Ghana’s balance of payment is looking healthy and is expected to reach 8% GDP next year, according to Standard Bank Africa Research.
Yvette Babb of Standard Bank Africa Research made this forecast at Stanbic Bank’s Global Markets Forum as she analysed Ghana’s prospects under the IMF programme.
She noted that the fall of the balance of deficit is not necessarily because the trade balance is improving but rather due to current transfers in the form of donor-to-donor displacements and remittances that are supporting the balance of payment.
“The most important feature of balance of payments this year for Ghana has been the deep financial inflows,” she said. “The syndicated loan proceeds from cocoa and the Euro bond proceeds, that have bolstered foreign exchange wages to $5.7 billion, have given Ghana better confidence and have in the short term limited the desires to rapidly accumulate dollars.”
She said this has given the Bank of Ghana the needed reserves to support that level of confidence and means to sell dollars directly into the market. Babb however forecast lower foreign exchange inflows in the first half of next year, which would imply some depreciative pressure on the cedi. But whether or not it will be as aggressive and disorderly as it was in June 2015 will hinge on several macroeconomic management issues.
“It will hinge on how the commercial banks in the inter-bank market will be able to adequately price the foreign exchange,” she explained. “It also depends on whether the availability of foreign exchange will be constrained by the Bank of Ghana or will be made available to the inter-bank market.”
Given the improved outlook for Ghana’s fiscal performance and payment, Babb argued that the risk of a disorderly depreciation of the cedi is being diminished. The success of the IMF programme, she said, depends on how well the country’s inflation rates can be driven down.
Stanbic Bank Ghana held the Global Markets Workshop to equip its corporate and investment banking clients with tools to effectively manage exchange and interest rates.
The workshop was designed to highlight and discuss Ghana’s macroeconomic outlook as well as the latest forex trends in the country. The theme “Navigating the Markets in 2016” was discussed from a monetary and fiscal angle taking into cognisance the 2016 elections. It brought together key industry players from the Bank of Ghana, the Ministry of Finance and Stanbic Bank’s Global Markets unit to educate some of the bank’s corporate and investment banking clients. The clients were also afforded the opportunity to voice their thoughts on business transformation, current global market trends and their effects on businesses.
According to the Head of Stanbic Bank’s Global Markets, Afua Bulley, the idea was birthed from continuous interest from the Bank’s customers at this time of the year for forecasts on exchange, interest rates and treasury management tools to serve as inputs in their annual budget preparation.
“The intent is to hold this annually for the benefit of our corporates who typically would be involved in budgeting processes of their companies,” she said.
