TIG Post

Tag: Economist

  • Cedi gains should lead to price reduction – UG Lecturer

    Cedi gains should lead to price reduction – UG Lecturer

    An economics lecturer at the University of Ghana, Professor William Baah Boateng, has called on importers and traders to reflect the recent appreciation of the Ghanaian cedi in the pricing of goods and services.

    Speaking on Joy News’ PM Express Business Edition on Thursday, May 8, Prof. Baah Boateng questioned why business operators who are quick to increase prices when the cedi depreciates do not take similar action to reduce prices when the local currency strengthens.

    “I will be very happy if he says when it goes down, then he will also reduce his prices to reflect the same level,” he said, reacting to comments from a representative of the Ghana Union of Traders Association (GUTA), who had welcomed the cedi’s gains.

    He cautioned that failing to align domestic prices with the cedi’s upward performance could erode public trust. “But if it’s not going to reflect on the domestic market at the speed the cedi is appreciating, then we have to be very careful,” he warned.

    Highlighting a persistent market trend, the economist noted that many importers often anticipate further cedi depreciation and price their goods accordingly — but do not apply the same logic when the currency appreciates.

    “When the cedi is appreciating, importers will by all means increase the price in anticipation of further depreciation,” he said. “And I expect that if it is appreciating, then they should reduce the price in anticipation of further appreciation.”

    His remarks come at a time when many consumers have expressed concern that the strengthening cedi is not being reflected in market prices. Prof. Baah Boateng argued that market integrity demands consistency.

    “If you’re going to adjust prices upwards when the currency is falling, then do the same when it’s rising. Don’t use one standard for losses and another for gains.”

    He also spoke positively about the Bank of Ghana’s handling of the current economic situation, particularly its cautious approach to policy amid shifting conditions.

    “What I see the central bank doing is watching and not just doing anything,” he noted. “They’re seeing how things unfold, and that’s wise.”

    Prof. Baah Boateng added that market forces alone do not drive outcomes in any economy, stressing the role of regulation. “There’s no economy where demand and supply alone determine everything,” he said. “There is always some level of regulation in every market.”

    Although he acknowledged some progress in the government’s effort to manage its finances, the lecturer emphasized that the overall structure of the economy remains largely unchanged.

    “When you look at the structure of the economy, we still have the same structure as it used to be last year,” he observed.

    Still, he commended the government’s recent focus on expenditure management. “Government has tried as much as possible to manage expenditure,” he said. “This is not cutting expenditure, but making sure the spending is tied to economic activity.”

    He believes that such fiscal prudence reduces pressure on the central bank. “If the fiscal is putting its acts together, the central bank won’t need to come in to clear the mess. It gives them peace of mind to focus on monetary policy and exchange rate stability.”

  • Proper management of buffers for all sectors will end IMF-dependence – Economist

    Proper management of buffers for all sectors will end IMF-dependence – Economist

    Economist and member of the National Economic Dialogue Planning Committee, Professor John Gatsi, has underscored the importance of financial buffers across all sectors of the economy to break Ghana’s reliance on International Monetary Fund (IMF) support.

    He argues that repeated IMF bailouts stem from poor economic management, stressing that long-term financial stability hinges on building strong economic safeguards.

    “It is not magical for anybody to say we will not go to the IMF again. What has been leading us to the IMF is poor management. If we are able to build the correct buffers for all the sectors, I believe we will be solid,” Professor Gatsi stated in an interview with Citi Business News.

    Despite gaining independence 68 years ago, Ghana’s economy remains prone to crises, with frequent reliance on external financial aid. The country has sought IMF assistance 17 times, the latest being a $3 billion Extended Credit Facility (ECF) secured in 2022 to address fiscal challenges.

    While the IMF-backed program aims to restore economic stability and ensure debt sustainability, questions remain about Ghana’s ability to maintain financial independence in the long run.

    Professor Gatsi, who also serves as the Dean of the University of Cape Coast Business School, insists that Ghana must move away from this cycle by implementing proactive measures to shield the economy from shocks.

    “We will not be drifting towards the IMF at the least financial distortions or at the least threat that is directed towards the finances of this country. We will be robust, solid, and we will be relying on the buffers that we build rather than going to the IMF,” he added.

    He further emphasized that achieving this goal requires disciplined fiscal policies, stronger domestic revenue mobilization, prudent debt management, and strategic investments in productive sectors to sustain economic growth.

  • Low food prices crucial for Ghana’s economic turnaround – Economist

    Low food prices crucial for Ghana’s economic turnaround – Economist

    Ghanaian economist Prof. Godfred Bokpin has underscored the urgent need for the government to prioritize the agricultural sector, describing it as pivotal for economic transformation.

    During an appearance on Joy FM’s Super Morning Show on Wednesday, November 20, he explained how prioritizing agribusiness could help reduce food prices, create jobs, and boost economic growth.

    He noted that with Ghanaians spending up to 44% of their disposable income on food, addressing food price inflation would provide immediate relief for struggling families and foster economic stability.

    Prof. Bokpin further linked the lack of household savings to slow economic growth, stating that low savings rates hinder capital accumulation.

    He also stressed the importance of agro-processing, which can create formal jobs and increase tax revenues.

    Despite agriculture accounting for 26% of Ghana’s GDP, it contributes less than 1% of tax revenues due to its predominantly informal structure.

    He pointed out inefficiencies in public spending, particularly in infrastructure projects like interchanges, which often come with inflated costs compared to international standards.

    For Prof. Bokpin, focusing on agriculture is critical for tackling poverty, reducing inequality, and achieving sustainable growth in Ghana.

    Agriculture plays a vital role in Ghana’s economy, contributing 26% of the country’s GDP and employing about 40% of the workforce.

    Historically, the sector has driven the economy, with staple crops like cocoa, maize, cassava, and plantain essential for domestic consumption and export.

    Cocoa, in particular, has positioned Ghana as one of the world’s leading producers and a major foreign exchange earner.

    Despite its importance, the sector is plagued by several challenges, including low productivity, climate change, an ageing farming population, and limited access to modern farming technologies.

