesel is over 16 uh dollar sorry 16 cities per liter and that also feeds directly into inflation because you have your transport services operating mainly on diesel and your industry also operating on diesel. So these are the things that the MPC uh the committee decided on over the past few days to determine whether uh they should adjust the rates, leave it as it is or hike it. Now one of the main things again that influences inflation within the economy is the exchange rates.

[00:25:25]>> Now we've seen the exchange rates on very sustained uh you know depreciation path. It came down dramatically over here and then that's where we heard that the BG had to put about 2 billion in the market for just June and then we saw some desk payments by the finance ministry. there's always this you know coordination between the two authorities and we are still going up again despite the bog still supplying the markets with the with the forex as and when so I think these are the things that are going to be you know very uh in focus within the NPC meeting and let me just end on this as to um the shape or the makeup of Ghana's economy now gold is the major factor here doing 12.4 billion >> in the first 6 months we did 18 billion in exports >> 12.4 4 just came from gold. That's about 69% almost 70%. So that's 2/3 of your exports just from one commodity. That tells you how heavily we exposed to gold and gold prices. The good news for us is that gold prices are so elevated. In fact, they going up a bit because of some uncertainty in the US and all of that. And but then again, we've heard indication that from the US Fed they're going to cut their rates. Once they cut their rates, the ripple down effect is that good prices might come down. Once it comes down, Ghana's economy is going to be felt. Now there was also a policy change um announced by the governor that BG is not going to pre-inance gold board anymore. That's significant because the BG pre- financing gold means that gold might have to look elsewhere for their purchases. But then again also remove some of the liquidity within the system because BG pre- financing gold balls essentially BG printing money in a very layman uh understanding of the thing BG putting money in their system for gold to go and make their purchases. Now I have a thought that the BOG might not want to cut the policy rate to so hike the policy rate too um too sharply. So by by uh to prevent that the BG has decided to take back the cash that they would have given to gold board. Once BG is no longer pre-inancing gold board it means the liquidity in the system has reduced. So in that way also trying to fight inflation and reduce how much money is within the Uhian economy. So I think this this was also a reason why the bill decided to stop pre-inancing gold board already. We also know that the IMF was not happy about that and the IMF they are almost done with their their report and I'm sure it to be end there as the BG's you know dealings with gold ball. So these are some of the things that the committee has been looking at.

[00:27:32]>> Well George uh he's he's mentioned some of the factors and we've looked at it and we've seen uh inflation go up three straight months yet still the policy rate has been at 14% since March. Now let's look at all the factors that we've talked about. How much room do you think the committee have in terms of I mean in case they have to move?

[00:27:56]>> How much room do they have looking at the oil shocks and if there's going to be a hold as well? What are the data policy um uh I mean indicators that they would have to look at if there should be any hold before they make any uh >> the governor of the bank of Ghana who had made the argument that they work with data.

[00:28:15]>> What does the data saying? The Bank of Ghana has a a policy of working with what they call inflation targeting after all said and done whatever policies that they put in place monetary tools. How did they try and check inflation i.e the amount of money in circulation and all the monetary tools and all those things?

[00:28:35]Recently at the preNPC meeting the governor gave an indication that maybe that diff this inflation that we saw over the past month is coming to an end because of what we seen in the external factors but that is just one person. We have seven members of the monetary policy committee committee.

[00:28:54]>> The governor doesn't vote actually unless there's a tie.

[00:28:57]>> Mhm. From indications that were picked from some of the members, they were indicating that they would vote for a hold because of the uncertainties out there.

[00:29:09]>> Inflation is going up. What were the drivers? They were non food.

[00:29:12]>> Mhm.

[00:29:13]>> And so you realize that what has happened externally is playing a role is now impacting us.

[00:29:18]>> They are some of the school of thought.

[00:29:20]What today we wake up or wake up and now Trump has change of mind. There's a new peace deal. Mhm.

