BANK OF GHANA MPC NOVEMBER MEETING – PART 3

Summary_of_Economic__Financial-Data_November-2019

MPC-Press-Release-Nov.-2019

IN THE LAST PART OF MY ARTICLE SERIES – BANK OF GHANA MPC NOVEMBER MEETING – PART 3 – I DISCUSS

— MONETARY INDICATORS,

— BANK ING SECTOR INDICATORS, AND

— STOCK MARKET PERFORMANCE.

AT THE END OF THIS ARTICLE, A CONCLUSION AND OUTLOOK WILL FOLLOW. Continue reading “BANK OF GHANA MPC NOVEMBER MEETING – PART 3”

BANK OF GHANA MPC NOVEMBER MEETING – PART 2

MPC-Press-Release-Nov.-2019,

Summary_of_Economic__Financial-Data_November-2019

IN BANK OF GHANA MPC NOVEMBER MEETING – PART 2, I WILL DISCUSS FOUR SECTORS.

— FOREIGN EXCHANGE RATES (INTERBANK),

— COMMODITY PRICES,

— EXTERNAL SECTOR DEVELOPMENTS, AND

— GOVERNMENT FISCAL OPERATIONS.

AS USUAL, YOU CAN DOWNLOAD THE DOCUMENTS REFERRED TO FROM THE BEGINNING OF THIS ARTICLE. Continue reading “BANK OF GHANA MPC NOVEMBER MEETING – PART 2”

BANK OF GHANA MPC NOVEMBER MEETING – PART 1

MPC-Press-Release-Nov.-2019 Summary_of_Economic__Financial-Data_November-2019

Summary_of_Economic__Financial-Data_November-2019

BANK OF GHANA MPC NOVEMBER MEETING – PART 1

THE MONETARY POLICY COMMITTEE (MPC) OF THE BANK OF GHANA (BOG) HELD ITS NOVEMBER MEETING LAST WEEKEND. IT ALSO PUBLISHED THE SUMMARY OF THE ECONOMIC AND FINANCIAL DATA FOR GHANA NOVEMBER 2019. YOU CAN DOWNLOAD BOTH DOCUMENTS FROM THE TOP OF THIS ARTICLE.

IN THE FIRST PART, I’LL COMMENT BRIEFLY ON THE PRESS RELEASE OF THE MPC. THEN I’LL DISCUSS PRICE DEVELOPMENTS, REAL SECTOR INDICATORS, AND MONEY MARKET RATES. Continue reading “BANK OF GHANA MPC NOVEMBER MEETING – PART 1”

WHAT PERSPECTIVE DOES THE BUDGET 2020 GIVE TO GHANA?

 

2020-Budget-Statement-and-Economic-Policy

WHAT PERSPECTIVE DOES THE BUDGET 2020 GIVE TO GHANA?

THAT IS THE QUESTION MOST GHANAIANS ASK THEMSELVES AFTER THE READING LAST WEEK.

NOW DON’T EXPECT FROM ME A COMPLETE ANALYSIS OF THE CA. 260 PAGES DOCUMENT – INCLUDED APPENDICES. YOU CAN DOWNLOAD THE WHOLE DOCUMENT AT THE BEGINNING OF THIS ARTICL E.

BUT APART FROM LISTING THE ACHIEVEMENTS OF THE GOVERNMENT WITHIN THE LAST THREE YEARS, THE BUDGET IS FULL OF PROJECTS FOR 2020 AND BEYOND. BE IT THE IMPROVEMENT OF THE RAILWAY INFRASTRUCTURE OR THE 1D1F INITIATIVE, ALL ARE VERY AMBITIOUS.

MOST OF THE ECONOMICAL DATA ARE POSITIVE AND IN LINE WITH THE RESEARCHES OF THE BANK OF GHANA. THE NEWEST IS THE CURRENT INFLATION RATE. AFTER THE REBASE OF THE UNDERLINED BASKET, THE RATE DECREASED FROM 7.8% TO 7.7% (SEE https://www.bog.gov.gh/) THIS IS ALREADY FURTHER BELOW THE INFLATION TARGET OF 8+/-2%.

