Ghana: Markets react positively to verdict

As one might expect the Supreme Court verdict in favour of the NDC and Mahama was positively received by the financial markets, which had been perturbed by the uncertainty created by the impending decision, the risk of unrest, the impact of a full or partial election re-run, and the partial paralysis of Ghana's political system due to this uncertainty.

In financial terms as the confidence of investors in Ghana increases, yields - or the implied market-demanded effective interest rates on outstanding bonds, given bonds' market price - on Ghana's cedi denominated bonds have indeed been falling. Rates on the planned September auctions of around 600 million cedis worth of bonds have perhaps fallen by between 2%-4% to as low as 17% - a rate not to be confused with the much lower rates and yields on the dollar denominated Ghana Eurobond.

 

Cedi depreciation may well also be slowed as investors stop the shift to dollar-denominated assets due to electoral uncertainty - with Elvis Darku of Nigeria's Access Bank projecting a slight cedi appreciation versus the dollar by the end of the year. This is even if other analysts remain pessimistic and unlikely to shift from predictions of further cedi decline, even with the recent influx of Eurobond dollars and expected receipt of Cocobod financing dollars through the agreed US$1.2 billion syndicated financing facility which should both increase dollar supply and thus reduce its relative price compared to the cedi.

 

On the inflation front, despite double-digit inflation and the impact of cedi depreciation on inflation due to relatively more expensive (in cedis) imports, the most recent release from the state Ghana Statistical Service (GSS) indicates that July producer price inflation has fallen by 0.5% in month-on-month terms and by 2% points on a year on year basis, to 5% for July 2013 compared to July 2012 (whereas the June producer price level was 7% higher than that in June 2012).

 

Although this may seem like positive news, further detail revealed by GSS statistician Dr Philomena Nyarko indicates that while manufacturing inflation rose from 10.6% to 10.9% (year-on-year), mining and quarrying inflation fell significantly into the sub-zero zone partly due to lower gold prices - a factor which (broader implications for Ghana's economy aside) is unlikely to cause sustained inflation relief.

 

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2013 Menas Associates

Ghana: Vice Presidential candidate assassination threat

NPP accuses unnamed NDC officials of plotting to assassinate its vice-presidential candidate Dr Mahamudu Bawumia. Dr Bawumia was involved in a serious accident on 17March when the tyres on the car in which he was travelling burst causing the vehicle to flip over several times. He was flown to Accra's Lister Hospital where he was treated for minor injuries and later discharged.

Joy News reported on 18 March that the NPP's General Secretary, Kwadwo Owusu Afriyie, believes that national security officials are behind a “plot” to assassinate Dr Bawumia and other leading members of the NPP. He allegedly claimed that security officials had tampered with the tires of the brand new vehicle in which Dr Bawumia was travelling. He also noted that the tires of National Patriotic Party (NPP) party chairman, Jake Obetsebi Lamptey, had also burst under “bizarre circumstances” earlier in the weekend.

He is quoted as saying that the incident was a “desperate” attempt by the NDC and its security officials to wipe out Dr Bawumia and other key NPP party officials who are witnesses in the on-going presidential election petition at the Supreme Court.

Over the past couple of months the NPP has also accused the NDCof organising a police raid of an NPP research office and the burglary of the office of a party lawyer Gloria Akuffo. An NDC spokesperson described the allegations as “ridiculous.”

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2013 Menas Associates