Finance ministry fires IMANI, IFS over 'hedging lies'

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Komla Agbeshie ( Ho ) 10 years ago

Tell us the truth. IMANI and IFS are right.

Tell us the truth. IMANI and IFS are right.
#Occupy_Evil_NPP_Hypocrites 10 years ago

Hohohoooooooooooooooooooooooooooooo

Hohohoooooooooooooooooooooooooooooo
jj 10 years ago

well done

well done
Thinkofanumber 10 years ago

Think. We are paying this silly boy, Ato-Forson, a salary to fill the air with words devoid of substance. He is incapable of addressing issues of substance legitimately raised by serious grown-ups.

Think. We are paying this silly boy, Ato-Forson, a salary to fill the air with words devoid of substance. He is incapable of addressing issues of substance legitimately raised by serious grown-ups.
Bafour 10 years ago

Why Even waste time onsuch trash?
Government must be smart and spend resources beneficial things. This uneducated trash from so called Septic tank is not worth commenting on. They mere distractions.

Why Even waste time onsuch trash?
Government must be smart and spend resources beneficial things. This uneducated trash from so called Septic tank is not worth commenting on. They mere distractions.
www.adommall.com 10 years ago

Surprise your family and friends in Ghana with Adom Mall, www.adommall.com and pay through paypal or our local agents.

Surprise your family and friends in Ghana with Adom Mall, www.adommall.com and pay through paypal or our local agents.
Close Observer 10 years ago

THE USELESS NDC PARTY WILL NEVER STOP LYING; YOU KNOW LYING AND STEALING GOES. JUST VOTE THE DEAD GOAT AND HIS USELESS NDC PARTY OUT IN 2016 JUST LIKE THE NIGERIANS HAVE DONE.

THE USELESS NDC PARTY WILL NEVER STOP LYING; YOU KNOW LYING AND STEALING GOES. JUST VOTE THE DEAD GOAT AND HIS USELESS NDC PARTY OUT IN 2016 JUST LIKE THE NIGERIANS HAVE DONE.
#Occupy_Evil_NPP_Hypocrites 10 years ago

JUST IGNORE THIS MAN WHO CANNOT KEEP HIS ***** MOUTH SHUT! HEHEHEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE

JUST IGNORE THIS MAN WHO CANNOT KEEP HIS ***** MOUTH SHUT! HEHEHEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
Proper Tenu 10 years ago

Minister of Propaganda and Lies

Minister of Propaganda and Lies
awl 10 years ago

dwarf Think-Tankers: Look beyond ur nose but pse the Cedis must stabilised early

dwarf Think-Tankers: Look beyond ur nose but pse the Cedis must stabilised early

JJ 10 years ago

So called hedging is just another excuse for incompetent thieves to steal more money and disguise this as hedging. Just keep quiet and do what you have to do and stop pretending to be working.

So called hedging is just another excuse for incompetent thieves to steal more money and disguise this as hedging. Just keep quiet and do what you have to do and stop pretending to be working.
pablo 10 years ago

Dr. Dufour is just not sincere with his God and Ghanaians after messing things up he wants to be seen as a saint. As for Professor Kusi, he is a misfired bomb.

Dr. Dufour is just not sincere with his God and Ghanaians after messing things up he wants to be seen as a saint. As for Professor Kusi, he is a misfired bomb.
Sankofa 10 years ago

Read the article carefully.

It explains clearly that forecasting is an inexact science, especially as regards the oil industry.

Hence hedging, which relies on forecasts of oil price, should be used with care.

Hedging ...
read full comment

Read the article carefully.

It explains clearly that forecasting is an inexact science, especially as regards the oil industry.

Hence hedging, which relies on forecasts of oil price, should be used with care.

Hedging was adopted as an instrument to protect oil earnings against the fluctuations in the price of oil. Dr Dufour is in no way to blame for any problems that have arisen with hedging, if he did indeed introduce the policy.
The learned one 10 years ago

They never accept their weaknesses! Very soon, the reality will catch up with them.

They never accept their weaknesses! Very soon, the reality will catch up with them.
Abeeku Mensah 10 years ago

By IMANI and IFS officials engaging in political collusion they have thrown caution to the wind thus lost credibility for the lack of caution required for intellectual analysis and evaluation.
Hedging is not a full proof eco ...
read full comment

By IMANI and IFS officials engaging in political collusion they have thrown caution to the wind thus lost credibility for the lack of caution required for intellectual analysis and evaluation.
Hedging is not a full proof economic analysis, forecast and transaction tool neither is it a time warp tool; success rates for those who use hedging and associated tools is dependent on knowledge derived from experience while at the mercy of an unpredictable global currency fluctuations and liquidity. IMANI and IFS should have known hedging is a glorified terminology for futures trading and nothing more. As such most acquisitions through hedging are time sensitive and prices only as guaranteed as the availability of financial resources of the buyer.
Instead of IMANI and IFS going after long standing practices of governments, past and present, on matters of implementing unsustainable initiatives and unfunded mandates, Franklin Cudjoe and others stoop to gutter level politics to sell lies and nothing but intellectually dishonest information where they can count on the ignorance of most Ghanaian buyers and consumers
jt 10 years ago