THE GDP GROWTH IS SURELY WITHIN THE FORECAST OF INSTITUTIONS LIKE THE IMF OR THE WORLD BANK. SOME ARTICLES IN THE GHANAIAN PRESS DOUBT THAT TO ACHIEVE A TARGET OF 6.8% IS REALISTIC. ON THE OTHER HAND, THE INSTITUTIONS HAVE ALREADY DOWNGRADED THE ESTIMATE. THEREFORE, 6.8% GDP GROWTH SEEMS TO BE REALISTIC.

THERE ARE SOME COMPONENTS THAT MIGHT GIVE SOME PEOPLE A LITTLE HEADACHE. ONE OF THEM IS THE DEPRECIATION OF THE CEDI. AFTER SOME DAYS OF STABILISATION, THE CEDI LOST SOME GROUND AGAIN IN THE LAST DAYS.

NEVERTHELESS, I DON’T SEE ANY REASON TO PANIC RIGHT NOW. THE GOVERNMENT HAS INTRODUCED SEVERAL INITIATIVES THAT WILL MAKE SURE THAT WE MUST IMPORT LESS PRODUCTS. OF COURSE, THAT WILL PROBABLY LEAD TO PROTESTS OF SOME IMPORTERS. EVEN THE GOVERNMENT CANNOT MAKE EVERYONE HAPPY. BUT PROJECTS LIKE PLANTING FOR FOOD AND JOBS WILL LEAD TO MORE DOMESTIC PRODUCTION OF THINGS THAT ARE NEEDED HERE. THIS, IN TURN, WILL LEAD TO LESS EXPENDITURE OF FOREIGN CURRENCY, ESPECIALLY THE US-DOLLAR. AND THIS WILL SURELY STABILISE THE LOCAL CURRENCY.

FURTHERMORE, THE BFT ONLINE PUBLISHED AN ARTICLE TODAY. IN THIS ARTICLE, THE DIRECTOR OF ISSER EXPECTS THE GOVERNMENT TO MISS THE FISCAL DEFICIT TARGET. https://thebftonline.com/2019/economy/its-likely-govt-will-slip-in-deficit-target-prof-quartey/

THIS TARGET STANDS AT 4.7%, AND THE TARGET IS BASED ON THE FISCAL RESPONSIBILTY ACT. THE DIRECTOR BASES HIS OPINION ON THE ASSUMPTION THAT 2020 IS AN ELECTION YEAR. THIS, SO THE DIRECTOR, WILL PUT THE GOVERNMENT UNDER FISCAL PRESSURE. HE THINKS THAT IT WAS ALWAYS LIKE THAT IN ELECTION YEARS.

I REALLY DON’T KNOW WHY IT MUST BE LIKE THAT BECAUSE IT WAS ALWAYS LIKE THAT. THE GOVERNMENT IS NOW BOUND TO THE FISCAL RESPONSIBILITY ACT. WAIT AND SEE WHETHER THE GOVERNMENT KEEPS TO THE LEGAL BASIS. IF NOT, YOU CAN CRITICISE THE GOVERNMENT LATER.

I SEE THE MOST IMPORTANT PROBLEM FOR THE GOVERNMENT IN THE REVENUE GENERATION. HERE, THE GOBERNMENT WANTS TO BROADEN THE TAX BASE. THIS IS A GOOD START, AND WILL HOPEFULLY BE SUCCESSFUL.

SOME DISTRICTS HAVE ALREADY BOUGHT A SOFTWARE THAT TAXES MONIES AT THE SOURCE, IF THIS SOFTWARE IS IMPLEMENTED SUCCESSFULLY, IT WILL HELP TO CONTROL REVENUE COLLECTION AT THE BASE.

IN ALL, I AM OF THE OPINION THAT THE GOVERNMENT IS ON THE RIGHT PATH TO TRANSFORM THE ECONOMY. NOW IT’S THE TIME FOR THE POPULACE NOT ONLY TO BENEFIT FROM THIS TRANSFORMATION. GOVERNMENT, NO MATTER FROM WHICH PARTY, CANNOT DO ANYTHING WITHOUT THE SUPPORT OF THE PEOPLE.

