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BUSINESS NEWS | GHANA AND BEYOND

The International Monetary Fund (IMF) is predicting that Ghana’s fiscal deficit will reach 16.4 percent of GDP this year, the largest in the country’s history. The record deficit projection comes on the back of the devastating effect of the coronavirus pandemic, which caused a huge shortfall in government’s revenues amidst bigger-than-expected spending in a frantic effort to contain the spread of the virus. The extra expenditure includes the government’s provision of free electricity and water for Ghanaians to cope with the disruption caused by the virus, as well as loans to enterprises. Finance Minister Ken Ofori-Atta, in his mid-year budget presented in July, revised the country’s 2020 fiscal deficit projection from 4.7 percent to 11.4 percent of GDP to accommodate the fiscal impact of the pandemic.

The Minister of Finance, Ken Ofori Atta, is expected to present to Parliament next week Wednesday, October 28, 2020, an Advanced Budget; covering government spending for the first quarter of 2021. The expected presentation, known as Expenditure in Advance of Appropriation is a standard practice rolled out in election years to prevent transitional challenges in the smooth running of government for the first three months in the year after elections. This was made known by the Majority Leader and Minister for Parliamentary Affairs, Osei Kyei-Mensah-Bonsu on Friday, October 23, 2020, when he briefed Parliament on its activities in the coming week.

Ghana’s country risk index of 53.9% placed it first, ahead of four top West and Central African countries, according to assessment by Fitch Solutions, research arm of ratings agency, Fitch. This means the country is the best place to invest in the ECOWAS and Central Africa region since it has a lower risk elements for political, economic and operational. The country’s high score of both political and operational risk index propelled it to the first position, ahead of Gabon, Ivory Coast, Nigeria and Cameroon. According to Fitch Solutions, a high score index means a lower risk in terms of investment climate. The nation scored 69.7% and 72.9% for the short and long term political risk, while its 44.1% operational risk index score placed it higher than the other four countries assessed. For the economic risk index, the nation recorded 41% and 51.6% for the shorter and longer term respectively.

The World Bank is projecting a lower demand for oil next year, as the global economy recover from the impact of covid-19. It is also forecasting an average of US$44 per barrel of oil price for next year, up from an estimated US$41 per barrel 2020. “While metal and agricultural commodities have recouped their losses from the COVID-19 pandemic and are expected to make modest gains in 2021, energy prices, despite some recovery, are expected to stabilize below pre-pandemic levels next year”, the World Bank said. This means that the government will have to be modest in its petroleum price forecast for next year. The government had projected US$62 per barrel of crude oil in its 2020 Budget. The World Bank emphasized that demand is expected to rise only slowly as tourism and travel continue to be held back by health concerns.

The Ghana Revenue Authority’s goal of exceeding its revised 2020 target of GH¢42.7 billion Cedis as stated in the 2020 mid-year budget, is receiving a boost from higher than expected inflows from the Communication Service Tax (CST). This reduction in the Communications Service Tax from 9 % to 5 %, which took effect from September 15 this year, formed part of the government’s efforts to alleviate the plight of Ghanaians amidst the coronavirus pandemic. Even though the reduction was welcomed by the general public, some CSOs like the Tax Justice Coalition bemoaned the move saying it will negatively affect government’s ability to meet its revised revenue target for 2020.

President Nana Addo Dankwa Akufo-Addo , has commissioned 204 housing units, constructed in 9 months, under the National Mortgage and Housing Finance Initiative. Commissioning the housing units on Monday, 26th October 2020, on day 2 of his tour of Greater Accra, President Akufo-Addo described the completion of the 204 housing units as “one of the successes achieved during the 2 year pilot phase of the National Housing and Mortgage Fund (NHMF).” The project involves the construction of 204 houses, comprising one, two standard and expandable unit bedrooms for public sector workers. GCB Bank Limited will be underwriting the mortgages to public sector at rates far below market rates, and with longer tenor. In his remarks, the President stated that the country has a huge housing deficit, which has risen over the years, especially in the urban areas.

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