Financial & Economic Analyst

22/12/2023

21st December 2023:
$1=11.65
BOG weighted average

22/12/2023

It’s not advisable to sell your forex now. Let’s keep it for next year

22/12/2023

A year a ago, the exchange rate was manipulated. It wasn’t a demand and supply issue.

27/11/2023

Not the desired growth rate to transform any country. This growth rate cannot be the Ghana’s dream.

27/11/2023

Now growth rate for 2023 is stated at 1.2% of gdp. This rate of growth is not encouraging. We cannot applaud this rate of growth. It is not the desired growth rate for a country whose unemployment rates keep soaring.

27/11/2023

7. Budget deficit
8. Capital expenditure
9. Trade balance
10. Projections: Revenue and expenditure
11. Relationships between Revenue and (interest payments, compensation and statutory fund)
12. Interest payments and MMDCE’s budget.

27/11/2023

1. Real GDP growth
2. Inflation particularly food inflation
3. Exchange rates
4. Un/Employment
5. Cost of borrowing
6. Primary balance

27/11/2023

The following indicators will be looked at in analyzing the budget statement and economic policy;

27/11/2023

These indicators provide a general broad view of the budget statement. Whatever victory or claims of deliverables must show positively in the selected indicators.

27/11/2023

We will analyze the budget statement of the government of Ghana based on the selected indicators.

27/11/2023

ANALYZING THE 2024 BUDGET STATEMENT AND ECONOMIC POLICY.

We will analyze the budget statement of the government of Ghana based on the selected indicators. These indicators provide a general broad view of the budget statement. Whatever victory or claims of deliverables must show positively in the selected indicators.

The following indicators will be looked at in analyzing the budget statement and economic policy;

1. Real GDP growth
2. Inflation particularly food inflation
3. Exchange rates
4. Un/Employment
5. Cost of borrowing
6. Primary balance
7. Budget deficit
8. Capital expenditure
9. Trade balance
10. Projections: Revenue and expenditure
11. Relationships between Revenue and (interest payments, compensation and statutory fund)
12. Interest payments and MMDCE’s budget.

Real GDP growth.

This is the rate of growth of the total output of all economic activities in a country or an economy in a particular given year. Your guess is as good as mine. An increase rate of growth, all things being equal suggest: increased economic activities , reduction in unemployment, increased tax revenues and their positive ripple effects. Gdp is a very key indicator in assessing performance. In fact it is primary indicator.

Now growth rate for 2023 is stated at 1.2% of gdp. This rate of growth is not encouraging. We cannot applaud this rate of growth. It is not the desired growth rate for a country whose unemployment rates keep soaring. Not the desired growth rate to transform any country. This growth rate cannot be the Ghana’s dream.

It is below what was recorded last year. It is also below the average growth rate of the sub region (ECOWAS) which stands at 3.3%. It is also far below our compatriot country Ivory Coast. Ivory Coast post-covid has been consistent in posting average growth rate of 6% Of gdp. They are doing something right. A transformation from a developing country to a *Developed country* in the medium term will require a consistent growth of not less than 8% of gdp.

GROWTH RATE FOR SELECTED COUNTRIES IN THE SUB REGION:

01/07/2023

How can you be preparing for debt exchange and continue to pay 35% interest on treasury bill when You cannot pay for 20% coupon rates. Government is further worsening the situation by this level of interest. Where and how is government going to get the money to pay for this high interest.
An investor will simply make the coupon rate you claim you cannot pay any longer by investing in treasury bills for just six months. Mr. Government, you digging further which is dangerous.

Is it a short term measure to keep the cedi afloat against the dollar.?

The gains from the cedi will be Artificial and in the medium to long term come back to hunt us. Manage the cedi from purely DEMAND AND SUPPLY LEVEL. Let the cedi find it’s level. When government then borrows, it will be directed at capital expenditure aimed at increasing exports and reducing the demand for dollars. ANY OTHER ATTEMPT WILL ONLY MEAN DELAYING ONE’S ILLNESS.

We cannot see any efforts by government to increase supply of forex and minimize demand. This approach of hiking interest in fighting the forex situation is myopic. The way to go is to reduce the policy rates. The implication of a reduction in policy rates boast production. Increase productivity is the surest WAY.

28/04/2023

28th February 2023:
$1=11.01

28th March 2023
$1=11.014

28th April 2023
$1=10.951

11th July 2023
$1=11.001

*A very good time to invest in dollars.

BOG’s Weighted average rate.

28/02/2023

28th February 2023:
$1=11.01

28th March
$1=11.014

BOG’s Weighted average rate.

25/02/2023

Dense layers of institutions producing little. Public purse drain

10/02/2023

BANK OF GHANA PAAA

Let’s all understand that a revered central bank characterized by transparency and compliance to laws and statutes is pivotal in sound economic management.

