According to him the high prices of goods on the market are reflective of the high costs of production which are the results of the low levels of production as well as the inflated costs of raw materials.

[contextly_sidebar id=”xCTDrV8bmlGsbAyuxL7YWqTpJoO2SOsC”]“Ghana is a high inflation country, largely because our productivity level is very low, which then tends to increase the unit cost of production. So whatever we produce, because the productivity is low, the production cost is high, costs of raw materials are high, so definitely it will eat into our final pricing,” Dr. Osei-Assibey said yesterday [Thursday].

He also noted that the increased preference of Ghanaians for imported raw materials for production and the depreciation of the cedi was driving up the cost of production.

“Our currency is weak compared to other currencies in neighbouring countries and once you have a weaker currency and you depend so much on imported raw materials, it goes to increase your production cost. Despite the fact that you have low wages due to excess labour, other factors are very high and that pushes up transaction costs and production costs,” he added.

Silver lining?

Despite these challenges, the government has been quick to tout its achievements in managing the economy and the gains attained despite the fact that it had inherited an economy in dire straits.

As evidence of the progress of the economy, President Akufo-Addo, delivering the State of the Nation address in February, cited the strong trajectory of the Ghana Stock Exchange Composite Index in January 2018, which gained 19 percent in dollar terms, according to benchmarks tracked by Bloomberg.

The World Bank has also projected that Ghana’s economy will probably grow by 8.3 percent this year, which will be the fastest in the world in 2018.

The President expects these improving macroeconomic indicators to usher Ghana out of the International Monetary Fund programme later this year after his administration extended the 2015 programme.

“The good macroeconomic performance in 2017 will strongly support our successful completion of the IMF programme. We are determined to put in place measures to ensure irreversibility and sustained macroeconomic stability so that we will have no reason to seek again the assistance of that powerful global body.”

Beyond the strong economic indicators, President Nana Akufo-Addo said his economic management team had found imaginative ways to deal with the “oppressive debt situation” bringing relief to the country and rebuild the “annual average rate of debt accumulation as reduced from a high of 36 percent to 13.6 percent as at September 2017.”

“As a result of appropriate policy and the normalization of power situation in the country, [we]  have also engineered a spectacular revival of Ghanaian industry from a growth rate of negative 0.5 percent in 2016, to 17.5 percent in 2017,” he added.

President Akufo-Addo was, however, keen to stress that, the gains made on the economy from did not mean Ghana was out of the woods.

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By: Edwin Kwakofi/citifmonline.com/Ghana

The post High living costs due to low productivity, import dependence – Economist appeared first on Citi 97.3 FM - Relevant Radio. Always.

They contend that the development continues to impact their operations adversely hence require a solution to the perennial issue.

The comments come three days ahead of the  President Akufo Addo’s state of the nation address to Parliament on Thursday, February 8, 2018.

“If I’m rating the President, I’ll give him 40% because he is doing some good things. But for us especially the travel and tours industry, because I deal with the Abossey Okai spare parts dealers, the volatile exchange rate regime really affects my business. If they can’t travel to bring in goods then I lose money,” one business woman stressed.

Another stated, “Before Nana Akufo Addo came into office, the business was okay and people were buying a lot of items from us. But now they don’t have the money to buy it and business has become very slow.”

Checks by Citi Business News also indicate that the government would have to do more in order to meet its main economic targets for this year.

The government was unable to meet some targets projected for the first year in office.

For 2017, government targeted to rake in an estimated 44.9 billion cedis and spend about 58 billion cedis.

But official figures from the Ministry of Finance indicate that as at September last year, government has spent 36 billion cedis on areas such as wages and salary, capital expenditure on roads and other infrastructure, among others.

Revenue accrued stood at 28.4 billion cedis as at September last year.

This comprised tax revenue of about 22 billion cedis and non tax revenue of about 3.8 billion cedis.

Meanwhile inflation ended last year at 11.8 percent, up from the government’s projected 11.2 percent.

It may however suggest that the government’s projected economic growth target of 6.3 percent could be achieved as figures from the Ghana Statistical Service show that the economy has grown by about 7 percent as at September last year.

Even though the cedi has witnessed marginal stability against the dollar, it depreciated by 3.4 percent to the dollar on the average in 2017.

On the country’s debt, the total debt stock hit 139 billion cedis as of November 2017; representing 69 percent of GDP.

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By: Pius Amihere Eduku & Bobbie Osei/citibusinessnews.com/Ghana

The post Cedi depreciation remains key concern for businesses appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Economist Intelligence Unit (EIU) based in the UK, has predicted that the local currency will perform poorly against the dollar within the next four years due to some external pressures and political uncertainties.

But some currency analysts have expressed diverse opinions with strong arguments for their stance.

The Economist Intelligence Unit (EIU)’s claims are based on the fact that the US Federal Reserve will likely increase its rate which will affect developing economies like Ghana.

Also, that the political uncertainty associated with Ghana’s general elections in 2020, might trigger speculation among investors which will reduce the supply of the dollar in the system.

For Economic Analyst with GN Research, Emmanuel Zewu, this prediction is possible.

His basis are that the relative stability of the cedi have least been backed by strong sustainable policies.

