Ghana’s Balance of payment records U$1.47 billion deficit

By Elorm Desewu

Preliminary estimates of Ghana’s Balance of Payments for the second quarter of 2020 indicate a lower deficit of US$1.476 billion, compared to a deficit of US$1.674 billion for the second quarter of 2019, according to Bank of Ghana’s second quarter report.

The current account deficit improved by 21 percent from US$839.14 million in the second quarter of 2019 to US$662.97 million in second quarter of 2020. The decrease in the current account deficit was influenced largely by a reduction in the payments of investment income, reflecting a reduction in profits and dividend payments. In addition, there was some moderate increase in net unilateral transfers.

The provisional trade balance for second quarter of 2020 showed a surplus of US$114.47 million compared to a surplus of US$712.44 million recorded for the same period in 2019. The reduction in the gains made in the trade balance was because of a larger decline in exports by 13.6% year on year relative to imports 1.5% year on year.

The estimated value of merchandise exports for the second quarter of 2020 was US$3.481 billion, indicating a decrease of US$548.42 million or 13.6 percent compared with US$4.029 billion recorded in the same period in 2019.

The decrease was attributable to declining receipts from the exports of crude oil, although other exports (other minerals and non-traditional exports) and some commodities recorded lower export receipts.

Gold exports in the second quarter of 2020 amounted to US$1.708 billion compared to US$1.554 billion recorded during the corresponding quarter in 2019. The increase in export receipts was mainly as due to price effects. The average realized price increased by 10.9 percent to settle at US$1.708.79 per fine ounce whilst the volume of gold exported decreased by 15.3 percent to 1,000,397 fine ounces.

The value of crude oil exported during the second quarter totaled US$631.32 million compared to US$1.235 billion recorded in the same period in 2019. The decrease in value was due to a fall in price by 50 percent to settle at US$34.07 per barrel, compared to US$68.14 per barrel recorded for the same period a year ago. There was, however, an increase in volume by 2.2 percent to 18,528,077 barrels compared to 18,134,495 barrels in second quarter of 2019.

Earnings from cocoa beans and products exports amounted to US$545.68 million compared to US$521.33 million for second quarter in 2019, an increase of 4.7 percent. Earnings from cocoa beans amounted to US$275.61 million, a decrease of 10 percent over the level recorded in 2019.

The price of cocoa beans decreased by 0.4 percent to settle at US$2,428.62 per tonne, and the volume exported decreased by 9.6 percent to 113,485 tonnes. Earnings from the export of cocoa products, increased by 25.6 percent to US$270.07 million on account of a 22 percent jump in volume to 85,991 metric tonnes and a 2.9 percent increase in price to US$3,140.71 per tonne.

Earnings from the export of timber products in the review quarter amounted to US$29.17 million representing a decline from exports of US$40.08 million in 2019.

The value of “other” exports, which is made up of non-traditional exports, electricity and other minerals (bauxite, diamond, aluminium and manganese), was estimated at US$566.56 million; which is 16.2 percent lower than the outturn in the second quarter of 2019.

The value of the top-ten non-traditional commodities exported during the period under review amounted to US$273.44 million compared to US$309.36 million recorded for the same period in 2019. Among the ten top non-traditional items exported were cashew nuts, prepared or preserved tuna, palm oil and its fractions, aluminum, etc.

Total value of merchandise imports for the second quarter of 2020 amounted to US$3,366.08 million, up by 1.5 percent compared to US$3,317.49 million recorded in 2019. The increase was driven by non-oil imports.

During the review quarter, oil imports (made up of crude, gas, and refined products) decreased by 37.3 percent to US$374.98 million from US$598.52 million in 2019. Crude oil imports totaled 3,274,653 barrels valued at US$93.52 million at an average realized price of US$28.56 per barrel, compared with imports of 783,523 barrels valued at US$51.28 million at an average realized price of US$65.45 per barrel as recorded in 2019.

In addition, the VRA imported 6,576,557 MMBTu of gas worth US$48.27 million from the West African Gas Company (WAGP) at an average price of US$7.3 per MMBTu (Million Metric British Thermal units) for its operations. For the same period last year 6,056,912 MMBTu of gas worth US$43.72 million at an average price of US$7.2 was imported. The value of finished oil products imported in the second quarter of 2020 amounted to US$233.19 million compared to US$503.52 million in the same period in 2019.

The total merchandise non-oil imports for the second quarter of 2020 was estimated at US$2,991.10 million (including electricity imports) compared to an outturn of US$2,718.97 million recorded for the same period in 2019, up by 10 percent. This was the result of decreases in all the major categories except Intermediate goods.

The value of capital goods imported during the quarter amounted to US$618.57 million, down by 26.71 percent from the US$488.18 million recorded for the same quarter in 2019.

This was due to a 34.1 percent and 96.6 percent increase in capital goods (except transport) and industrial transport goods respectively. Demand for Consumption goods increased by 14.4 percent to US$618.06 million from US$540.09 million in Q2:2019. This was explained by a high demand for goods in all sub-categories, except for primary foods and beverages mainly for household consumption.

The value of intermediate goods imported decreased by 4.7 percent to US$1,432.11 million largely on account of a fall in the demand for goods in all sub-categories except processed industrial supplies, which recorded an increase of 6.4 percent.