[00:29:26]>> That news alone will see crude oil prices going down >> and so there is still a high level of uncertainty that >> the high can come back again and review it is more safe for the committee and again gleaning from some of the members who are saying that and I hope that they have the majority when it comes to the vote. There are seven members, six members that will vote. If there's a tie or something, the governor will vote.

[00:29:53]>> If these majority of members are anything to go by, then it means that we may end up seeing the rate being maintained.

[00:29:59]>> If there's a tie or some people think that listen, if you look at the situation, >> we also don't want to be taken back by events. If tomorrow prices is going up, >> it means also that we might be spending more of our reserves >> to finance oil imports. It has implications of the Bank of Ghana's ability to again contain inflation. Do you want to also move fast to ensure that you contain inflation and build the shocks against what is coming out there?

[00:30:27]Also, the reserves have gone down. It means that we may not see the Bank of Ghana in that aggressive manner again going forward in trying to firmly stabilize the city.

[00:30:37]>> So, we might see some blips going forward. The Bank of Ghana will say that these blips are expected in any market.

[00:30:43]Mhm.

[00:30:44]>> So what is the problem is that we might not see a huge depreciation >> but you might see some blips. So >> if you put all this data together the the external uncertainty they assemble the school of thought that go ahead and hike they supposed to say that wait and see. So it it is quite a difficult decision for the members of the monetary policy committee in terms of voting on this decision. that again as I said that if what we've picked up from some of the members >> indicating that they will vote for a hold >> then we mean that we might see that hold there for the next one month or two >> and also don't forget that they have several tools as well >> that they can use you could look at the cash reserve ratio as well >> they used that the last time >> is that also going to be the commercial banks have complained that that action actually has made cost of credit difficult >> the last month what do you call it again reference to it there was a spike because of the cash reserve ratio as well. So the Bank of Ghana is looking at all these numbers. Would it rather be prudent to just to hold the rate now >> and watch for just a month or two or use other monetary instruments to try and build that safe gas to ensure that we are not overtaken by events but the external environment doesn't look good.

[00:31:58]M >> there will be pressure on the reserves dealing with the city >> bringing in finished petroulum products and showing that there is availability it means you have to >> deplete your reserves and don't forget about the signal effect about when your reserves are coming down >> those who want to bet on that by signal because of that the bank of Ghana cannot then step in to save the city so let me bet on the currency >> and that also feeds into the depreciation as well so it is going to be a hard time for bog. Some are saying that maybe it's good to just hold wait and see. Some are saying that listen >> nothing stops you. After all, you can do an emergency NPC meeting >> if anything change.

[00:32:40]>> Now, well, we've looked at uh some of the external factors and I'm thinking so this is to say that you think that the MPC comm I mean the committee may hold >> that's something that listened >> again to be on the safer side. What I thought that we've picked up indicate that there are some who are pushing or who vote for a rate hold >> which could be a little bit safe for us right now.

[00:33:07]>> Why are we worried by this? Because it is about the implications on lending.

[00:33:11]Now the policy rate is the rate that the bank of Ghana will lend to commercial banks and that could is a major tool in trying to again checking the system which will impact on inflation because the bank of Ghana thinks that listen going forward we could see inflation going up why don't we use this tool to check it some are saying that the target is 8%. M >> how many months to the end of the year listen unless I I I mean listen all the extrapolations that you do I doubt whether in a month you will see inflation going up by 2 or 3%. It means that you are still within your your band >> of plus 2 or minus 2 8%.

[00:33:49]>> So there is some room so listen why don't you hold some are saying that wait why don't you even cut which is not possible some would say. So if you look at all these scenarios, you realize that the bank of Ghana still has a room because your target is + 8 or minus 2 that is 8 + 2 or 8% minus 2. So with with with this rate right now you are still within your band as well. So where is this argument about threats to inflation going up in the economy as well?