Is it the case of setting your own questions and answering. So what does this particular response aimed to achieve. Help me guess.

Is it a confirmation or denial of the allegations against BOG, Or let’s be seen talking, taking the intelligence of all analysts including OURS and citizens for granted.

THE ALLEGATIONS
At least one of the following allegations have been made by Bloomberg, IEA, our own FEA and other Ghanaians.

1. BOG has breached its acts that states that it must not advance to government more than 5% of previous years revenue without going to parliament to suspend the provision.
2. Allegations that BOG has contributed to the current inflation which stands at 54% hence it’s constant increasing of the Monetary Policy Rates.

PER THE LETTER
Having read carefully your warranted response, we arrived at the following;

1. The total advances to government irrespective of reasons and excuses amount to Ghc 55 billion in 2022. This amount is more than 67% of government total Revenue and grants which stood at Ghc 81 billion from January to November as stated in the MPC report by BOG in January 2023.

You claimed that the total deficit from Jan -Nov 2022 was about Ghc 60 billion(9.8% of GDP) of which you alone within that same period advanced to government a total of Ghc 55 billion. So a nearly Ghc 5 billion was from the market? Or in adding the Ghc 55 billion of your total advances to government, our deficit should be in the region of Ghc 115 billion(18.7% Of GDP).
Do you see that Your accounting lacks transparency and clarity.
I state below what you claimed in your report.

Provisional data on budget ex*****on for the period January to November 2022 indicated an overall broad fiscal deficit (cash) of 9.8 percent of GDP, against the programmed target of 6.7 percent of GDP. The corresponding primary balance for the period was a deficit of GH¢18.8 billion (3.1 percent of GDP), against a deficit target of GH¢3.1 billion (0.5 percent of GDP). Over the review period, total revenue and grants was GH¢81.8 billion (13.3 percent of GDP), short of the projected target of GH¢84.0 billion (13.6 percent of GDP). Total expenditure of GH¢142.2 billion (23.1 percent of GDP) was above the programmed target of GH¢125.4 billion (20.4 percent of GDP). The deficit of GH¢60.4 billion was financed mainly from the domestic sector.

2. These advances were not part of the deficit presented to the legislature in the 2022 budget.

3. Your actions are opaque and the central bank of the republic should be the last entity to be associated with opaqueness.

A revered central bank characterized by transparency and compliance to laws and statutes is pivotal in sound economic management.

07/02/2023

Investors be warned! Government may not be able to pay

03/02/2023

GOLD FOR OIL 2

The process as explained by government so far defeats what we intend to achieve. Government explained that;

1. The program is undertaken by the Bank of Ghana. BOG buys more gold than it needs for reserves. The excess gold purchase is then used for the GOLD FOR OIL

2. The central bank through its intermediaries then sells the purchased gold for dollars.

3. The dollars above are used to buy the oil at the market rate to deliver to government for onward distribution to Bulk distribution companies and OMC’s.

4. The businesses of the central bank will be at a profit. So profit margins will be added to intermediaries commissions, transport cost and other overheads.

Why do we complicate things?

We have created intermediaries commissions, transport cost, profit margins and other overheads. Who then bare the costs of government officials who travelled to UAE as explained in negotiating for the oil and Gold.

A simple case of making the dollars available to the BDC’s has already been complicated. When the process is complicated, corruption is rife and accountability is difficult.

03/12/2022

DOES MOODY’s RATINGS SUGGEST “INVESTORS MUST WAIT”?

Moody investors recently downgraded Ghana from its Caa2 to Ca. A simple understanding of this means that Ghana’s economy which initially was on top of the trash with a likelihood of jumping out now finds its way in the middle of trash.

An investor must be extremely careful dealing with such economy. An investor must be taking twice the risk it used to. New investors are warned by this rating. Now does it suggest current investors must wait? We don’t think so though A wait is good for the country in question to recover. Read our piece on:

MUST INVESTORS WAIT?

MUST INVESTORS WAIT?

We asked this question because it will be one single headache investors must be going through. Must they wait for boom years in other to redeem their investment?
There is a subtle agreement that whoever holds government of Ghana bonds currently will loose part of the investment. Investors must again note that gain and loses are part of the business. Gains most often depend on how smart the investor and his team have been working. Now let’s ask the following questions

1. Is the economy or let’s say the market going to recover soon.
2. How severe is the cut of profit and (or) principal.
3. Are there potential market where I could reinvest my investment to restore parity
4. What are the trends of forex exchange and inflation.

A careful answer to these questions will not call for a further delay. There are markets that can restore your investment value in the short to medium term than this particular one. Speaking as and investors.

03/12/2022

MUST INVESTORS WAIT?

