Connect with us

Markets

IMF Says Ghana Needs More Revenue, Fewer Spend Cuts for Goal

Published

on

ghana-one-cedi
  • IMF Says Ghana Needs More Revenue, Fewer Spend Cuts for Goal

Ghana needs to improve revenue collection and can’t keep reducing spending on capital items to achieve its fiscal targets, the International Monetary Fund said.

That’s one of the recommendations made by the Washington-based lender during a review of the nation’s $1 billion extended credit-facility program, country representative Natalia Koliadina said. Under the plan that started in April 2015 and is due to end in December, Ghana committed to implementing reforms to rein in chronic overspending and improve economic governance.

“Fiscal consolidation has to be revenue-based,” Koliadina told reporters in the capital, Accra. “Further spending cuts are not sustainable as government capital spending is already low at 3 percent of gross domestic product.”

While Ghana missed its revenue target for 2017, it met fiscal-consolidation goals, with the budget deficit declining to 5.9 percent of gross domestic product, she said. The gap was 8.7 percent of GDP the year before, government data show.

The state, which hasn’t borrowed from the central bank to finance the budget since 2016, must continue to support the goal of bringing down inflation to 8 percent in the medium term, and also continue to stabilize the exchange rate, Koliadina said. Ghana’s inflation rate fell to 10.3 percent in January.

Efforts by the Bank of Ghana to resolve weaknesses in the financial industry and lower non-performing loans are welcome and should continue because they will help to trim private-sector borrowing costs, she said. NPLs increased 43 percent to 8.6 billion cedis ($726 million) at end-December from a year earlier, according to the central bank.

The IMF supports Ghana’s plans to issue $1 billion of Eurobond this year because it would help the authorities to refinance more costly domestic debt. It also agrees with Ghana’s goal to further reduce the fiscal deficit to 4.5 percent of GDP in 2018, because this will result in a primary surplus of 2 percent of GDP and means meeting interest payments on debt without having to borrow, she said.

IMF staff and the Ghanaian authorities will use the coming weeks to reach an understanding on measures being put in place to continue fiscal discipline and structural reforms, focusing on sound public financial management before the IMF board’s meeting in April.

A positive outcome of the fifth and sixth reviews of the program will lead to the IMF disbursing $190 million to Ghana, Koliadina said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

Continue Reading
Comments

Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

Published

on

Barclays Bank

Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

Continue Reading

Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

Published

on

opec 2
  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

Continue Reading

Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

Published

on

gold bars
  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

Continue Reading
Advertisement
Advertisement
Advertisement
Advertisement

Trending