Businesses Less Optimic About Achieving Targets

Minister of Finance, Seth Terkpeh

The latest surveys conducted by the Bank of Ghana (BoG) have revealed that businesses in the country are less optimistic about achieving their targets for capital outlay, employment, sales, and revenue due to increases in utility and fuel price hikes. This generally softening business and consumer sentiments in the West African second largest economy.

On growth, the updated Composite Index of Economic Activity (CIEA) suggests a relative pickup in economic activity in the fourth quarter of 2013. Even though the pace of general economic activity slowed down relative to the previous year. The index grew by 6.8 percent year-on-year in the fourth quarter compared with a growth of 8.2 percent for the same period in 2012.

The main drivers were Port activity, DMBs credit to the private sector, Domestic VAT, Exports, and Sales of key manufacturing companies. Developments in monetary aggregates point to increased liquidity conditions. Broad money (M2+) grew by 25.6 percent for the first two months of 2014, compared with 23.2 percent in the same period last year. This was largely reflected in increases in currency in circulation and demand deposits, according to the central bank.

The pace of growth in private sector credit remained generally unchanged at 33.0 percent year-on-year at the end of February 2014. The annual growth of real private sector credit however declined to 16.5 percent from 20.9 percent. The Credit conditions survey showed a general tightening of credit for all loan types during the period. In the first two months of the year, the banking sector remained relatively stable and continued to record growth in total assets.

Total assets as at the end of February 2014 went up to GH¢39.1 billion, from GH¢28 billion in February 2013. This was driven mainly by advances, which accounted for 47.1 per cent of the total. The growth in assets was mainly funded by deposits which recorded an annual growth of 29 percent to GH¢25.1 billion at the end of February 2014.

The non-performing loans (NPL) ratio within the banking industry decreased to 12.7 percent in February 2014, from 13.5 percent in February 2013, while the ratio excluding the loss category, declined to 4.9 percent from 6.0 percent in the same period last year.

Meanwhile, the Bank of Ghana (BoG) says it will only review new and revised forex rules it implemented this year after three months in operation.

The bank introduced the rules in February as part of measures to save the cedi from further depreciation.

Among the rules commercial banks are banned from issuing cheques and cheque books on Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA).

Also banks are prohibited from granting a foreign currency-denominated loan or foreign currency-linked facility to a customer who is not a foreign exchange earner.

Also over-the-counter cash withdrawals from foreign exchange and foreign currency accounts not exceeding US$10,000 shall only be permitted for travel purposes outside Ghana or its equivalent in convertible currency per person per travel.

The quotation and transaction of goods and services in foreign currency was also banned by the central bank.

However there were calls for the central bank to review the rules by stakeholders in a number of sectors including the real estate industry, hospitality as well as importers and traders.

Last week the International Monetary Fund (IMF) also called on the Bank of Ghana to review the rules.

Its country representative Dr Samir Jahjah recommended to the Bank of Ghana to ‘review the measures in light of the reaction of the business community and investors’.

African Eye News

Related posts