    Most farmers operate on a small scale, relying on traditional methods. In addition, post-harvest losses remain high due to inadequate storage and transportation infrastructure.

    In response, the government has introduced initiatives like the Planting for Food and Jobs (PFJ) programme to enhance food production, generate employment, and reduce reliance on imports.

    However, Prof. Bokpin believes a more comprehensive and strategic focus on agriculture is essential to fully realize its potential and drive sustainable development.

  • A divided Parliament will hinder our economic growth- Economist

    A divided Parliament will hinder our economic growth- Economist

    Economist Professor Lord Mensah has expressed concern that the ongoing developments in Parliament could exacerbate investor uncertainty regarding Ghana’s economic outlook.

    He emphasized that critical fiscal policies need to be reviewed and passed by Parliament in a timely manner, but this process could be hindered by the ongoing disagreement between the two major political parties the National Democratic Congress (NDC) and the New Patriotic Party (NPP) over which party holds the majority in the House.

    Prof. Mensah cautioned that such political discord could send negative signals to both investors and businesses looking to operate in Ghana.

    “Parliament plays a major role when it comes to approvals of expenditure lines and our approvals of some revenue line. So if it turns out that as a result of this power shift things are not beings settled, of course the investor community are going to see it to be more or less a bad signal”, he cautioned.

    He further noted that political uncertainty creates an unfavorable environment for investors, who value predictability and a clear future direction.

    “At the end of the day it will impede their decisions as to whether to settle on Ghana or move elsewhere. Under a democratic dispensation, everything has to do with timelines and we are moving into November. We have to start concluding on our budget lines for next year”, he said.

    Highlighting the importance of timing in investment decisions, Prof. Mensah stressed that any further delays in passing necessary fiscal laws could erode investor confidence.

    Using the upcoming November budget as an example, Prof. Mensah warned that any delay in its presentation could harm the country’s economic prospects.

    “At the end of the day it will impede their decisions as to whether to settle on Ghana or move elsewhere. Under a democratic dispensation, everything has to do with timelines and we are moving into November. We have to start concluding on our budget lines for next year”, he said.

    On October 22, 2024, Speaker of Parliament Alban Bagbin adjourned the House indefinitely amid controversy over vacant seats.

    This decision came during a session where NDC MPs had taken over the Majority side of the aisle, following the walkout of NPP Members of Parliament over a dispute regarding which party holds the majority.

    During the brief proceedings, the Speaker agreed with MP Francis-Xavier Sosu that the parliamentary record should be amended to reflect that the NPP was in the Minority during their walkout last Thursday.

    Effutu MP Alexander Afenyo-Markin, who led the NPP MPs out of the chamber, explained that they had retreated to their offices, awaiting further directives from Speaker Bagbin. He stated that the NPP MPs opted for peace rather than engaging in confrontation, emphasizing that Ghana must remain a peaceful nation.

  • Overhaul economic financing to stop cedi depreciation – Economist urges

    Overhaul economic financing to stop cedi depreciation – Economist urges

    Economist Patrick Asuming has recommended that the government overhaul economic financing to stop the depreciation of the cedi.

    In a media interview on Tuesday, August 6, he mentioned that the heavy dependence on foreign financing significantly contributes to the cedi’s high volatility.

    He also emphasized the need for the country to regulate certain imports

    “I think we should think a little longer term in addressing the cedi depreciation rather than the shorter-term measures implemented which have not solved the problem. In the past, we have relied on foreign inflows, but now is the time to reform the whole economy in terms of how it is financed,” he said.

    Dr. Asuming’s remarks follow the 2024 Mid-Year Budget Review by the Institute of Statistical, Social and Economic Research (ISSER), which highlighted that the depreciation of the cedi has profoundly affected the nation’s economy. The report noted that this has resulted in labor unrest, the shutdown of some businesses, and the migration of others to more favorable business environments.

    The economist stated that the relocation of businesses and the rise in labor unrest are not solely attributed to currency instability.

    However, “it is a reflection of the overall difficult economic environment.”

    “In addition to the problems brought on by currency depreciation, we have seen in the last few years the rising cost of doing business, an increasing number of taxes, and the uncertainty generated in our tax laws – those are major parts of the argument.”

    To address this, he suggested creating a more welcoming and predictable business climate, which includes implementing stable regulations in the country.

    He also highlighted the importance of developing the economy on a more proficient foundation.

  • Fluctuations in exchange rates might lead govt to miss its year-end inflation goal – Economist

    Economist, Dr. Theo Acheampong is of the view that exchange rate volatilities could cause government to miss its end of year inflation target of 15 percent.

    Analyzing some of the revised macro-targets in the Mid-Year Budget Review, he expressed optimism that the country may be able to achieve the Overall Real GDP Growth rate which has been revised upwards from 2.8 percent to 3.1 percent, but could miss the inflation target.

    He noted that duties and taxes on imported goods are typically indexed in dollars, which unnecessarily raises the prices of these items.

    “Most of the charges on the ICUMS platform are charged in dollars. This means that when the cedi depreciates, importers will pay more at the ports”.

    Dr. Acheampong contended that this situation will consistently affect the prices of goods, resulting in inflation.

    “The importers will not bear that cost and will pass on the extra cost at the ports to consumers. This means consumers will pay more”, he said.

    He asserted that these factors might undermine the progress achieved in lowering inflation, eventually causing the government to miss its target.

    Revised macro targets

    The government has revealed significant updates to the country’s macroeconomic fiscal targets for 2024.

    During the Mid-year Budget presentation to Parliament on July 23, 2024, Finance Minister Mohamed Amin Adam announced that the Overall Real GDP Growth rate has been adjusted upward from 2.8 percent to 3.1 percent.

    He also noted that the government will keep the year-end inflation target steady at 15 percent.

    Additionally, the Non-Oil Real GDP Growth rate has been increased from 2.1 percent to 2.8 percent.

    “Nominal overall GDP has been revised from ₵1,050 billion to ₵1,020 billion. Non-Oil GDP has been revised from ₵979 billion to ₵977,093 billion”.

    Dr. Amin Adam said that Primary Balance on Commitment basis has also been maintained at a surplus of 0.5 percent; while Gross International Reserves (including oil funds and encumbered/pledged assets) is expected to cover not less than 3.0 months of imports.

