SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [2]

Summary_of_Economic_Financial_Data_September-2020-1

THE SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [2] EXAMINES THE FOLLOWING TOPICS:

  1. EXTERNAL SECTOR DEVELOPMENT;
  2. GOVERNMENT FISCAL OPERATIONS;
  3. MONETARY INDICATORS;
  4. BANKING SECTOR INDICATORS;
  5. STOCK MARKET PERFORMANCE, AND
  6. PAYMENT SYSTEM DATA.

ADDITIONALLY, THERE WILL BE A CONCLUSION.

AS USUAL, YOU CAN DOWNLOAD THE DOCUMENT IN PDF FORMAT AT THE BEGINNING OF THIS ARTICLE.

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  1. EXTERNAL SECTOR DEVELOPMENT

WITHIN THIS SECTOR, THE TRADE BALANCE SHOWS POSITIVE SIGNS, DESPITE THE PANDEMIC. BOTH EXPORTS AND IMPORTS INCREASED, WHICH REFLECTS IMPROVING ECONOMIC ACTIVITY. MEANWHILE, AS EXPORTS OUTPACED IMPORTS, THE TRADE BALANCE INCREASED IN COMPARISON WITH LAST MONTH. IT NOW REPRESENTS 2 PERCENT OF GROSS DOMESTIC PRODCT [GDP].

THE BALANCE OF PAYMENT SHOWS LESS POSITIVE RESULTS. BOTH THE CURRENT ACCOUNT BALANCE AMD THE CAPITAL AND FINANCIAL ACCOUNT BALANCE DECREASED. THIS LED TO A NEGATIVE, ALTHOUGH MARGINALLY NEGATIVE, OVERALL BALANCE OF PAYMENT.

ALSO, THE GROSS INTERNATIONAL RESERVES DIMINISHED FOR THE SEVENTH MONTH IN A ROW. IT STANDS NOW AT 4 MONTHS IMPORT COVER, WHICH SHOULD BE THE MINIMUM FOR A HEALTHY ECONOMY. TOGETHER WITH THE GROSS INTERNATIONAL RESERVES, ALSO THE NET INTERNATIONAL RESERVES WENT DOWN TO THE LOWEST POINT WITHIN ONE YEAR.

2. GOVERNMENT FISCAL OPERATIONS

HERE WE GET TO A LONG-LASTING PROBLEM ZONE FOR THE GHANAIAN ECONOMY. GOVERNMENT AFTER GOVERNMENT TRIED TO SOLVE THE PROBLEM OF INSUFFICIENT FISCAL ACTIVITIES. ALTHOUGH TOTAL REVENUE AND GRANTS WENT UP, THE OVERALL RESULT IS NOT SATISFACTORY. THIS IS, BECAUSE THE TOTAL EXPENDITURE INCREASED BY EVEN MORE. OF COURSE, THIS IS PARTLY DUE TO THE CORONA VIRUS PANDEMIC. NEVERTHELESS, ANY GOVERNMENT MUST AFTER THE DECEMBER ELECTIONS SEE TO IT THAT ESPECIALLY THE REVENUE COLLECTION BECOMES MORE EFFICIENT.

ON THE OTHER HAND, THE PUBLIC DEBT SITUATION IS NOT AS BAD AS MANY PEOPLE HERE IN THIS COUNTRY SEE IT. I KNOW THAT A PUBLIC DEBT-TO-GDP RATIO OF 68.3 PERCENT DOES NOT LOOK NICE. BUT LOOK AT IT THIS WAY: OTHER COUNTRIES ARE MUCH WORSE OFF. I KNOW THAT IT MIGHT BE WRONG TO COMPARE GHANA WITH THE RICHEST COUNTRIES IN THE WORLD. BUT, LOOK AT THE FACT THAT GERMANY HAS THE LOWEST DEBT-TO-GDP RATIO AMONG THE 7 RICHEST COUNTRIES IN THE WORLD. THEIRS IS AROUND 75 PERCENT. THE UNITED STATES OF AMERICA HAS A RATIO OF AROUND 100 PERCENT, AND JAPAN IS THE LEADER OF THE PACK.

THAT SHOULD NOT MEAN THAT WE SHOULD BE PROUD OF OUR DEBT SITUATION. IT ONLY SHOWS THAT DUE TO THE PANDEMIC, EVERY COUNTRY’S DEBT SITUATION GETS WORSE. IT NOW DEPENDS ON HOW A FUTURE GOVERNMENT WILL BE ABLE TO BETTER THE FISCAL OPERATIONS.

A LITTLE POSITIVE SIGN IS THAT THE DOMESTIC DEBT INCREASED A LITTLE BIT MORE THAN THE FOREIGN DEBT. IT IS ALWAYS BETTER TO HAVE DOMESTIC DEBTS INSTEAD OF FOREIGN DEBTS. FIRST, DOMESTIC DEBTS ARE NOT CALCULATED IN FOREIGN CURRENCY. THEREFORE, THEY DON’T DEPEND ON CURRENCY FLUCTUATION. SECOND, YOU SIMPLY CAN CONTROL DOMESTIC DEBTS BETTER THAN FOREIGN ONES.