[00:34:20]>> [snorts] >> It is difficult but again as I said that >> what the data points to >> to be hiking rate to be on the more safer side but again economics is also about people and I always remember what they told us in class there is the political economy as well. So how do you weigh all these actions and take a decision on how that will impact on businesses out there who are also complaining that access to credits is a major challenge for them. Well, let's look at the uh importers and manufacturers as well. When you look at the amount of money they have to pay, um can we say that the extra that they get to pay as taxes is some effect we're seeing from the FX um rate or the policy rate?

[00:35:08]>> Uh so I think for the important exporters, you know, they also affected by what'sever happened in the Middle East because there's something we call important inflation. the things they bring to the economy also impacts Ghana's own currency also impacts how much they can bring to the economy how much they sell and you know the profits and all of that so I think from the B they need to make sure that there's enough dollars within the economy and to meet the demand now that's really where the challenge is because usually in times like this there's always uncertainty some people might fear that at the end of the year things might get out of control so let's import now which is why you see some front loading of the imported products into the economy that's alo putting some extra demand on the on the dollar which affect your currency which is why the BG sometime comes to say hold on we have enough forest to support the economy so do not rush for that again some people also fearing that the availability of their products elsewhere might also be affected by the ongoing tensions remember already Ghana's gold exports was affected by the Middle East tensions we could not export as much as within last year because the airspace was slowed in in Dubai India also they had some um controls over how much you can purchase in gold and all of that so I think these are the things that take into effect now draw spoke about the uh international reserves and it dropped it dropped by 1.2 billion. We also know that the fin decided to dip into his reserves to meet the regular FX.

[00:36:30]>> But Caleb, just a quick one. I mean, there there's there's a two approach here. There is the bit about um what is coming in from the gold that um Ghana gold board has sold >> which they threw into the market >> and also don't forget the bank of Ghana is still implementing this >> accumulation program and that is why >> the impact wasn't there because from general environment from March to June I think that in terms of supply if I could use the word a mix of intermediation and intervention >> it has be more than $1.2 billion. So again, the the good thing for us right now is that >> gold is still doing well.

[00:37:11]>> And so whilst Bank of Ghana is still mopping up with its accumulation program of building reserves, >> the extra that came in from the sale of gold, >> they throw that into the market in terms of the regular auction, >> the the auctions or interventions or intermediation. I don't [laughter] it's an intervention in the market. So those things might be helping us and >> our bet here is that or our prayer is that when you go to the room and you sleep in the night is that let go prices to go up. I'm still waiting for how the the Fed actions would because if the dollar assets are now more enviable for people to go then they will turn that way. If gold is still a safe haven for them >> then people will still divert towards gold assets and all those things. So these are the dynamics. Talking about export, they were struggling to recently they managed to find a different route >> to get these gold expert out there. So you have the gold but you don't have the money.

[00:38:09]>> So there are real challenges out there.

[00:38:13]>> Things are not as what we are all seeing. The backstory is that things are tough. We are not out of the woods yet.

[00:38:21]>> They are still inherent challenges. Have we built the shocks to withstand the shocks? No, we haven't.

[00:38:27]>> And speaking on the go side of thing, now that the BG have decided to stop pre-inancing gold board, we need to understand um whether gold will have enough muscle to go and buy the same amount of gold that they buy on a weekly or daily basis and export that to support the economy. No, the BG supports gold through two ways through the commercial banks and through BG's own money. So now the BG's own money is out of the equation with commercial banks.

[00:38:49]Now commercial banks do they have enough liquidity to keep supporting gold at a level or is gold going to rely on it revolving fund I think about 4 billion was released to gold board we don't know whether um the revolving fund is in operation whether they are still relying on BG and the commercial banks entirely or whether they started using their own um funds within the revolving fund to um purchase and exports gold but know we had some routes or measures from gold over the past few weeks where they now um outlined the purchasing price the time of purchase and all of that to streamline the purch purchases within the gold sector. So I think the gold compensation is something that we cannot take out of the equation entirely because 70% of the export is gold. So if gold price should reduce by 20%, we're going to feel it heavily in the economy.

