Ghana’s foreign exchange reserves dipped by 13.3 percent from $5.77 billion in June 2017 to $5.1 billion in August 2017, equivalent of 3.0 months of import cover.
According to Ecobank Research, this is on account of gradual weakening in the trade balance in quarter two of 2017. Cocoa price has been slightly lower than that of last year despite production levels remaining high, and it is presently selling at $2,060.
“That said, recent signing of a COCOBOD loan agreement for $1.3bn for the 2017/18 season is set to provide a momentary uplift in quarter four 2017”, it stated in its latest report.
Also, the issuance of a three-year domestic dollar bond on November 7, 2017 to develop local funding sources to support the economy is expected to shore up the secondary reserves.
But the Bank of Ghana Monetary Policy Report September 2017 stated that Gross Foreign Assets stood at $7.1 billion, translating into 4.1 months of import cover at the end of August 2017, compared with $4.9 billion (2.8 months of import cover) a year ago.
It added that the foreign exchange market conditions remain relatively stable supported by improved liquidity conditions, despite some marginal demand pressures. In the year to August 2017, the Ghana cedi depreciated by 4.5 percent against the US dollar, compared with a depreciation of 3.9 percent in the same period of 2016.
Meanwhile, cocoa production is expected to increase by 21.5 percent in 2017 despite low price on the world market, according to BMI, research outfit of ratings agency, Fitch.
BMI had earlier forecasted a growth rate of 15.2 percent for cocoa production in 2017.
According to its report on Ghana’s economic outlook, “supportive weather conditions have offered further tailwinds to economic activity.”
It added “rising cocoa production will also support exports in 2017 due to excellent growing weather in the 2016/2017 harvest although we expect that harvests will be less productive in subsequent years.”
Ghana has been battling with low price of cocoa on the world market. Presently, cocoa which the country is the second largest producer in the world is going for $2,085.
Despite the low price of the commodity, the Government of Ghana maintained the producer price of cocoa for the 2017/2018 season at GH¢7,600 per tonne, same from the 2016/2017 crop season.
BMI noted that cocoa together with oil and gold will contribute significantly to the Ghanaian economy in 2017.
Whilst cocoa constitutes 30.5 percent of the nation’s exports commodities, oil and gas constitute 15.2 percent of exports commodities.