Northerners disappointed Mahama, i m afraid Dr Hilaliman, prz only for 2 yrs couldn't do anything, Mr hailed as Jr obamah, He appointed Northern to help him change things, they all chop whatever money is a located to them. ...
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Northerners disappointed Mahama, i m afraid Dr Hilaliman, prz only for 2 yrs couldn't do anything, Mr hailed as Jr obamah, He appointed Northern to help him change things, they all chop whatever money is a located to them. Now what is left for us as notherners?
Jay London 10 years ago

This NDC folks the only they seem willing to react to timely is criticisms of their performance.

look at their records every time there is a criticism of NDC, quickly they jump will all the facts they only have to suppress ...
read full comment

This NDC folks the only they seem willing to react to timely is criticisms of their performance.

look at their records every time there is a criticism of NDC, quickly they jump will all the facts they only have to suppress the criticism.

It is a strategy they employ consistently, caring about their name but not the reality on the grounds. Where they feel unable to deliver, they say this is not wholly an NDC fault.

If not NDC fault then whose? PNDC and NDC have been in power from 1982 to 2000 and from 2008 till now so if not NDC's fault I can't see who else fault it is.

Thse are all NDC ploy: divide and rule politics; Deceiving the people; refuting criticisms sharply; Bribing chiefs towards elections; Finding ways to massage the election counts.

And why would they do all these? Simple. To get the chance to continue their CORRUPT practices.
from the President to the MPs.
Bafour 10 years ago

Government must be smart and spend resources beneficial things. This uneducated trash from so called Septic tank is not worth commenting on. They mere distractions.

Government must be smart and spend resources beneficial things. This uneducated trash from so called Septic tank is not worth commenting on. They mere distractions.
Jim wise 10 years ago

The solution to Ghanas problems is not talk shows we need very deep thinkers and not people like Franklin cudjoe & co who have formed septic tanks & making noise all over the place . Anything that he says must be heard with ...
read full comment

The solution to Ghanas problems is not talk shows we need very deep thinkers and not people like Franklin cudjoe & co who have formed septic tanks & making noise all over the place . Anything that he says must be heard with a bag of salt he is too infantile !
'S
JH New York 10 years ago

It's good the Ministry of Finance responded to give the inside facts and technicalities associated with Hedging to disfused the minds of the general public,most of whom may not have an idea on the Subject,and would have take ...
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It's good the Ministry of Finance responded to give the inside facts and technicalities associated with Hedging to disfused the minds of the general public,most of whom may not have an idea on the Subject,and would have taken IMANI and IFS concocted diabolical analysis at face value as the truth,to tarnish the reputation and image of Terkper to discredit the gov't.
Very bad of you IMANI & IFS !

Keane atta 10 years ago

Ato your explanation shows Imani and ifs are right. You have caused fiancial loss to the state and you need to be held responsible for the mess. How inexperienced can you be!!!!

Ato your explanation shows Imani and ifs are right. You have caused fiancial loss to the state and you need to be held responsible for the mess. How inexperienced can you be!!!!
Dessy 10 years ago

Rush to judgement, follow from afar,.."the wrath of Peter" ;Waling Misinformation Machines

Rush to judgement, follow from afar,.."the wrath of Peter" ;Waling Misinformation Machines
KING 10 years ago

GHANAIAN JAH DEY IT IS BETTER

GHANAIAN JAH DEY IT IS BETTER
Abigi 10 years ago

Government does not understand financial instruments. It is a pity we have such people running our finances. It is of no wonder IMF is now the Finance Ministry of Ghana. How can you hedge and lose? Hedging is to prevent loses ...
read full comment

Government does not understand financial instruments. It is a pity we have such people running our finances. It is of no wonder IMF is now the Finance Ministry of Ghana. How can you hedge and lose? Hedging is to prevent loses, only in Ghana with incompetent itellectual can give this kind buill crap as an excuse.
Sankofa 10 years ago

You have just shown that you do not understand hedging.

Hedging is effectively a calculated gamble, so you can lose if the markets behave differently from your forecasts.

You have just shown that you do not understand hedging.