    Announcing some revision to the 2024 fiscal framework, he explained that the primary balance on a commitment basis remains unchanged at the targeted surplus of 0.5% of GDP, in line with the IMF-supported PC-PEG objectives.

    According to him, Total Revenue and Grants have been revised upward by 0.5 percent to ¢177,220 million (17.4% of GDP) in 2024, from the 2024 Budget target of ¢176,414 million (16.8% of GDP).

    This, he pointed out largely reflects the increase in Non-Oil Non-Tax Revenue which has been increased from ¢14,837 million (1.4% of GDP) to GH¢15,638 million (1.5% of GDP) to reflect dividends from interest accrued in the ESLA accounts.

  • Intensified expenditure cuts will check cedi depreciation – Economist

    Intensified expenditure cuts will check cedi depreciation – Economist

    Economist Dr. Ishmael Yamson has urged the Ghanaian government to consider expenditure cuts as an immediate measure to address the depreciation of the cedi.

    He believes that while debt restructuring agreements with external creditors are important, they are not the primary solution to the currency’s poor performance in recent years.

    “There is always a signalling effect that could convince investors about government commitment to stabilize the economy and help deal with our debt situation,” Dr. Yamson explained during an appearance on PM EXPRESS BUSINESS Edition with host George Wiafe on July 18, 2024.

    He emphasized the need for the government to adopt practical and verifiable expenditure reduction measures. This approach, according to Dr. Yamson, could help manage the amount of fresh borrowing required.

    The discussion focused on Ghana’s economic recovery and whether the country is on the right track. Dr. Yamson expressed concern over the government’s reliance on short-term borrowing through the Treasury bill market, warning that it could negatively impact the cedi and the country’s debt situation.

    Cedi’s Performance

    Despite government efforts in restructuring Ghana’s external debts, the cedi continues to struggle against major currencies. As of July 19, 2024, the cedi was trading at ₵15.56 to the US dollar, ₵20.23 to the British pound, and ₵17.02 to the euro, based on average transactional quotes from major commercial banks.

    The telecommunications and manufacturing sectors remain the leading sectors demanding foreign currency, with trades on the interbank market ranging around ₵15.38.

    Ghana’s Exports and Cedi Performance

    Dr. Yamson highlighted the importance of monitoring developments in the cocoa sector, as its performance can significantly impact the cedi’s stability. He noted concerns over the recent decline in cocoa production and its potential effect on Ghana’s export earnings. With Ghana currently unable to access the Eurobond market, export proceeds are crucial for bolstering international reserves.

    Election Spending

    Dr. Yamson also expressed concerns about the government’s ability to maintain fiscal prudence in an election year, despite commitments under the International Monetary Fund program. He recalled that previous administrations have struggled to adhere to fiscal discipline during election periods.

    “We can talk about Yaw Osafo Marfo who tried to ensure that we did not witness any serious election overrun,” Dr. Yamson said, referencing past efforts to maintain fiscal discipline during elections.

    As the December 2024 elections approach, Dr. Yamson’s advice underscores the need for the government to implement effective economic measures to stabilize the cedi and ensure long-term economic recovery.

  • Akufo-Addo has passed the begging bowl to South Korea – Economist reacts to $2bn agreement

    Akufo-Addo has passed the begging bowl to South Korea – Economist reacts to $2bn agreement


    Renowned US economist, Professor Steve Hanke, has criticized president Akufo-Addo’s continuous reliance on borrowing from international communities rather than implementing sustainable economic reforms to salvage the economy.

    Taking to the X platform, he argued that such agreements only deepen Ghana’s debt burden and fail to address fundamental economic challenges.

    “#SaveGhanaNow: Ghana recently secured a $2bn framework agreement with South Korea. Pres. Akufo-Addo passes Ghana’s BEGGING BOWL – ONCE AGAIN,” he wrote.

    His comment comes after Ghana recently secured a significant boost for its developmental initiatives through the signing of a $2 billion framework arrangement with South Korea’s Economic Development Cooperation Fund (EDCF).

    The agreement, formalized on the sidelines of the 2024 Korea-Africa Summit, is set to boost the implementation of Ghana’s key priority programs spanning various sectors such as infrastructure, agriculture, health, education, energy, roads and transport, as well as ICT over the next five years.

    This milestone signing ceremony marks a reaffirmation of the enduring bilateral economic development partnership between the two nations.

    The Minister for Finance, Dr. Mohammed Amin Adam, represented the government, while Mr. Cho Tae-yeol, the Foreign Minister for Korea, signed on behalf of the Government of the Republic of Korea.

    The event was attended by Ghana’s Foreign Minister, Shirley Ayorkor Botchwey, alongside other dignitaries from both countries.

    Meanwhile, on Friday, February 3, 2023, President Akufo-Addo urged Germany to play a facilitating role in encouraging China, an ad hoc member of the Paris Club, to support Ghana’s debt restructuring efforts.

    During a meeting with the visiting German Finance Minister, Christian Lindner, at the Jubilee House in Accra, Akufo-Addo emphasized the importance of the Paris Club swiftly establishing a creditors committee, with the participation of other official creditors, to assist Ghana in its efforts to restore economic growth.

    Mr Lindner, leading a delegation from Germany, engaged in bilateral discussions with President Akufo-Addo aimed at enhancing relations and economic cooperation between the two countries.

    President Akufo-Addo expressed his government’s primary focus on concluding negotiations with the International Monetary Fund (IMF), particularly at the Board Level, and finalizing a deal with the Bretton Woods institution by mid-March of the same year.

  • Assume responsibility and stop blaming others for cedi depreciation – Economist tells Finance Minister

    Assume responsibility and stop blaming others for cedi depreciation – Economist tells Finance Minister

    Economist Prof. John Gatsi has reacted to the government’s response to the decline in the value of the country’s local currency.

    He criticized Finance Minister Mohammed Amin Adam for attributing the cedi’s falling streak to currency speculation and the need for more money to service Ghana’s debts. Prof. Gatsi argued that these reasons are not fair justifications for the depreciation of the Ghanaian cedi.

