BoG consolidates stable cedi; Increases policy rate to 26%
The Bank of Ghana has, in a surprise move, increased its main benchmark interest rate by 100 basis points to 26 per cent from 25 per cent to fend off mounting inflation and consolidate the stability of the cedi.
This is the third raise by the central bank this year since the beginning of the year when the policy rate was pegged at 19 per cent.
The Governor of the Bank of Ghana, Dr Henry Kofi Wampah, said at a news conference in Accra that the risks to inflation outlook were on the upside, with a likely drift from the medium-term target.
“The committee will continue to monitor developments in the economy and take appropriate action, if necessary, including the possibility of lowering the policy rate once inflation expectations are well-anchored,” he said.
Inflation levels
Governor Wampah said the current level of inflation,17. 4 per cent, was far above the medium target of eight plus or minus two per cent.
He mentioned the upside risks to inflation outlook such as worsening external financial conditions and the planned utility tariff adjustments, which were now likely to be higher than anticipated.
This is expected to tighten credit squeeze and increase the lending rates of commercial banks, which currently average between 31 and 36 per cent, depending on the bank.
Nigeria ‘won’t lower’ MTN’s $5.2bn fine
Nigeria’s telecommunications regulator says it is extending its Monday deadline for MTN Nigeria to pay a $5.2bn fine but indicated it will not lower the amount for a company it accuses of routinely flouting regulations. It comes as other Nigerian regulators are slapping companies with multi-million dollar fines, as the government looks for more revenue while pursuing President Muhammadu Buhari’s anti-corruption drive.
Spokesperson Tony Ojobo of the Nigerian Communications Commission (NCC) said the fine was the second imposed on MTN in two months over the same infraction:
A failure to deactivate unregistered cellphone SIM cards.
The issue is one of national security in Nigeria, where law enforcers say cellphones are used to activate bombs and coordinate other attacks by Boko Haram Islamic extremists as well as in kidnappings and armed robberies.
When all four Nigerian cellphone service providers missed an August 11 deadline, they were fined amounts from $19 000, for Airtel, to $511 000 for MTN, Ojobo said in a statement. Only MTN failed to pay, he said.
When an enforcement team audited MTN from September 2-4, the company admitted it still had 5.2 million unregistered SIM cards active on its network, the statement said. Other companies had complied.
IMF conditions crippling Ghana’s agric sector – Economist
An Economist at the Kwame Nkrumah University of Science and Technology (KNUST) Mrs. Grace Ofori-Abebrese has attributed failure of the agric sector to tough international Monetary Fund (IMF) conditionalities.
According to her, a directive by the Washington-based lender to government against allocating funds to the agric sector is the cause of the sector’s abysmal performance.
“It will be very difficult for the government to over spend against the IMF’s directive, so the government will not resource the sector,” Mrs. Grace Ofori-Abebrese.
Mrs. Ofori-Abebrese who is a Senior Lecturer at the KNUST’s Department of Economics was speaking Monday on Adom FM’s “Burning Issues” programme hosted by Afia Pokua.
Presenting the 2016 Budget Statement to parliament, Finance Minister, Seth Tekper announced that the agric sector grew by 0.04% this year, a figure some analysts have condemned as too low.
According to Mrs. Ofori-Abebrese, next year will be a challenging year for the sector because government will continue to ignore the sector.
“The government must look at how to solve the challenges of Ghanaian farmers to enable them work happily in the sector” Mrs. Grace Ofori-Abebrese recommended.
First Fund retains spot as Best Performing Mutual Fund
First Fund, an investment product managed by FirstBanC Financial Services Limited (FirstBanC), has maintained its position as the best mutual fund (collective investments schemes) in Ghana, according to the Securities and Exchange Commission’s annual report for 2014.
The report ranked First Fund as the best performing and the collective cost effective investment scheme for 2014 as it closed the year with an annual yield of 37.28 per cent ahead of other schemes.
Since its inception in 2010, First Fund has maintained its position as the best performing money market mutual fund in Ghana each year.
It has also achieved consistent and considerable growth in the Asset under Management (AUM), price and clientele base.
The AUM of the fund grew by 62.3 per cent from GH¢22.8 million at the end of 2014 to GH¢37 million as at September 30, 2015.
The Fund, as at September 30, reported an annualised yield of 37.19 per cent, higher than the benchmark 91-day Treasury Bill for the period at 25.32 per cent.
Ȼ1.6b lost to tax exemptions
The value of import exemptions for the first nine months of this year exceeded what the government has budgeted for the period by more than a billion Ghana cedis.
The revised budget of government estimated the value of import exemptions for the first three quarters of the year at a little above Ȼ541 million.
However, provisional figures from the Finance Ministry show that as at the end of September this year the value of import exemptions had ballooned to Ȼ1.6 billion.
More troublingly, government estimated in the revised budget for this year that -taxes on goods exempted from the payment of Customs import duties for the entire year will be Ȼ753 million, but the Finance Ministry projects that this figure could exceed Ȼ2 billion – creating a worrying situation for taxmen, policy analysts and the country’s non-concessional lenders.
The International Monetary Fund (IMF), which is overseeing the implementation of a three-year Extended Credit Facility Programme for Ghana, has raised questions about the country’s import exemption regime and asked government to overhaul it.
Professor Newman Kusi of the Institute of Fiscal Studies, in a paper published by the B&FT last week, also asked government to fix loopholes in the country’s revenue system arising from exemptions, under-invoicing, bonded-warehouse facility, transit goods, and export processing zones to enhance domestic revenue mobilisation.
Billion dollar debt breaks VRA’s neck: Tema thermal plants shuts down
Information available to Joy News indicates that the country’s biggest power generation company, the Volta River Authority (VRA), has shut down its thermal plants in Tema.
The decision has become necessary due to the VRA’s inability to purchase crude oil to power the plants. The company has been unable to access funds from banks to buy the crude.
This means the VRA plants in Tema which collectively provide over 400 megawatts of power will not be able to produce the required power for a while.
Sources at the VRA tell Joy News Editor, Araba Koomson that the company has borrowed in excess of $1.3 billion from banks to buy crude.
The sources are also certain that the problem has become even more serious due to Ghana’s indebtedness to the West African Gas Pipeline Company (WAPCO).
Problems with the supply of gas from WAPCO has compounded the situation.
The VRA, according to our information, has borrowed to the point where banks have stopped giving the company letters of credit to buy crude oil.
Dana air postpones operations
According to Dana Air the rescheduling of their maiden flight was due to upgrading of facilities by the Nigerian aviation authorities at the three airports in Lagos (Murtala Muhammed International Airport, Murtala Muhammed 2 and Domestic Airports).
The airline which is looking to ply the Accra-Lagos route and later Accra – Abuja routes is expected to start passenger operations on November 28, 2015 as the Ghana Civil Aviation Authority (GCAA) has approved its operations in Ghana.
Speaking to Citi Business News Lead sponsor for DANA air in Ghana Sukhjinder Mann apologized to prospective passengers.
Credit: Joy Online, Citi Online, Graphic
