2014 looks promising – Economist

Businesses operating in the country have been asked to look beyond the current economic hardship and prepare for better times in 2014.

Dr Settor Kwabla Amediku, Head of the Financial Stability Department at the Central Bank, disclosed this while making a presentation on the topic: “The economy and you: past, present and the future,” on Tuesday in Accra at an event organised by Stanbic Bank Ghana Limited.

“If you ask the banks, they are witnessing significant development in the flow of foreign exchange. Also, this is the time that Ghana gets a lot of money from its cocoa – October, November and December. The issues of 2013 are based on developments in 2012. In 2014, there would be strong stabilization and you will see rates trending down. Also, there would be an improvement in the foreign exchange market, and going forward especially for planning, 2014 is going to be a good year. 2013 has been a challenging year though,” Dr Amediku blurted.

He said since Ghana is a primary commodity producer and exporter, the global challenges were impacting on its economy. “Now, in terms of inflation, you could also notice that inflation in these advanced economies is also subdued on account of lower prices of commodities.

And since we export commodities, what it means is that prices for these goods are now falling and it is going to affect negatively on the countries that do the exports. The development was reflecting on the country’s cocoa and gold prices and also remittances and all the afore-stated directly impacted on government revenue and government income, he said.

Implications of the crisis

“There are lots of challenges including the provision of certain basic amenities which government has to provide. This has led to an overrun of government’s expenditure. Notwithstanding all these, currently the 91-Treasury Bill rate is trending downwards as at the end of October to 5th November, 2013.

“The interest that government paid on its 91-day Treasury bill rate is falling. The implication of this to bank customers is that you will realise that currently the Central Bank has put in place a new formula for base rate determination. So if government borrowing cost is falling we expect that overall, the interest that you pay on your loans, going forward, will also drop as per the formula.”

Security

He continued: “Ghana is very secure. We have people from other countries which are around us that have started disposing of assets to come and acquire assets here. In terms of real estate acquisition by other sub-regional countries in this economy, the most difficult thing is that normally if you are operating an economy and it is moving notwithstanding the challenges, the citizens themselves don’t appreciate it but rather the outsiders.

Additionally, the current oil discovery was helping Ghana to improve its balance of payments as well as the new discoveries that are taking place and so prospects for growth for the economy were very high, he indicated.

Contributions by Alhassan Andani

Managing Director of Stanbic Ghana, Alhassan Andani, in a remark said: “For those of us in the country, there is probably something we are missing. There is too much noise. Apart from the wage bill which you hear the managers of the economy talk about, the other issue is the borrowing cost. Why should the domestic borrowing cost be that high? “We started the year off with about 23 percent in treasury bills.

That was supposed to be riskless by government. But in the last eight weeks, we have seen interest rates have dropped by 400 basis points. “Reduced borrowing costs mean longer term planning and capital. The trend of also the 2-year, 3-year and 5-year treasury bills all congregating along the same line, tell us that there is hope in the horizon.

“If we make so much noise, capital will be the first to take flight because it is cowardly. 2013 looks better than the situation in 2009. Every year especially after elections, this trend erupts. We shall begin to see a very productive 2014, 2015 and 2016.”