MOREOVER, A SUCCESSFUL FISCAL POLICY DEPENDS ALSO ON THE COOPERATION OF EVERY GHANAIAN. WE MUST ALWAYS KEEP IN MIND THAT EVERY DEVELOPMENT OF INFRASTRUCTURE  DEPENDS ON EFFECTIVE TAX COLLECTION. FURTHERMORE, THE MORE FISCAL REVENUE THE GOVERNMENT HAS, THE LESS DEBT IT MUST PRODUCE.

3. MONETARY INDICATORS

ALTHOUGH THE ANNUAL GROWTH RATE OF RESERVE MONEY WENT DOWN IN AUGUST, THE LIQUIDITY IN GHANA IS STILL SATISFACTORY. THIS IS BECAUSE THE BROAD MONEY [M2] WENT UP RATHER SIGNIFICANTLY. CONSEQUENTLY, THE ANNUAL GROWTH RATE OF TOTAL LIQUIDITY INCREASED BY NEARLY ONE PERCENTAGE POINT.

DESPITE THE PANDEMIC, ALL FIGURES CONCERNING PRIVATE SECTOR CREDIT ARE IN POSITIVE TERRITORY. THIS IS ANOTHER SIGN THAT THE ECONOMIC ACTIVITY IN THIS COUNTRY IS STEPPING UP. THE FACT THAT THE ANNUAL GROWTH RATE IS NOT IMPRESSIVE DOES NOT CHANGE THIS ASSUMPTION. AT LEAST IT IS HIGHER THAN IN THE TWO MONTHS BEFORE.

4. BANKING SECTOR INDICATORS

THE BANKING SECTOR APPEARS TO BE ASTONISHINGLY CONSTANT, DESPITE THE PANDEMIC INTERRUPTIONS. THE AGGREGATE BALANCE SHEET SHOWS POSITIVE TENDENCIES. APART FROM THAT, NEARLY ALL OTHER INDICATORS ARE STABLE. THE ONLY EXCEPTION ARE THE LIQUIDITY INDICATORS, WHICH SHOW A SLIGHTLY NEGATIVE TENDENCY. NEVERTHELESS, IT’S STILL WITHIN A TOLERABLE FRAME.

5. STOCK MARKET PERFORMANCE

THE GHANAIAN STOCK MARKET CONTINUES ITS NEGATIVE PERFORMANCE. THIS IS ASTONISHING, AS IN OTHER COUNTRIES THE STOCK MARKETS OUTPERFORM THE “REAL” ECONOMY BY FAR. THE COMPOSITE INDEX [GSE-CI] AS WELL AS THE FINANCIAL INDEX [GSE-FSI] CONTINUE THEIR DOWNWARD TREND. FOR MY UNDERSTANDING, IT IS TOO EARLY TO TALK ABOUT A “COLLAPSE” OF THE STOCK MARKET IN GHANA. [THAT’S AT LEAST HOW SOME OF THE MEDIA SEE THE SITUATION]. IN MY OPINION, THE INDICES OF THE GHANA STOCK MARKET ARE LOOKING FOR THEIR BOTTOM LINE. FROM THEN ON, WE CAN EXPECT AN UPWARD TREND.

6. PAYMENT SYSTEM DATA

AS WE COULD EXPECT, ELECTRONIC PAYMENT SYSTEMS ARE STILL ON THE RISE. REGISTERED MOBILE MONEY USERS AS WELL AS ACTIVE MOBILE MONEY ACCOUNTS SHOW UPWARDS. FURTHERMORE, THE NUMBER OF MONTHLY TRANSACTIONS AS WELL AS THE VALUE OF THESE TRANSACTIONS INCREASED SIGNIFICANTLY.

IN ALL, WE CAN SEE THAT EVERYTHING RELATED TO MOBILE MONEY WENT UP, WHEREAS ALL OTHER PAYMENT DATA REMAINED NEARLY UNCHANGED. THE CORONA VIRUS ALSO SEEM TO BE MAINLY RESPONSIBLE FOR THIS PHENOMENON.

CORONA VIRUS OR NOT – WE CAN EXPECT THAT THE GROWING TENDENCY OF THE USE OF MOBILE MONEY WILL GO ON. THIS WILL ESPECIALLY HAPPEN WHEN MORE RURAL AND COMMUNITY BANKS CONNECT TO MOBILE MONEY. THE MOBILE MONEY SERVICE SHOULD ONLY BECOME BETTER THEN. TECHNICAL ISSUES SHOULD BECOME A THING OF THE PAST.

7. CONCLUSION

DESPITE ALL DIFFICULTIES, THERE ARE MORE POSITIVE SIGNS FOR THE FOTURE OF THE ECONOMY IN GHANA. SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [2] TOGETHER WITH THE FIRST PART  SHOW THAT GHANA IS ON THE RIGHT PATH. THERE ARE MORE POSITIVE THEN NEGATIVE DEVELOPMENYS. ONLY THE EVERLASTING PROBLEM OF THE FISCAL PERFORMANCE SHADOWS THE SUN COMING THROUGH ON GHANA. HOPEFULLY, THAT WILL GO ON AFTER THE ELECTIONS. AND, THE FISCAL PERFORMACE WILL IMPROVE…

STAY TUNED…

 

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