    The cedi has depreciated by about 14.6% against the US dollar as of May 2024, according to the Bank of Ghana. This figure is slightly better than the roughly 20% loss in value seen on the retail market.

    Finance Minister Mohammed Amin Adam assured on Friday, May 24, 2024, that the government is collaborating with the Bank of Ghana to address the cedi’s depreciation.

    However, the Dean of the Business School at the University of Cape Coast, Prof. Gatsi, stated that the reasons given by the finance minister for the cedi’s troubles are not valid points.

    In an interview with Kwame Dwomoh-Agyemang on the Class Morning Show on Monday, 27 May 2024, Prof Gatsi said: “Those things are just statements that we make to shift the blame to other people”, explaining: “If you go to UK, they are not even interested in carrying their money in the US dollar, not even in any other currency like the euro and the rest. If you go to South Africa, it’s the same. Go to Rwanda, the same. Why are people trying to invest in the dollar? It is because the confidence around our cedi is not strong, so, the moment they see rampant and continuous depreciation, then they want to find alternatives to invest in, so, they go into buying the dollar as a means of investment vehicle”.

    “So, to claim that [speculation] is the reason, then it means that you need to make sure there is confidence surrounding your currency but you cannot just continue to be saying it’s because of speculation. Why did the people speculate? You need to solve that,” Prof Gatsi noted.

    On borrowing to pay debts, Prof Gatsi said: “Yes, that one the finance minister should know that if you are borrowing and you are not using the money to develop the country; you’re not using the money to create assets for the country and you need to refinance, that is to say, borrow more money to pay the existing debt, you’ll get to a point where that will not work again and it creates problems for you and that was the whole issue about the debt crisis that we went into”.

    “So, you know; you’re the one who has been going to the market to borrow and you know that the revenue that you’re raising is not enough to pay the debt, therefore, you don’t use your misapplication of the rules concerning borrowing to say that now you need more money to … who are you crying to? That is what you need to know when you are borrowing. So, those are not points that show us that the finance minister has a grasp of what it takes to solve the problem.”

    Explaining the effects of the depreciation, Prof Gatsi said: “It has the potential to erode incomes of individuals and businesses. It disrupts and truncates the purchasing power of people. It erodes business capital and makes the general cost of living very expensive for all classes of people”.

    In addition, he said: “It also increases the debt portfolio in Ghana cedi terms for the government of Ghana. It also may cause some increases in revenue for the government, especially at the entry ports because when the duties are charged in dollars and they are translated or exchanged into Ghana cedis, that means more money for the government but this benefit is not something that we should talk about because it is defeated by all other negative effects of the depreciation.”

    The Bank of Ghana’s May 2024 Summary of Financial and Economic Data indicates that the cedi lost 7.7% against the dollar in March 2024 and depreciated by 10.5% in April 2024.

    On the retail market, the dollar is averaging GH¢15, while the Bank of Ghana quotes it at GH¢13.01. Against the British pound, the cedi has fallen by 14.5%, trading at GH¢17.70. It has also lost 12.9% against the euro, with a current rate of GH¢15.07.

    Measures to ensure the cedi appreciates include accelerating fiscal consolidation by rationalising spending and boosting revenue, intensifying the gold-for-oil programme, and implementing strategic foreign exchange interventions.

    Other strategies involve enhancing the gold-for-reserve programme, disbursing the third tranche under the International Monetary Fund-supported programme after its June 2024 review, and securing funds from ongoing projects, such as a $150 million World Bank loan and an anticipated $300 million World Bank disbursement in the third quarter of 2024.

    Despite recent challenges, the pressure on the cedi has eased due to improved foreign exchange liquidity, particularly in US dollars.

    Last week, the Bank of Ghana intervened significantly, injecting about $59 million into the spot market and auctioning $20 million to Bulk Oil Distribution Companies, stabilising the currency for now.

  • “Credit management needs a digital system to operate” – Economist

    “Credit management needs a digital system to operate” – Economist


    An Economist and former Chief Executive Officer (CEO) of Stanbic Bank, suggests the government should embrace effective digital systems for managing credit in Ghana.

    Andani urges the government to establish robust technological infrastructure to streamline loan acquisitions and implement monitoring mechanisms to ensure efficient fund utilization.

    Speaking to the Ghana News Agency during the launch of the 10th anniversary of the Chartered Institute of Credit Management (CICMG) in Accra, Andani highlights the importance of these measures in addressing the recurring debt crisis.

    He emphasizes the need for accountability from the government and advises against excessive expectations from citizens to avoid undue pressure for debt accumulation.

    Additionally, Andani cautions political leaders against making overly ambitious promises at various levels of governance, which may lead to unsustainable spending beyond budgetary limits.

    Currently serving as the Executive Chairman of LVSAfrica, an integrated business advisory and enterprise development firm, Andani expresses concern over Ghana’s recurring debt crisis.

    Ghana’s debt is now “unsustainable”, with the government implementing a US$3 billion loan-support programme with the International Monetary Fund (IMF) to overturn the situation and reach 55 per cent debt to Gross Domestic Product (GDP) of 55 per cent by 2028.

    “Our current debt situation leaves so much to be desired; I’ve been in finance for a very long time, but we’ve not seen this level of despair within our credit system, and the impact on financial services,” Mr Andani said.

    With over two decades of experience in banking, particularly in credit management, the former banker identified the recurrent debt crises in Ghana as stemming from governments’ failure to appoint individuals who could effectively utilize borrowed funds.

    He proposed the adoption of digital technologies to allocate loans to the most efficient users and to implement thorough monitoring to ensure optimal returns in the country’s productive sectors, thereby facilitating timely repayment.

    He emphasized the centrality of credit in financial services, as it typically serves as the conduit for acquiring sufficient funds from investors, investing these funds for profit, and subsequently repaying the loan.

    “Financial service providers gather resources from surplus owners who want them for safe keeping and access it anytime they want and also make it available to those who want to use it create asset and develop enterprises,” he said.

    “It’s for all the operators; the government, citizenry, financial service providers, and regulators to rethink our role and manage expectations, and rearrange the payment, which is what’s been done, and be able to pay back,” he advised.

