This week in business, The Monetary Policy Committee of the Bank of Ghana has announced a hike in the policy rate by 150 basis points to 29.5 percent from an earlier 28 percent announced in January this year.

The decision comes after the Central Bank held its second meeting for 2023 to review economic developments in the country.

Governor of the Bank, Dr. Ernest Addison explained that the hike is due to rising inflationary shocks which are expected to persist as Ghana awaits an IMF-supported programme.

Governor of the Bank of Ghana, Dr Ernest Addison also said that an agreement has been finalised with the Ministry of Finance on the modalities toward a Memorandum of Understanding for zero financing of government’s budget for the 2023 fiscal year and beyond.

According to him, the MoU is expected to be signed by both parties soon as Ghana awaits an IMF-supported programme which is expected to restore macroeconomic stability among others.

Meanwhile, government secured GH¢2.44 billion from the sale of treasury bills in its latest auction held on March 24, 2023.

The auction saw an under subscription of GH¢764.6 million. This will be the first time this year that treasury bills have been undersubscribed.

The government set the target at GH¢3.21 to finance the payment of maturities for the first quarter.

Also, the rates have remained quite stable in the past two weeks after dropping to an average of between 18.87% to 25.66%.

Vice President of the United States of America, Kamala Harris, has disclosed her government's intention to deploy a full-time resident advisor to the government of Ghana to help them resolve the country's economic crisis.

Kamala Harris made this known when she arrived in Ghana on Sunday, March 26, 2023. She said the resident advisor will assist the Ministry of Finance to develop and execute medium to long-term reforms to improve its debt sustainability programme.

Kamala Harris noted that the project formed part of its Department of Treasury’s Office of Technical Assistance (OTA) to engage and strengthen public financial management across sub-Saharan Africa.

The Vice President of the United States of America indicated that the OTA will execute 25 projects in 15 African countries including Ghana this year.

Banks with a capital adequacy ratio (CAR) of less than 10 percent of their assets have been asked to submit plans for recapitalisation, Bank of Ghana Governor Dr. Ernest Addison has disclosed.

The ratio – a principal financial soundness indicator – demonstrates banks ‘ ability to finance their long-term capital expenditures and ventures and was reduced from 13 percent to 10 percent in December 2022 as part of a slew of measures aimed at mitigating the domestic debt exchange programme’s (DDEP) impact on banks, as they were over-exposed to the Treasury instruments…holding a third of all outstanding cedi-denominated bonds.

Watch a wrap of business stories that made headlines this week