Ghana

Ghana will continue to subject its public finances to the scrutiny of the International Monetary Fund after its bailout program with the lender ends in April, Finance Minister Ken Ofori-Atta said. While the government doesn’t intend to ask for a second bailout deal, it will seek other forms of cooperation with the IMF such as the Policy Support Instrument program, Ofori-Atta said in an emailed response to questions, Bloomberg News reported.
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Ghana is borrowing its way out of a banking crisis. The government of West Africa’s second-biggest economy --- its budget already stretched by interest costs that consume about a third of its revenue -- is piling on debt to cover the liabilities of failed lenders and settle arrears dating back 20 years, Bloomberg News reported. It was left with little choice but to issue bonds to save an industry the International Monetary Fund sees as a financial-stability threat.
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Ghana’s central bank plans to prosecute executives of failed local lenders suspected of dissipating depositors’ funds and insider dealing, the regulator told Reuters on Tuesday. The Bank of Ghana on Aug. 1 said it had revoked the licenses of Unibank and smaller peers Royal Bank, Beige Bank, Sovereign Bank and Construction Bank, and had appointed a receiver to manage their assets because they had become insolvent, Reuters reported.
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A reluctance by banks in Ghana to lend is threatening to stall one of Africa’s fastest expanding economies, Bloomberg News reported. With almost a quarter of all outstanding loans in the country at risk of not being repaid, credit granted to the private sector is increasing at nearly the slowest pace in four years. At stake is the 6.8 percent growth that the government is hoping to achieve to boost revenue and narrow its budget deficit.
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Vodafone's Ghana business plans to list on the local stock market after restructuring its loans, the head of the local unit told Reuters on Tuesday. Yolanda Zoleka Cuba said Vodafone was in talks with the West African country, which owns a 30 percent stake, to restructure its debt, the International New York Times reported on a Reuters story. The world's largest mobile group by revenue paid $900 million for a 70 percent stake in state-run Ghana telecom in 2008 while the government retained the remaining 30 percent with an enterprise value of around $1.3 billion at the time.
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Ghana’s central bank has appointed accounting firm KPMG as administrator for Unibank to save it from imminent collapse, Governor Ernest Addison said on Tuesday, Reuters reported. The move, which follows central bank liquidations of two other local banks last year, will prevent losses to depositors and other creditors and ensure it does not create further risks to the wider financial system, Addison told reporters. Ghanaian-owned Unibank had suffered persistent cash shortfalls and regularly fell below cash reserve requirements, he said.
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The Ghana Association of Restructuring and Insolvency Advisors (GARIA) has cautioned of alarming consequences on Foreign Direct Investments (FDIs) to Ghana, if efforts are not intensified to develop the country’s insolvency regime. GARIA argues that the current practice where businesses are compelled to shut down over huge debts, downgrades the country’s reputation in attracting investments. “It is important for Ghana to have a good regime so that in addition to all our democratic dividends, goodwill and political dividends, we will be able to attract FDIs to the country.
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Weeks after being rebuffed, Ghana has tapped the international bond market again in what will be an important test of a rally in emerging market debt fanned by investors’ scramble to escape the low-yield world of developed markets, the Financial Times reported. West Africa’s second-biggest economy will sell $750m at 9.25 per cent, according to a banker familiar with the sale, before US Federal Reserve officials meet on September 21, when there is a chance, albeit receding, that they will raise interest rates.
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The Ghana Association of Restructuring and Insolvency Advisors (GARIA) has called for the speedy passage of the Corporate Insolvency Bill which is currently before Cabinet into law, to prevent companies from premature liquidation, Ghana Business News reported. The Association is of the belief that an effective law on corporate insolvency would enable companies to fall on options to recuperate rather than closing the company, as is the common prescription under the country’s current laws. Mr.
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Ghana’s president has blamed the country’s economic malaise on government overspending just as the bottom fell out of the market for its main commodity exports, the Financial Times reported. In a reversal of fortunes that provides a cautionary tale for other natural resource-dependent emerging nations, John Mahama said “wage overruns” — a reference to public sector salaries that accounted for 72 per cent of government expenditure in 2012 — and huge energy subsidy bills fuelled the fiscal deficits that crippled Ghana’s economy.
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