    During the event, Dr. Anthony Aubynn, Chairman of CICMG, encouraged credit management professionals to persist as catalysts for change, advocating for policies that foster responsible lending practices and promote financial inclusion.

    Dr Aubynn said it was important to “embrace innovative technologies, such as blockchain, artificial intelligence, and big data analytics to streamline processes, mitigate risks, and extend financial services to underserved communities.”

  • Economist opposes merging large banks like ADB-NIB

    Economist opposes merging large banks like ADB-NIB

    Head of the business school at the University of Ghana, Professor Lord Mensah, has indicated that it is not economically sensible for the government to combine ADB and NIB financial institutions.

    He believes that these state-owned businesses are important banks that can continue to run independently.

    Professor Mensah discussed the ADB-NIB merger on ClassFM and stated,  “You cannot put two big banks together…Prudent economic management will not allow merging two state-oriented banks.”

    The economist expressed concerns that combining these entities could potentially disrupt the balance sheet of NIB.

    He suggested that an external investor is crucial to infuse capital into the financially challenged NIB for its revitalization.

    In the meantime, the Minority Leader in Parliament cautioned that the government’s move to merge the National Investment Bank with the Agricultural Development Bank might result in approximately 800 job losses.

    Isaac Adongo, Member of Parliament for Bolgatanga Central, characterized this decision as unwise, hinting at a government strategy to assume full control of the bank.

    He further argued that alternative measures could enhance the bank’s sustainability without transferring it to ADB.

  • Economist laments on poor state of Ghana’s economy

    Economist laments on poor state of Ghana’s economy

    Faculty member at the University of Ghana Business School, Professor Godfred Bokpin, has expressed concerns that the nation is on a perilous course under the current leadership managing the Central Bank.

    He pointed out that despite the clear economic warning signs in 2019, the Bank of Ghana, under the leadership of Governor Dr. Ernest Addison, failed to caution the government about the impending economic risks.

    He emphasized that the decisions made by Dr. Ernest Addison and his team during this period, while ignoring these warning signs, are indicative of the challenges that lie ahead for the country.

    Professor Bokpin urged Ghanaians to be deeply concerned about the state of their nation.

    He made these remarks during an appearance on TV3’s The Keypoints program on Saturday, September 7, 2023.

    “If as at 2019, Bank of Ghana’s own projections and the rest of them could not have warned us that this is where we were heading towards, then I feel we should feel sorry for this country.”

    His remarks were prompted by a recent protest organized by the Minority in Parliament, demanding the resignation of the Governor of the Bank of Ghana (BoG) and his two deputies.

    The demonstrators alleged that Dr. Ernest Addison mismanaged the central bank, leading it into financial distress.

    They also criticized him for overseeing extravagant spending, including the construction of the new $250 million Bank of Ghana headquarters.

    Despite the calls for his resignation, Dr. Addison firmly stated that he had no intention of stepping down and referred to the protesters as troublemakers.

  • Member nations of ECOWAS must show sincere desire to implement ECO currency – Economist

    Member nations of ECOWAS must show sincere desire to implement ECO currency – Economist

    The resolve and commitment of the ECOWAS member nations to the establishment of the one currency, the ECO, has been questioned by economist Professor Godfred Bokpin.

    He claims that the member nations of ECOWAS have not shown that they are prepared to implement the necessary fiscal and monetary plans for the introduction of the single currency.

    “Prolonged discussions surrounding the ECO, questioning whether member countries are genuinely committed to the requisite fiscal policy discipline and prudent monetary policies are needed to achieve macroeconomic convergence,” the Professor of Finance at the University of Ghana Business School (UGBS) said.

    Meanwhile, a recent report from a technical committee has revealed that ECOWAS member states have not met the essential requirements necessary for the implementation of the ECO currency.

    These requirements encompass maintaining an annual inflation rate in single digits, reducing the fiscal deficit to no more than 4 percent, and ensuring that Central Bank deficit-financing remains below 10 percent of the previous year’s tax revenue.

    In response to this situation, the technical committee has been assigned the responsibility of revisiting and reassessing the roadmap and convergence pact for ECOWAS member states to explore potential solutions.

    This decision was made during the ongoing Monetary Zone Conference, currently underway in Accra, Ghana.

  • Property taxes might produce GH12 billion annually – Economist

    An economist and associate professor at the Institute of Statistical, Social, and Economic Research (ISSER), Prof. Charles Ackah, has explained why Ghana must prioritize collecting property taxes.

    He claims that Ghana can generate up to GH12 billion in property taxes each year.

    He added that the GRA’s goal of approximately GH165 million is too modest.

    “If you do the analysis and you decide to raise ¢165 million target in Accra alone, divide 165 million by the structures in Accra and each property is likely to pay just about 97 a year. This means that the target is quite low.

    “According to my analysis, we could raise as much as ¢12 billion in property taxes alone. So, property tax holds a huge potential to boost the country’s tax revenues. Even if we focus on high-earned communities and the increasing luxury real estate, we can do more”, he said.

    Prof. Ackah urged legislators to make sure that the predetermined revenue goals are met as much as feasible.

    He added, “What we need to do is to mandate parliament to set revenue targets and apply punitive measures for failure to meet targets.”

    Due to the nation’s low revenue levels, the lobbying for the collection of property taxes has become a hot topic.

    Many people think that maximizing efforts to collect taxes will contribute to raising the ratio of taxes to GDP in the nation.

  • Economist predicts inflation to worsen before it gets better

    Economist predicts inflation to worsen before it gets better

    Ghana’s inflation is anticipated to deteriorate before showing signs of improvement, according to Professor Williams Peprah, a finance lecturer at Andrews University in Michigan, USA. However, he expressed his belief that the rate of inflationary increase would not resemble that of 2022.

    In July 2023, inflation experienced a slight uptick, reaching 43.1 percent, primarily driven by a surge in food inflation, which stood at 55.0 percent.

    During an interview with Joy FM in Accra, Professor Peprah explained that global commodity prices have been on the rise, while the performance of the cedi, impacting import-related inflation, has not demonstrated strong performance despite recent stability.