“We need to ask ourselves what has accounted for this improvement, is it because the economic fundamentals are improving or we are managing the situation temporarily. We should look at the bonds that have been issued as well as the Bank of Ghana’s decision to release some dollars into the system especially in the early stages of the year. All these things should have accounted for the marginal improvement that we have seen last year,” he argued.

For 2017, the cedi ended at 4 cedis 41 pesewas to a dollar.

As at Thursday January 3 2018, the cedi has depreciated marginally and it is selling at 4 cedis 42 pesewas.

Treasury manager disagrees

But the General Manager for Treasury at HFC Bank, Joseph Nketsia disagrees with the projection by the EIU.

Though he admits to the cedi’s seasonal depreciation, he believes the move may least hit the 6 cedis mark.

“We know with the oil exploration, our foreign exchange resources are likely to increase considerably. It is true that on a year on year basis the cedi depreciates but I don’t think that the cedi will depreciate to 6 cedis to a dollar by 2020.”

Mr. Nketsia also argues that the reasons cited by the EIU may just be too early and highly speculative.

“If we are say in January 2019, we could perhaps predict the performance of the government at the elections and the uncertainties surrounding the elections. But as it is now, it is highly speculative to say that in 2020 people will be hoarding currency because of the uncertainty surrounding the elections,” he added.

Government could reverse trend

Meanwhile it may seem government could work to avert the occurrence altogether.

Emmanuel Zewu suggests that could be achieved with a more robust strategy t grow the tourism and non-traditional export sectors to attract more foreign exchange and deal with the perennial causes of the massive depreciation of the cedi.

“We look at the tourism industry which gives inflows of foreign direct investments. Also with the exports, if you look at the non-traditional products that we are trying to explore the African markets, we should be able to create the necessary environment for these farmers to produce more and to be at a competitive price so that when they go to the international market, our commodities could be very competitive,” Emmanuel Zewu advised.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Mixed reactions meet GH¢6 to $ 1 prediction appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to an Economist, Ken Thompson, the financial support presently coming in from international donors will not be enough to sustain the programme.

[contextly_sidebar id=”rMbIhEwwyFrTH2Jizr8dcv7DCwQnzET7″]He believes it would rather be advisable for government to invest in the production sectors to empower Ghanaians to solely fund the education of their children without government’s support.

“The free SHS programme that the government announced is premature. I know the Canadaian government is giving us about 125 million dollars but it is not enough. This is the time that we should be investing and trust me, if Ghanaians have jobs, even the pressure for them to ask for free SHS will go down. Let us use the little money we have now and invest in the production sectors.Bob Marley said a hungry man is an angry man. When you are hungry, you cannot even think. The government cannot do everything. They just have to focus,” Mr. Thomspon suggested on the Citi Breakfast Show.

Cedi depreciation

On cedi depreciation, the Economist said the value of the cedi keeps depreciating because there is “more demand than supply.”

He said Ghana will have a stable currency if the country decides to increase exports and reduce imports.

“You cannot expect to import everything, export very little and have a stable currency. That doesn’t happen. As far as I am concerned…I really believe and now let’s invest in agriculture and let’s see so we can increase our exports and any attempt by the Central government to intervene will fail because it is a demand and supply issue.”

“Anytime the Central Bank says that it is going to intervene to stabilise the currency we panic. We panic because we all know that the Central Bank has not gotten the pocket so why are we stretching ourselves with cedi depreciation. Because we do not export. We export very little and import everything. Allow it to depreciate. The main issue is a supply and demand situation and anytime somebody says they are going to intervene, I know they are going to fail.”

Official figures from the Bank of Ghana show that the cedi had depreciated by 1.3 percent to the dollar as at January 19, 2017.

The figure however represents a sharp decline from the 9.2 percent recorded in December 2016.

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By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post September schedule for free SHS “premature” – Economist appeared first on Citi 97.3 FM - Relevant Radio. Always.

Some market watchers have attributed the development to speculations as the general elections draw closer.

But assuring the public of a stable currency during and after the elections, the Governor of the Bank of Ghana, Dr. Abdul Nashiru Issahaku maintained that the cedi is rather stabilizing and has shown remarkable performance compared to election period in 2012.

According to him, such marginal movements in the exchange rate market are expected, hence adequately being observed by the central bank.

“One of the things we do is moderate volatility of the currency. Stability means there will be some movements up and down. What we are seeing is some of the movement which is expected and we’ve indeed expected that to happen,” he assured.

Pointing out some measures being taken, Dr. Issahaku stated that the central bank is always moderating the volatility, allowing the market to determine the price.

“We are proactively responding to the[volatility] both from the way we intervene in the market to moderate the volatility, not hold it because we operate a liberal price system here,” he stressed.

Dr. Issahaku insisted that the cedi is experiencing stability  since a period comparison of the currency with previous years can prove that.

He cited for example that the currency was unstable in the same period this year in 2012, which was an election year.

“The claim that the cedi is stabilizing is evident, it’s actually stabilizing. When we compare to last year and previous elections it’s for a reason. There is improved performance of the currency given what we expected in an election year, when I say ‘we’  I mean general citizenship of this country. And what we are seeing is a remarkable performance of the currency compared to last year when it was about 15 percent depreciation,” he said.

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Election fever will not cause cedi depreciation – BoG assures appeared first on Citi 97.3 FM - Relevant Radio. Always.