[00:39:31]Your city is going to tank, inflation going to spiral and then again we might have the BG having to you know use some of these tools to and prevent that from happening. But then again I spoke about this earlier where I said because now stopping the pre-inancing side of things liquidity within the economy is going to reduce and that's going to support the inflation fight because inflation fight is all about liquidity within the system and whether BG uh is reducing the money in circulation. So the reduction or the reduction that's going to come from the cancellation of the pre-inancing means that inflation should be manageable within uh the commercial banks uh point of view. Again the cash reserve ratio is in operation that's also reducing the liquidity within the system. When the governor spoke on Monday he said a committee were going to assess whether the cash reserve ratio is you know delivering on this intended purpose and they might do something about it today.

[00:40:16]Hopefully we might hear some announcements on the cash reserve ratio because the banks have also be complaining about it. But then again from the bog side of things they want to control inflation and also preserve the you know the lower interest rates that we've seen over the over the past few months. Apparently the average lending rate has come down a bit compared to the same period last year which is good news for the business community and consumers but then again protecting these gains.

[00:40:38]So which is why sometimes a hike might be very challenging for the BOG because once you hike you're distorting the markets and then should things within the Middle East you know come come a bit under control the B now have to come and reverse that hike before they can now continue the easing cycle again without they might come through an emergency NPC meeting or anything we don't know that yet. But again uh just to reemphasize the point that gold prices are what's keeping the economy afloat at the moment and sometimes people unc uncomfortable with that and that's the truth. Again oil prices are also doing very well which is also supporting us a bit but then the overwhelming driver is gold at this moment. So we just hope that >> gold was still still has access to the markets because if you look at the data for the first three months of this year compared to the first three months of last year we exported less gold but I still got more forex because gold prices were very high. So we do not feel the impact that much. So should gold prices fall, we need to start exporting more gold before we can still support the city and moving forward. So I think that's one of the major reasons and if you look at Ghana's uh gold reserves is still going up despite the fall in uh uh international reserves. Gold has now gone up to 24.4 important which is still within the BOG's playground of about 20% you know to 25% of your international reserves because last year we had almost 40% of your res being in gold and that's not really a good idea because you might need to intervene into the markets as and when and once you have entire about 40% of your reserve locked up in gold it means you need to find a market for that very quickly and can even make losses in that space because once you're looking for for buys quickly you might just accept anything um that the buyers give you at that point so again that's something we need to look at but for gold prices. I'm still a bit, you know, optimistic because China is still buying a lot of gold. Central banks around the world are still buying a lot of gold because of Donald Trump, people don't trust it that much. So the demand for gold is still up there. So once demand is so up, I think we should we should not be in too much trouble.

[00:42:28]>> I think the problem with the gold board now is when Bank of Ghana tried to crack the whip in terms of enforcing the Asian rate and there were this thing about the fact the bank of Ghana may have the rate, the alleg may have the dollars as well. gold what might have the gold but [laughter] whether it has the cash is another thing all together we have to look but I think that he made a quite a very critical point about >> gold and what gold is doing to this economy and what is happening right now that if gold prices should tank what would that mean for the economy but as someone was saying that listen >> the price is still within the budget >> so over 4,000 it means that government has said that listen when it drops below this amount then there's a So, still hovering around 4,000.

[00:43:14]>> That is still good news for the economy in terms of what it will mean and all those things as well. Yeah.

[00:43:21]>> Well, be before we we wrap up on this, let's look at the T bills as well, what would a hold or cut mean for borrowing costs?

[00:43:29]I mean if if if the bank if the commercial banks are is not costing them more >> to turn to the bank of Ghana as the last resort then we could see um things being a little bit stable but don't forget that you want to look at the the tibos rates and at what cost is government willing to borrow from the market >> and again inflation. So a hold of a policy rate could again could could make things a little bit minimal in terms of going forward. Even if the policy if even if the pressure rate to go up a little bit and even the interbank lending should go up a little bit but where it goes up and all those things goes up expect the Ghana reference rate which is the benchmark for learning to go up a little bit and that is not good for businesses out there. M Caleb.