    He further elaborated that food inflation within the country has reached alarming levels, raising questions about the effectiveness of government agricultural initiatives like Planting for Food and Jobs.

    Among the findings, ten specific food items exhibited inflation rates higher than the overall food inflation rate. These items included tea and related products (150.0 percent), cocoa drinks (86.5 percent), fruit and vegetable juices (66.7 percent), cereals and cereal products (64.2 percent), sugar, confectionery, and desserts (62.7 percent), oil and fats (59.5 percent), milk and other dairy products and eggs (58.3 percent), coffee and coffee substitutes (58.2 percent), fish and other seafood (57.7 percent), and live animals, meat, and other parts of slaughtered land animals (55.2 percent).

    Professor Peprah highlighted that recent reports, such as the World Bank’s Food Security Report and the International Monetary Fund’s Country Report on Ghana, indicate that food inflation is expected to worsen before any improvement is observed.

    He noted, “The World Bank issued a report on Food Security Index saying we should have anticipated, and also our IMF-Ghana document had already mentioned that the situation will get worse before getting better. So, all these issues indicate that food inflation will be high.”

    The global shortage of rice due to Indian policies has contributed to the recent global scarcity of rice.

    “The Indians control about 40 per cent of the rice produc­tion and has sent some to part of Europe and Africa, so food prices is going to go up because of shortages.

    “It is going to get worse before getting better. What I see is that maybe the rate of increase will not be as it happened in November and December last year. The rate of increase may be marginal as we noticed between the previous month of June 2023 and July 2023,” it said.

    He advised the government to address some policies within the agriculture sector.

    “The government should be able to address some policies and strategies in the agriculture sector to address the farmgate versus the urban market. That kind of issue can be addressed. We should anticipate that inflation will get worse before it starts to come down,” he said.

    Analysts anticipate that infla­tion would go down when the harvest season starts in Septem­ber 2023 and October 2023, but could go up again in November 2023 and December 2023 be­cause of the festive season.

  • The economy’s oxygen was destroyed by Ofori-Atta before Covid-19 – Dr. Nii Moi Thompson

    The economy’s oxygen was destroyed by Ofori-Atta before Covid-19 – Dr. Nii Moi Thompson

    The oxygen any economy could have relied on before COVID-19 struck the country, according to Ghanaian economist Dr. Nii Moi Thompson, was destroyed by Finance Minister Ken Ofori-Atta.

    He claims that before the epidemic, important economic sectors of Ghana, including as the financial industry, which is the lifeblood of any country, were not properly established.

    “He blames Covid and the Ukraine war for his mess, but the facts say otherwise. Long before Covid, in November 2019, when he presented the 2020 budget to Parliament, he prophesied a steady decline in GDP growth from 7.0% in 2019 to as low as 4.6% in 2022, followed by a weak recovery to 6.5% in 2023.”

    “This grim outlook reflected the consequences of his vindictive and ruinous policies since 2017, including the wanton destruction of the financial sector – the source of oxygen for any economy – which shrank by an average of nearly 12% per year, and the very dynamic construction sector, which declined by 6.5% by the end of 2019, fuelling unemployment. Growth in other sectors either slowed or also declined. The economy was heading for the doghouse long before the world heard of Covid,” Mr. Thompson has said in a statement.

    In response to the mid-year budget review presented in Parliament by the Finance Minister, critics of the economic policies expressed their dissatisfaction, stating that the Minister has turned the exercise into a comical display of incoherent biblical quotations.

    “And whilst Covid did stagger the economy and put a strain on government finances for most of 2020, it also became a financial bonanza for the government, which raised nearly GH¢28 billion (not the GH¢21.8 billion in the Auditor-General’s report) to fight the pandemic. (The report omitted the GH¢5.8 billion, or US$1 billion, that the IMF gave the government in 2021, in addition to the US$1 billion (GH¢5.6 billion) given in 2020). (Combined tax revenue shortfall in 2020 and 2021 was GH¢5 billion).

    “Of the GH¢28 billion, nearly GH¢12 billion (about 43%) “was spent on Covid-related activities”, according to the report, with the remainder going to the nebulously named “budget support,” which could mean anything.

    “The positive impact on the economy – and the budget – of all that money is yet to be felt. Rather, the government has followed the IMF’s crazy advice and imposed more taxes and raised the rates for others, ostensibly to “revitalise” the economy and “mobilise revenue”. The woman roasting plantain by the roadside would tell you this is madness, and it is, as reflected in the minister’s gloomy economic prophecy for 2023.”

  • More taxes to follow after IMF deal approval – Economist warns

    More taxes to follow after IMF deal approval – Economist warns

    An economist, Professor Godfred Bokpin, has urged the general public to brace themselves for an imminent tax hike, following the International Monetary Fund’s (IMF) endorsement of Ghana’s bailout request.

    In an interview with JoyNews on Wednesday, he elaborated on the reasoning behind this forecast, citing the government’s obligation to achieve a specific tax to GDP ratio during the programme evaluation.

    “There are targets that we have to meet every six months of the program review. Part of the target may include increasing our tax-to-GDP ratio to let’s say 18%. The strategy in increasing the tax revenue could negatively impact businesses if we don’t adopt optimal tax handles,” Prof Bokpin said.

    Following the International Monetary Fund’s (IMF) long-awaited approval, Ghana’s Program request for a $3 billion Balance of Payment support to restore economic stability has been granted. In an official press release, the IMF stated that this endorsement would facilitate the prompt release of approximately US$600 million to Ghana.

    “The program is based on the government’s Post COVID-19 Program for Economic Growth (PC-PEG), which aims to restore macroeconomic stability and debt sustainability and includes wide-ranging reforms to build resilience and lay the foundation for stronger and more inclusive growth,” parts of the statement read.

    Meanwhile, Professor Bokpin emphasized the necessity for Ghana to implement stringent governance measures and productivity-boosting reforms to augment the benefits derived from the International Monetary Fund.

    He asserted that the government must undertake substantial efforts to establish a sturdy macroeconomic stability in the near to medium future, particularly in light of the country’s anticipation of receiving the initial portion of the $3 billion facility from the IMF.

