Ghana’s gross international reserves declined by GHS168.51 million.

It stood at GHS8.249 billion in January 2020 from GHS8.418 billion as of December 2019.

According to the Bank of Ghana’s January 2020 Statistical Bulletin, the January 2020 cash and other reserve assets held by the central bank is 3.94 months of imports cover.

This means that in case the country experiences any shock, it can fund imports by only 3.94 months.

In December 2019, the import cover was 4.05 months of import cover.

The Finance Minister, on Monday tabled before Parliament a proposal that if the legislature passes, will allow the government to borrow up to 10% of the previous year’s tax revenue in the event of tight domestic financing market conditions amid the COVID-19 pandemic.

The move would reduce the nation’s foreign exchange reserves and put pressure on the cedi if demand ftor the currency resurges.

In January this year, the International Monetary Fund (IMF) disclosed that Ghana’s foreign exchange reserve level remained relatively low.

“Gross international reserves stood at 2.7 months of imports in 2018, lower than the three-month rule-of-thumb benchmark and the norm of 3.6 months estimated by the model for resource-rich LICs (Lower Income Countries) with a flexible exchange rate,” the IMF said in a report.

The Bank of Ghana’s Monetary Policy Report had quoted the country’s Gross International Reserves increased by US$1.67 billion to US$8.093 billion in October 2019 from a stock position of US$7.02 billion at the end of December 2018. This was also equivalent to 3.9 months of imports cover compared.

But the IMF figures indicates that Ghana’s gross international reserves for 2019 was US$5.1 billion, about 2.4 months of imports cover and forecasted to reduce to US$5.01 billion in 2020 but increase slightly to US$5.06 billion next year. This is equivalent to 2.3 months of import cover.

The Bretton Wood institution emphasised that the Ghana government’s definition of reserves is higher as it includes additional assets such as oil funds that may not meet the requirement of being readily available used in staff’s definition.