WHAT PERSPECTIVE DOES THE BUDGET 2020 GIVE TO GHANA? THE BUDGET WILL ONLY GIVE THE PERSPECTIVE THAT YOU SUPPORT.

IT IS YOUR COUNTRY!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEST AFRICA – AN EXPORT OPPORTUNITY FOR U.S. AGRIC GOODS?

 

WEST AFRICA – AN EXPORT OPPORTUNITY FOR U.S. AGRIC GOODS?

THIS MORNING, I SAW AN INTERESTING BANNER HEADLINE IN THE “NEW DAY” PROGRAMME OF TV 3 GHANA. IT SAID THAT THE U.S.A. IS EXPLORING OPPORTUNITIES TO MAKE WEST AFRICA AN EXPORT OPPORTUNITY FOR AGRICULTURAL PRODUCTS. IT SOUNDS A LITTLE BIT RIDUCULOUS – A SIMPLE COMMENT. Continue reading “WEST AFRICA – AN EXPORT OPPORTUNITY FOR U.S. AGRIC GOODS?”

THE IMPORTANCE OF AfCFTA FOR GHANA AND AFRICA

WORLD DEVELOPMENT REPORT 2020

THE WORLD BANK HAS JUST PUBLISHED THE WORLD DEVELOPMENT REPORT 2020.(YOU CAN DOWNLOAD THE REPORT AT THE BEGINNINF OF THIS ARTICLE.) IN THIS REPORT, THE WORLD BANK DISCUSSES THE USE OF GLOBAL VALUE CHAINS (GVC), ESPECIALLY FOR DEVELOPING ECONOMIES. GLOBAL VALUE CHAINS DEMAND MORE INTERNATIONAL COOPERATION. ON THE AFRICAN CONTINENT, THIS REGIONAL INTERNATIONAL COOPERATION WAS RECENTLY INITIATED THROUGH THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA). WHAT IS THE IMPORTANCE OF AfCFTA FOR GHANA AND AFRICA? Continue reading “THE IMPORTANCE OF AfCFTA FOR GHANA AND AFRICA”

SEPTEMBER MEETING BANK OF GHANA MPC – PART 2

MPC-Press-Conf-Release_Sept_20_2019

Summary_of_Economic_Financial_Data_September-2019

]IN THIS SEPTEMBER MEETING BANK OF GHANA MPC – PART 2 OF MY ARTICLE SERIES I WILL DISCUSS FOREIGN EXCHANGE RATES, COMMODITY PRICES, AND EXTERNAL SECTOR DEVELOPMENTS.

1) FOREIGN EXCHANGE RATES
ACCORDING TO THE PRESS RELEASE OF THE MPC, THE FOREIGN EXCHANGE MARKET “REMAINED RELATIVELY CALM”. (MPC PRESS RELEASE, NO. 10) I DON’T KNOW WHAT THE MPC UNDERSTANDS BY “RELATIVELY CALM”. I STILL SEE ONLY DOWNWARD TRENDS. THE CEDI LOST, LOST, AND LOST AGAINST THE US-DOLLAR, THE EURO, AND THE POUND STERLING. THIS IS ESPECIALLY DISAPPOINTING AS THE POUND AND THE EURO ARE WEAK THEMSELVES. AND UNFORTUNATELY, THIS TREND CONTINUED IN THE LAST DAYS. THE CEDI IS NOW MORE THAN 5.31 AGAINST THE US-DOLLAR. AS THE GHANAIAN ECONOMY DEPENDS TO A LARGE EXTEND ON IMPORTS, THE WEAK CURRENCY IS SURELY NOT ENCOURAGING.

THERE ARE SEVERAL WAYS THE CENTRAL BANK CAN INFLUENCE THE FOREIGN EXCHANGE RATE. WE CAN SUMMARISE ALL OF THEM UNDER “FOREIGN EXCHANGE CONTROL’. TO GO INTO DETAILS HERE IS PROBABLY A LITTLE BIT FAR-FETCHED.