    “What then is important is that how do we complement gains from the IMF, short term usually, by the necessary governance productivity and enhancing reforms that Ghana needs to do?” he further quizzed.

  • DDEP: Difficult times for banks has come to an end – Economist

    DDEP: Difficult times for banks has come to an end – Economist

    The losses incurred by banks in the 2022 fiscal year, according to economist Prof. Godfred Bokpin, may be the worst that could occur as a result of the Domestic Debt Exchange Programme (DDEP).

    He explained that most foreign banks have presented strong balance sheets and have given the assurance that they would re-strategize to prevent more losses.

    “To a large extent, people will be concerned but I want to believe that the worst moment is over.

    “If you look at the first quarter results for some of them, even though some of us have a little bit of an issue with the treatment of Treasury Bills in terms of the payment as compared to the medium term because it is the same borrower, but with the foreign banks, they have a very strong balance sheet from the group bank. In the case of Stanbic and the others, you will see the assurance of the group that they are going to recapitalize their banks, so there is no cause for fear, there should be no reason why we should have a run on those banks,” he was quoted by 3news.com.

    On the side of domestic banks, he also noted that they will be adequately capitalized since the Bank of Ghana has given banks some grace period and the removal of the 3 percent capital conservation.

    “But when it comes to the domestic banks, if you look at those that have been impacted heavily, GCB and the rest of them, actually that is also on the strength of the government balance sheet, you will see that some of them have capital adequacy ratio that is very low even though Bank of Ghana decided to remove the 3 percent capital conservation buffer in order to accommodate the effect of the DDEP.

    “I believe that in consultation with the central bank, there will be a grace period they can adequately recapitalize. I am sure that almost all the banks will be going through the capital planning process to ensure that all their banks are adequately capitalized,” he said.

    Prof Bokpin stated that the challenge will however be that, most banks are not robust enough to withstand certain shocks in the short term.

    He further added that “But I think if you are looking at the effect in the immediate that is where the issue is whether banks are robust enough to be able to support growth and employment generation, that is where the issue is because some have expressly indicated that they will cut back on their lending.”

  • Government to do better after securing IMF deal – Economist

    Government to do better after securing IMF deal – Economist

    An economist, Dr. Priscilla Twumasi Baffour, has said that when Ghana receives the financial assistance it is requesting from the International Monetary Fund (IMF), there will be a change in attitude following the current crisis the country is experiencing.

    According to her, she is optimistic that Ghana has learned valuable lessons from the current economic crisis.

    She added that the government must show fiscal discipline and also embark on rigorous revenue mobilisation to drive down the debt levels.

    “We have gone through an unexpected term. For instance, through the current challenges, external shocks, and also because of the way we have managed affairs internally. I believe that it is important as a country to work on our revenue mobilisation drive to increase revenue generation domestically,” she was quoted by myjoyonline.com.

    Dr. Twumasi added that she is hopeful that the IMF deal may help Ghana to tread cautiously.

    “As we are all anxiously waiting for the IMF programme, once we get this deal, hopefully, we will do the right thing. We should not find ourselves back in this precarious situation at any point in the future,” she added.

  • One of Akufo-Addo’s biggest mistake is over borrowing – Prof Adei

    One of Akufo-Addo’s biggest mistake is over borrowing – Prof Adei

    Economist Stephen Adei says incessant borrowing without the capacity to repay is one of the most significant contributors to the country’s economic crisis.

    The former Ghana Revenue Authority (GRA) Board Chairman insists this development is what has become an albatross around President Akufo-Addo’s neck.

    “I think the biggest mistake they made is that they borrowed beyond our capacity to service it,” he said.

    He made these comments on the sidelines of the Signature Market Pre-launch campaign at the Kwame Nkrumah University of Science and Technology (KNUST).

    Prof Adei explained that even though exogenous factors such as the coronavirus pandemic and the Ukraine-Russia war played a role, overborrowing is the final nail that threw it entirely out of gear.

    “If you are a country and you borrow beyond your capacity, you will be in trouble, of course, COVID-19 came in, and the Russia-Ukraine [war]. But the reason why things got worse is because of these underlying mistakes they made and they must admit it”, Prof Adei explained.

    He told pressmen that if this was not the case, “they won’t be going to IMF.”

    “We have to learn and not repeat our mistakes by going on a borrowing spree”, he urged the government.

  • Withdraw Stabilisation and Heritage funds from abroad, it’s giving us peanut – Economist

    Economist Dr. Adu Owusu Sarkodie, is calling for the withdrawal of the over one billion dollars Heritage and Stabilisation Funds invested overseas.

    According to him, these funds have generated a paltry 2% return on investments, which he describes as not good enough.

    Speaking to Joy Business, Dr Sarkodie said the funds should be invested in Ghana and the returns used to finance infrastructural projects.

    “Per my checks, these two funds [Heritage and Stabilisation funds] have accumulated over $1 billion  and this amount of money have been invested outside the country earning only 2% nominal inflation rate. In cases where the inflation rate is higher than the 2%, it means we are earning negative real interest rate.”

    “Meanwhile, the government of Ghana goes to the same foreign capital market to borrow at 7%, 6%, 8%, 9% percent”, he stressed.

    He appealed to the government of Ghana and Parliament to revise the act of parliament and allow the government to bring these funds home for reinvestment.

    “It is my humble appeal that the government of Ghana together with the parliament of Ghana to revise their notes and then pass a law or revise the act of parliament and  allow the government to withdraw the over one billion dollars Heritage Fund and Stabilization Fund to be brought home and it can be invested here.

    He proposed ways that the funds can be invested including the government borrowing from that fund in dollars and paying 5% or 6% or an agreed rate and the investment in infrastructure such as highways and railways.

    Source: Myjoyonline.com

  • People are now investing their money in the dollar – Prof. Bokpin

    An economist, Professor Godfred Bokpin, has called on the government to put in place the right measures to re-instill confidence in investors concerning the economy.

    According to him, due to the fast depreciating cedi and the ailing economy, investors have started investing their money in the dollar, a move which is further weakening the cedi.