[00:44:15]>> Well, I think at this point the you know the finance ministry they they want lowering they want lower rates when they go to the market. So [laughter] uh and you know we saw this earlier when the new government came in where TB rates came down dramatically and they stayed there. So I think from the fiscal authorities they they can keep the rates usually around where it is if they want to keep the rates because the minister can say I'm not going to take you know additional uh fund that the market is offering me and the rates are so um be subdued a bit but then again that comes back to the conversation we had before we came to the MPC about expenditure and whether the finance minister has enough you know revenue or enough cities and it coffers to spend where the economy needs the spending to be done. Uh so I think that that's really a challenge between the fiscal authorities now the monial authorities but then again I think like George you know spoke about I really think that it's going to be a hold today a cut a cut a cut I think is out of the table at this moment for a hike a hike is possible and the numbers can also point to a hike depending on how the members view things but then again in my perspective I think a hold is going to keep things stable the way they are and should things in the Middle East gets out of control the bog can always call an emergency MPC meeting and hike the rates at that But then to hike the R at this moment and then if things do not get out of control the building has to reduce the hike before they can continue the easing cycle and again we don't know what Donald Trump might do. He might decide to call off the war. He might decide to capulate to the Iranians and then because there this is where mimction coming up in US >> nuclear sites and all those things.

[00:45:38]Exactly. The committee has also been going with the the market trends. So the market is pointing to a hold.

[00:45:45]>> I don't think that they want to distort that as well. M so if I'm a business budgeting for the rest of the year what's the realistic interest rate or inflation rate I should be underwriting >> inflation rates I think we could see a marginal spike >> we could see the policy being held or a marginal spike >> that will see a marginal spike in the real cost of credit right now we still hear some business are getting singledit lending >> so expect that cost to go up a little bit >> okay >> okay I I guess we'll have to be crossing over to the Bank of Ghana as the governor is seated and is ready to announce. Well, it looks like the men are saying it's all uh it's it's all a hold, right?

[00:46:30]>> It's a hold. Yeah, I think I think it's going to be a hold. And >> when we're speaking about um how the business communities are going to be impacted by this, I think that's something that usually within this conversation we we always we always leave out whenever we speaking about the MPC rates because the business communities are the one that actually feel the impact of whether the the policy rate is going to go up or go down because that's where we need the drivers of the growth to come from. We spoke about how the finance ministry can drive growth to it spending. The bog can also drive growth through the policy rates and once the policy rate you know is it's favorable for banks to now decide not to leave their money with the BG or with each other they might give their money to the uh >> I think if you listen to what the banks are saying they are really worried about the the cash reserve ratio it going up so I think banks >> they'll be looking at what would the governor or the committee be doing >> on the cash reserve ratio >> I think it was refreshing to hear that the bill the committee is going to look at how the reserve ratio performed since May and they're going to make their decision based on their assessment so far. So there might be some hope for the business community because the committee is looking at that.

[00:47:36]>> And why are the commercial banks complaining in terms of the fact that they are now being asked to hold more of their deposits there?

[00:47:42]>> Yeah.

[00:47:43]>> With no interest on that.

[00:47:44]>> Mhm. That's about 20%.

[00:47:45]>> Yeah. Yeah. You're right on that. Well, so that's the visual from the MPC press briefing and we're wrapping up on Beyond the Numbers here on Jaw News. Thank you for your time. But when the governor is ready, we'll go back to the uh Bank of Ghana and take a listen to the announcement. Is it going to be a hold, a cut, or a hike? Well, the guys say they don't think a hike is even part of it. I mean, a cat.

[00:48:14]>> We haven't We haven't >> cut [laughter] Well, no. I mean they're saying that they doubt there will be a cut maybe a hold or a hike. I don't know where I stand but anyway uh thank you for your time. I am Michelle Jukum and I did this with I'm >> Caleb Zab and George Yafi.

[00:48:29]>> We'll see you on Friday.