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    Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)

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    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

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    Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)

    Local currency crosses ¢10 to one dollar mark on retail market

    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    AUDA-NEPAD holds workshop for Youth and Media on AU Year of Nutrition

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

    PURC justifies upward review of utility tariffs

    Emergency MPC meeting: Goldman Sachs projects 200 basis points hike in policy rate

    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

    BoG, UG partner to improve research in Ghana’s financial sector

  • Business
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    • Transport

    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

    Emergency MPC meeting: Goldman Sachs projects 200 basis points hike in policy rate

    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

    BoG, UG partner to improve research in Ghana’s financial sector

    BoG, EOCO deepen collaboration to build robust financial sector

    Cedi Depreciation: Government urged to enforce laws on pricing in dollars

    Assistant Director, Fintech and Innovation, BoG, Clarence Blay

    E-cedi will not affect MoMo business – Bank of Ghana

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    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

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    Vodafone agrees sell stake in Ghana’s business to Telecel

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    IIPGH to enter coding education partnership with Telecoms Chamber

    PayAngel joins Microsoft for Startups Founders Hub

    Node 8, HTU hold first edition of Node X in Ho

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    • Asia
    • Europe
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    AUDA-NEPAD holds workshop for Youth and Media on AU Year of Nutrition

    Agribusiness entrepreneurs must take advantage of AfCFTA – ADB MD.

    Inflation, debt, and forex crisis is pushing many African economies to the brink – IMF warns

    African countries that could follow Sri Lanka into economic chaos

    Africa’s internet economy to cross $180 billion by 2025: Report

    Regional economic cooperation needed to enhance Africa’s competitiveness – Bawumia

    Ivory Coast is set to receive $26.1 billion worth of development finance from 4 lenders, the EU and France

    Gulf central banks, Bank of England raise policy rates after Fed hike

    US Fed meets inflation surge with 75bp hike

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Obama’s favored African nation hits the skids

bycitibusinessnews
August 5, 2014
in Business, Local Economy, Top Stories
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Just over two years ago, it was President Obama’s model African nation. Now Ghana is looking for a bailout.

The small West African nation won many admirers for growing rapidly and reducing poverty.

But the poster child for progress in Africa, hailed by Obama in March 2012 as a “wonderful success story,” is now struggling.

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Growth is slowing, despite rising oil output. Government borrowing and inflation are rising, and the currency — the cedi — has lost about 40% of its value this year.

President John Mahama said Ghana would be seeking the support of the International Monetary Fund as it tries to stabilize the currency and economy.

The IMF has not received a formal request from Ghana for assistance, but said it is ready to work with the government on a support program.

So why the dramatic reversal?

Shilan Shah, African economist at Capital Economics, said Ghana has been spending too freely on public sector wages and subsidies, leading to a widening budget deficit.

“Compounding the problems are recent allegations that the Bank of Ghana is attempting to finance the deficit by printing money, which has pushed up inflation to over 15% year-on-year,” Shah wrote in a research note.

Ghana’s imports are also racing ahead of exports, draining the country’s foreign currency reserves and piling pressure on the cedi.

An IMF bailout would provide backstop funding while the government takes steps to get a better balance between spending and revenue, and in foreign trade.

That’s almost certain to mean tough austerity measures for a country where annual GDP per capita is still only $1,850. The IMF may also insist that interest rates — already at 19% — rise further to persuade people to spend less and contain inflation.

Growth could slow to about 4% this year and next, down from 7% in 2013, as a consequence, said Capital Economics’ Shah.

Talk of a bailout comes less than a decade after $3 billion in debt was wiped off Ghana’s books as part of an international relief initiative.

–

Source: CNN

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Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)
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