    He noted that such investors although aware of the repercussions of their actions on the local currency, continue to do so out of rationality.

    He said “investors are rational actors. When it comes to making money love for country is held constant. Nobody loves Ghana, people love their bottom line, we see GUTA people closing their shop and all of that.”

    Prof. Bokpin explained that with the cedi becoming a less desirable store of value, most investors have directed their attention to the dollar.

    This he says is as a result of the dollar gaining strength and “having a future”.

    “So when people exit and there are no alternatives because of the time value of money they wouldn’t want to keep the money idle and therefore they will look for a currency that is more stable and the currency that is more stable right now is the dollar,” he said.

    He added “If you look at it from the global dimension, you’ll see that dollar has a future not even only in Ghana here because the dollar is strengthening consistently across even major trading currencies. So if you’re an investor and you have money, you’re looking at denominating your money in a currency that is stable and more so could strengthen.”

    The Economist has warned that should the managers of the economy not put in place measures that will re-anchor the support and confidence of investors into the cedi, the country will be headed into direr times.

    “The country and the powers that is vested in those who are managing the country, the country must love itself enough to put in place the right measures so that you anchor the love of individuals around that particular angle. Other than that people will misbehave.”

    “When it happens that way the trade-off is cedi, anytime you go and buy dollar, automatically you’re selling cedis. And as a lot more people are demanding dollars they’re selling cedis. As supply of cedis increases then the value will have to come down. So if you look at it from that perspective then you know that probably you could say that the worst is yet to happen,” he said.

    Source:myjoyonline.com

  • World Bank’s assessment of Ghana’s economy is true – Lord Mensah

    An Economist, Lord Mensah, has backed assertions of Ghana’s economy by the World Bank.

    According to him, the World Bank being an external body gives an accurate measure of the country’s debts and growth prospects.

    He noted that the stakeholders in Ghana do not capture the true state of Ghana’s situation in its accounting of the country’s debts.

    “Being an external stakeholder of this economy, it is anticipated that once in a while, they’ll come and give us their perspective of the Ghanaian economy. And truly, what they said is a reflection of what is happening on the grounds,” he is quoted by myjoyonline.com.

    He added that: “Looking at our debt, I think we’ve been calculating our debt without the contingent liabilities over the years, and if I say contingent liabilities, what I mean is the liabilities that have some inflows to them so we think it is not debt.”

    “And we should know that all those inflows that are tied to this debt operate under a certain umbrella which is the economy. So, if the economy is not doing well, obviously those inflows will also be impaired and it can affect your debt payment,” Lord Mensah explained.

    The World Bank in the latest report stated that Ghana is currently a high-debt-distressed country with a debt-to-GPD ratio of 104%.

    Meanwhile, data released by the Bank of Ghana suggested that Ghana’s public debt stands at GH¢402 billion representing 68% of GDP.

  • Forward auction to stabilize cedi in 2021 – Economist predicts

    An Economist with Databank, Courage Martey, has indicated the use of forward auction has a high potential to stabilize the Ghanaian cedi.

    According to him, the move on the interbank foreign exchange market in the country will yield positive results in the first quarter of 2021.

    Mr Martey, in interaction with Citi Business, urged the Bank of Ghanato continue with its bi-weekly forex auctions which he noted has helped participants on the exchange market to lock in on exchange rates without having to rush for physical cash.

    In his words, “First of all the bi-weekly forex auctions that are being conducted by the Bank of Ghana has been very helpful because they are forward transactions that help participants on the exchange market to lock in exchange rates without going to rush for the physical cash and that has helped to reduce speculative and panic transactions on the spot market and so continuing these forward auctions will deepen forex trade on the market and that should help reduce panic on the spot market”.

    Meanwhile, the cedi has suffered depreciation for several years with investors having the fear of dealing with the local currency.

    The situation which occurs within the last quarter of a year through to the first quarter of a new year is usually attributed mainly to a hike in commercial activities during the festive season and profit and dividends repartition by foreign investors in the first quarter of a new year.

    Businessmen thus find it difficult to take strategic decisions for fear of the value of the cedi changing from one day to the next.

    However, forward auctions enable foreign exchange dealers to make forex purchase through spot sales that include a purchase made on a day and settlements done in two days.

    Courage Martey predicted that with the continuous use of forward auctions by the central bank, the cedi is highly likely to be stable in 2021.

    “What we also noticed from this year is that typically the Bank of Ghana will alot twenty-five million dollars at each biweekly forward auction but in the first quarter of this year they actually allotted twenty million dollars per auction every two weeks, so it shows that the Central bank is preparing to support the cedi with all policy tools available,” he explained.

    Source: www.ghanaweb.com

  • Four ways in which poorer economies will suffer

    Economists around the globe are warning the fallout from the pandemic might be the worst downturn since the Great Depression of the 1930s.

    Almost every country on the planet is being affected but developing economies might get hit hardest. They’ll be affected in four distinctive ways:

    * Commodity prices will fall and many developing nations are exporters of those

    * International investment will fall, investors might even pull money out of from developing nations

    * Declining local currencies will make it harder to repay foreign debt if it was taken for instance in US dollars

    * Overseas workers will be earning less, sending back fewer remittances to their families.

    Source: bbc.com

  • Coronavirus: Discuss possible lockdown thoroughly Economist

    Economist Professor, Godfred Bopkin has asked the government of Ghana to engage in broad discussions before considering a lockdown of any part of the country in the midst of the coronavirus outbreak in Ghana.

    He said although the country is faced with a serious situation as other parts of the world regarding the COVID-19, the government must act tactfully in its decisions.

    Ghana has so far recorded 136 cases of coronavirus with three deaths.

    Groups including the Ghana Medical Association (GMA) have asked the government to lock down the country to mitigate spread.

    Prof Bokpin told journalists in Accra: “Unusual times call for unusual measures. For that reason, the discussion of our debts, though relevant, we have to understand that the country is facing critical challenges that require us to think beyond the normal situation of debt-to-GDP ratio.”

    On the lockdown issue, he said: “A lot of conversation must go on to fill the gaps before such conversations start.”

    Source: classfmonline.com