THE PROBLEMS WITH THE CURRENCY IN GHANA ARE LESS A PROBLEM OF THE CENTRAL BANK AND THE MONETARY POLICY. THEY ARE MORE A PROBLEM OF FISCAL POLICY. IF THE GOVERNMENT SUCCEEDS TO INCREASE THE REVENUE – ESPECIALLY THE TAX COLLECTION – IT WILL HAVE A POSITIVE EFFECT ON THE CURRENCY.

ACCORDING TO THE BANK OF GHANA, THE GOVERNMENT IS ALREADY IN SIGHT OF SOME MEASURES TO BETTER TAX COLLECTION. LET’S HOPE THAT THESE MEASURES WILL HAVE A POSITIVE EFFECT. GHANA CANNOT AFFORD A MUCH WEAKER CURRENCY.

2) COMMODITY PRICES
FORTUNATELY FOR GHANA, THE RELEVANT COMMODITY PRICES DEVELOPED FAVOURABLY FOR THE COUNTRY.
ONLY THE COCOA PRICE IS A LITTLE BIT ON THE DOWNSIDE. BUT AT LEAST THE REALISED PRICE IS STILL ON THE UPSIDE YEAR-TO-DATE.
GOLD IS ON A LONG-TIME PEAK, REFLECTING A NEGATIVE SENTIMENT ABOUT THE GLOBAL ECONOMY. IF INVESTORS ARE DOUBTFUL ABOUT THE DEVELOPMENT, THEY USE TO FLEE INTO SAFE HAVENS. GOLD IS ONE OF THEM. THE TRADE WAR BETWEEN THE USA AND CHINA AND THE WEAKNESS IN EUROPE ARE REASONS ENOUGH TO GO INTO GOLD.

THE RECENT TENSIONS BETWEEN THE USA AND IRAN ALSO MADE THE OIL PRICE GO UP. USUALLY GOLD GOES UP WHEN OIL PRICE GOES DOWN. THAT IS BECAUSE DEMAND FOR OIL PLUNGES IN THE PROSPECT OF WEAKER ECONOMIC DATA. PEOPLE WON’T BUY CARS, AND USE LESS PETROL. DUE TO THE CRISIS INVOLVING SAUDI ARABIA AND IRAN, THE PROBLEM WAS LESS ON THE DEMAND SIDE. IT WAS THE FEAR OF LESS SUPPLY THAT PUSHED THE PRICE UP.

GENERALLY, GHANA CANNOT RELY ON COMMODITY PRICES REMAINING HIGH. ESPECIALLY THE OIL PRICE IS EXTREMELY VOLATILE. BY ALL MEANS, GHANA MUST INTRODUCE MEASURES TO ADD VALUE TO THE CRUDE OIL. ONLY THROUGH THAT CAN THE RELIANCE ON COMMODITY PRICES A LITTLE BIT LESSENED. ADDING VALUE IS PRINCIPALLY A GOOD MEANS TO INCREASE EXPORT POSSIBILITIES.

3) EXTERNAL SECTOR DEVELOPMENTS
ESPECIALLY THE THREE COMMODITIES MENTIONED ABOVE GAVE GHANA A REASONABLE TRADE SURPLUS OF 2.6 BILLI ON US-DOLLARS OR 3.9% OF GDP.

STRANGE IS THAT CURRENT AND CAPITAL ACCOUNT OBVIOUSLY DON’T BALANCE – WHAT THEY SHOULD USUALLY DO. (CURRENT ACCOUNT=CAPITAL ACCOUNT+FINANCIAL ACCOUNT)

THE GROSS AS WELL AS THE NET INTERNATIONAL RESERVES INCREASED MARGINALLY. THIS IS A GOOD SIGN, ESPECIALLY AS THE IMPORT COVER ALSO INCREASED MARGINALLY TO 4.1 MONTHS.

IN THE LAST PART OF MY ARTICLE SERIES I WILL DISCUSS GOVERNMENT FISCAL OPERATION, MONETARY INDICATORS, BANKING SECTOR INDICATORS, AND STOCK MARKET PERFORMANCE. APART FROM THAT, THERE WILL BE A CONCLUSION AND FINAL ASSESSMENT.

STAY TUNED!