The prime rate, the rate at which commercial banks borrow from the Central Bank, remained unchanged at 24.5 per cent on Friday after the first meeting of the Monetary Policy Committee (MPC) of the Bank of Ghana since its inauguration last September.

This follows a look at the balance risks in the outlook of the economy within the context of an appropriate budgetary framework for 2003. Dr Paul Acquah, Governor of the Bank of Ghana and Chairman of the MPC, noted that the market needs consolidation before any changes are made to the prime rate.

"The market should factor into its expectations, the long-term strategy of planning the economy firmly in a non-inflationary path and avoid volatility in prices and election tricks." He said the economy has experienced 21 months of consecutive declines in the rate of increases in the national consumer price index. Inflation dropped from a peak of 41.9 per cent in March 2001 to 12.9 per cent in September this year.

Giving an outlook, Dr Acquah said there was the need for an improved external payments position. He said he was expecting a surge in cocoa prices along with firm prices for gold, which should boost export proceeds and provide some depth to the foreign exchange market and cover for the seasonal increase in demand.

Dr Acquah, however, said the economy could respond to the risk inherent in oil prices given developments in the Middle East.