Business News of 2014-04-01

Ghana remains a favourable investment destination – Terkper

Finance Minister Seth Terkper has insisted that Ghana remains a favourable investment destination despite the turbulence in which the economy is currently going through.
Presenting a statement on the floor of Parliament Tuesday, Mr Terkper said the faith investors have on the economy had not waned.
Many analysts have surmised that measures introduced by the Bank of Ghana to arrest the spiralling fall in the value of the local currency were inimical to foreign investment. Some of the key measures prohibit companies from pricing, and receiving payments for their goods and services, in foreign currencies and withdrawing money from forex accounts.
The measures are said to undermine confidence in the economy and discourage foreign investment. Former Deputy Governor of the Bank of Ghana, Dr. Mahamudu Bawumia, at a lecture last week, urged the Central Bank to reverse the measures.
"The measures so far taken by the Bank of Ghana through the imposition of foreign exchange controls, despite all the good intentions, have rather added an element of uncertainty to Ghana’s exchange rate regime and this discourages the very investment needed to grow the economy," he said.
But Mr. Terkper contends that is not the case. He said the "BoG measures are designed to ensure transparency, streamline activities and reduce leakages in the foreign exchange market, address anti-money laundering issues and promote the use of the cedi as legal tender."
The Minister insisted the measures were not bad as they were made to look. Touching on other measures being pursued by the government to restore hope and confidence in the economy, Mr. Terkper said a moratorium has been placed on the awarding of new contracts and new loans.
Dr. Bawumia had argued that the country in the last five years had borrowed unsustainably. "By the end of 2008, Ghana’s total public debt stood at GH¢9.5 billion (33% of GDP). In the last five years however, the stock of public debt has seen a dramatic increase to GH¢49.9 billion (57.7% of GDP) at the end of 2013. This is an increase in the stock of debt by GH¢40.4 billion or the equivalent of $20 billion using the average exchange rate for 2009-2013. This also represents an increase in the stock of debt by 426% over a five year period (i.e. an average increase in the stock of debt by 85% a year)," he stated.
Dr Bawumia argued that "This is a frightening rate of accumulation of debt by any standard." He warned that if steps were not taken to reverse the situation "Ghana’s debt stock would cross the 60% of GDP level that developing countries with limited access to capital flows should worry about in terms of debt sustainability."
In an apparent agreement with the New Patriotic Party Vice Presidential candidate in the 2012 elections, Mr. Terkper said "our debt management measures are on course."
He said the measures "aim to manage the debt within debt sustainability limits; adopt recovery schemes such as escrows and lending of loans under commercially viable projects, financing of the capital budget from specific long-term domestic and foreign loans and bonds and not relying on short-term instruments."
Former Finance Minister under the Kufuor administration, Dr Anthony Akoto Osei, while commending the Finance Minister for the statement, said he was unimpressed.
He said Mr. Seth Terkper simply rehearsed statements contained in the 2014 budget which he argues are incapable of addressing the challenges confronting the economy.
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