Hedging is effectively a calculated gamble, so you can lose if the markets behave differently from your forecasts.
citizen 10 years ago

Moses Ayambi or whoever ghost u are must know that promissory notes cannot be part of deficit. Seth Terker has dug a big hole in which he has fallen and is desperately looking for scape goats. Since he is your paymaster, kind ...
read full comment

Moses Ayambi or whoever ghost u are must know that promissory notes cannot be part of deficit. Seth Terker has dug a big hole in which he has fallen and is desperately looking for scape goats. Since he is your paymaster, kindly help him to cure himself of his mental illness which he has done well to conceal from Ghanaians, including the President.
afo 10 years ago

Mr President, are u aware that Mr Seth Terkper has mental problems? A word to a wise.

Mr President, are u aware that Mr Seth Terkper has mental problems? A word to a wise.
if the lone c isrusader 10 years ago

Have you ever told us the truth?crooks god dey.sas.

Have you ever told us the truth?crooks god dey.sas.
Ghanaian Investment Banker in London 10 years ago

It necessary to respond to the recent Government Press Statement in defense of the IMANI / IFS Think Tank's comments.

In deliberating whether to hedge or not to hedge the oil price risk, the Hon. Cassiel Ato Forson, Deputy ...
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It necessary to respond to the recent Government Press Statement in defense of the IMANI / IFS Think Tank's comments.

In deliberating whether to hedge or not to hedge the oil price risk, the Hon. Cassiel Ato Forson, Deputy Minister of Finance and the inter-Ministerial technical team demonstrated: oblivion or ignorance of the existence of risk; complacency in trivialising the existence of risk; diffidence and a timorous approach in failing to apply the necessary funds to purchase the risk mitigating insurance - a simple vanilla put option to hedge the downside of the oil price. Associated with this, was the delusion that any downside effect would be transient with a succeeding recovery in the oil price overshadowing the effect of the consequent loss suffered .

This evidently demonstrates a serious gap in practical understanding and application of hedging as a risk management tool, directly attributed to the conclusion by the inter-Ministerial technical team that “the hedging programme at the time was fiscally unsustainable”.

This is the price you pay when you swim in the ocean naked ..but once the tide goes down we all know what happens.

So the decision not to hedge was due to the presumed prohibitiveness of the cost of hedging (premium), resulting in the phenomenal loss suffered by the price decline - a loss that eluded the delusionary proponents of the no-hedge policy to the detriment of the Ghanaian economy.

It is most unfortunate that the review by Hon. Cassiel Ato Forson, Deputy Minister of Finance and the inter-Ministerial technical team which lasted almost a year, during which the no-hedge policy persisted, only resulted in the resumption of the hedging programme. It is questionable whether there was a necessity to conduct a review of a perfectly viable and success hedging mechanism, in the first place. The review thus appears to have been bureaucratic and mechanical, a period of unfathomable delay with severe consequences. A pitiful attempt to shut the stable door (which should not have been prized open in the first place) after the race horse had bolted.

A put option is but a non-complex vanilla insurance policy. Those with technical and practical know-how and expertise will say that hedging for oil producers is mandatory condition prior to borrowing.There is no doubt that the use of crude oil options has been popular among crude oil producers for years, and is partially driven by financing, since lenders typically require that reserves be hedged (at least on the downside) to protect their loan value. Buying options is often the lowest risk strategy and can be likened to buying insurance to create specific price floors or caps to limit risk. Despite their benefits as hedging tool, options are often overlooked due to the perceived complexity or the initial premium cost.

Option strategies often need to be rebalanced or rolled to extend the life of a hedge or rebalance a position. This provides justification for a dynamic hedging policy as opposed to the passivity or a no-hedge policy which persisted between 2013 and 2014. It is indeed a costly decision to abandon a hedging strategy for any period of time, leaving the position unhedged. However, rebalancing an option strategy to extend the life of the hedged position is non-negotiable.

It must be accepted that the premium must be paid upfront and realistically the entire premium may be lost in the event the option expires out of the money and worthless at expiry. However, there are strategies that exist to mitigate premium costs. Spreads, for example, can substantially cut down the cost of an option. It would be better to invest in such a strategy if premium costs are considered prohibitive as opposed to adopting a no-hedge strategy.

Consequently, the period of passivity and delay by Hon. Cassiel Ato Forson, Deputy Minister of Finance and the inter-Ministerial technical team was tantamount to the “ostrich problem” of burying one’s head in the sand (ignorance is bliss) - the least plausible strategy and a defeatist approach to a problem requiring a dynamic solution. Deciding not to hedge is to adopt a passive approach akin to sitting ducks which under no circumstances constitutes a hedge.

In conclusion, the number one reason for not hedging is confidence that the price of oil is set to rise and consequently there is no need to hedge the long position. As the price of oil is uncorrelated with the US dollar, the other reason not to hedge will be confidence that the US dollar is set to come under pressure and lose value. The only justification not to hedge the price of oil is confidence of a gain from having a completely unhedged position.

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Finance ministry fires IMANI, IFS over 'hedging lies'

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