Volatility to vanish next year — Economist
Posted on: 2013-Nov-12        
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An economist, Dr Setor Amedeku, has predicted the economy to remain stable in 2014, bringing prospects to businesses in the country.

The economist, who handles some of the technical issues in the economy at the Bank of Ghana, said foreign exchange was expected to flow in more to stabilise the exchange rate due to cocoa and oil output, as well as an easing in effective interest rates charged by the commercial banks.

“The year 2014 will be a good one. There will be inflows of foreign exchange, especially as we enter October, the cocoa export season, with some inflow from oil and gas, and volatility will be less,” Dr Amedeku told an elite class of customers who come under the personal banking clients of Stanbic Bank Ghana.

Stanbic Bank had put together an innovative event to interact with this segment of their clientele – usually business owners and executives to receive feedback from them, while inviting experts to discuss issues on the economy, with emphasis on the opportunities available for the business community.

Dr Amedeku told the Ivy League of customers of Stanbic Bank that with the short-end interest rates on government papers coming down, effective interest of banks would also start trending downwards due to the new formula approved by the Bank of Ghana for use by universal banks.

Treasury bill rates and borrowing

The 91-Day Treasury Bill started the year at around 23.03 per cent and the 182-Day bill at 22.99 per cent, with the 91-day ending the month at 22.80 per cent.

At the end of March 2013, the 91-day was around 22.92 per cent and 23.09 per cent at the end of June, while the 182-day settled at 22.97 per cent.

In August when the country went for the US$1 billion Eurobond, the 91-day was at 22.91 per cent with the 182-day at 22.00 per cent, but these started easing later that month at 22.77 per cent for the 91-day. The rates have since been trending downwards.

At the beginning of September, the 91-day bill was at 22.64 per cent and ended it at about 20.84 per cent. The rate as of November 4 was 19.68 per cent for the 91-day bill and 19.75 per cent for the 182-day bill.

Since the formula for calculating interest rates by banks now has the interest rates of the government papers as a variable, Dr Amedeku said the banks would soon pass that on to their customers, saying “we expect that the interest on loans should drop as per the new formula.”
Economic prospects

He described the turbulence in the economy as temporary and that businesses should consider the silver lining in it and invest for good returns.
Information from the Bank of Ghana indicates that investor confidence was high, with some potential ones eyeing the financial services sector.

“Some foreign nationals are selling off assets in their countries to acquire assets in Ghana. The real estate sales are up and commercial property are springing up everywhere,” Dr Amedeku stated, adding that the usual case was that the temporary challenges would blur the sight of indigenous people, leaving only hungry investors, mostly expatriates to take advantage of the opportunities.

The economist made it clear that the economic challenges would generally affect businesses in the country and there was the need for them to devise creative means to go around them.

The Managing Director of Stanbic Bank, Mr Alhassan Andani, emphasised the economic prospects of the economy in the medium term, siting the easing of rates on the government paper as giving hope for the future.

However, he called on the central bank to find ways of making foreign exchange flow more into the system to enable banks to finance trade and transactions of their clients.

“We banks have net holding positions and sell what we have to the public. So if we see increased availability of foreign exchange, it will enable us to lend and finance more transactions, which will help strengthen the local currency,” he said.