We asked this question because it will be one single headache investors must be going through. Must they wait for boom years in other to redeem their investment?
There is a subtle agreement that whoever holds government of Ghana bonds currently will loose part of the investment. Investors must again note that gain and loses are part of the business. Gains most often depend on how smart the investor and his team have been working. Now let’s ask the following questions

1. Is the economy or let’s say the market going to recover soon.
2. How severe is the cut of profit and (or) principal.
3. Are there potential market where I could reinvest my investment to restore parity
4. What are the trends of forex exchange and inflation.

A careful answer to these questions will not call for a further delay. There are markets that can restore your investment value in the short to medium term than this particular one. Speaking as and investors.

03/12/2022

WHY FEED THE MARKET WITH CONFUSED INFORMATION?

information management as far as the market is concerned is very important. Information must be timely and apt. It must eliminate all forms of incoherence. The market strives on efficiency of information. You don’t starve the market of information and in addition must not feed the market with incoherent information. It will bite hard at your economy.

First it was Mr. President
👇🏿
Then the information minister
👇🏿
The finance minister
👇🏿
And finally deputy finance minister.

Curious to note that they have not helped the market a bit. From being a proud nation to not going to the IMF and finally in IMF
From No hair cut to hair cut but interest and(or) principal arrangement sort of. These kind of communication sent a wrong signal to investors.

Government appeared as confused not on top of what it’s doing.

01/12/2022

GOLD FOR OIL

Trading gold for oil. Great idea but it’s feasibility. Hope it turned out well. It’s a big game changer in stabilizing the local currency. However the gold exporters who earn foreign exchange, how willing will they be; to sell in local currency. What a sacrifice they must make. Again, what price will the government pay for the gold. Is it the price determined on the market? Now assuming government has been successful in purchasing the gold from the local miners and the prices of gold fluctuate negatively, we will still incur some loses.

Finally government doesn’t buy the petroleum products, it is bought by the OMC’s and BDC’s, is government going to supply them with the gold and how adequate is the supply. Which and how many countries are ready to deal in this m kind of trade. These are few questions to policy makers to fine tune the concept of gold for oil.

30/11/2022

GOLD FOR OIL

Trading gold for oil. Great idea but it’s feasibility. Hope it turned out well. It’s a big game changer in stabilizing the local currency. However the gold exporters who earn foreign exchange, how willing will they be; to sell in local currency. What a sacrifice they must make. Again, what price will the government pay for the gold. Is it the price determined on the market? Now assuming government has been successful in purchasing the gold from the local miners and the prices of gold fluctuate negatively, we will still incur some loses.

Finally government doesn’t buy the petroleum products, it is bought by the OMC’s and BDC’s. is government going to supply them with the gold and how adequate is the supply. Which and how many countries are ready to deal in this kind of trade. These are few questions to policy makers to fine tune the concept of gold for oil.

30/11/2022

In the name of communicating well on the financial market, don’t assume that investors are dumb and cannot read between the lines. Your actions and what you say must tally with the figures provided. You must bear in mind they have one of the most sophisticated analytical brains. With the mindset of avoiding loses, they tend to be a step ahead. Don’t take them for granted. One of the reasons why Ghana is where it is now.

30/11/2022

In a worse case scenario, It was our expectation that in the 2023 budget, government will program to spend at least half of the overall deficit balance on capital expenditure. Doing so will mean, we are prudently managing our borrowings.

However government planned a 45% of the overall deficit on capital expenditure, not bad though. We have cautioned since 2017 of government inability to put more than half of its overall deficit in capital expenditures. In 2022 end of September, government spent 28% of its overall budget deficit on capital expenditure when 43% was envisaged in the 2022 Budget.

An analysis of government expenditures and Revenue will show that ,the status quo will continue.

30/11/2022

29/11/2022

POLICY RATE UP BY 250 BASIS POINT.

The government cannot borrow from international market, inflation is eating away people’s investment and other investors looking for a more suitable commodity as a store of value. You expect the policy rate to increase. It is the way to go at this very moment. Sorry to businesses. Cost of doing business will be expensive.

We believe the main reason is for the government to borrow domestically.

“The inflation forecast shows that in the outlook, inflation will likely peak in the first quarter of 2023 and settle at around 25 percent by the end of 2023. This forecast is conditioned on the continued maintenance of tight monetary policy stance and the deployment of tools to contain excess liquidity in the economy. There are however some risks to this forecast that would have to be monitored, including additional pressures from the proposed VAT increase, and exchange rate pressures. Continued vigilance to the evolution of these potential price pressures in the outlook will be key.

The Committee is of the view that significant upside risks to the inflation outlook remain. To continue to anchor inflation expectations, the Committee therefore decided to increase the policy rate by 250 basis points to 27.0 percent.”