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Investors Confident In Akufo-Addo –

President Nana Akufo-Addo

FOREIGN INVESTORS with an interest in Ghana appear to have more confidence in the Akufo- Addo administration than a John Dramani Mahama-led one.

Before the elections on December 7, investors expressed the wish that President Nana Akufo-Addo would retain his position in order to sort out Ghana’s fiscal challenges by winning a second term, Goldstreetbusiness reported.

It detailed the views of some market players.

Simon Quijano-Evans, Chief Economist at London-based Gemcorp Capital LLP, indicated that “If the incumbent government were to win the elections, markets would probably award them the benefit of the doubt, given their track record of recent years.

“The current government’s fiscal plan makes sense as a baseline scenario and markets will probably judge performance on a quarterly basis.”

Securing credibility in the fiscal space will help lower interest costs to support growth and job creation.

According to Kevin Daly, Portfolio Manager at London-based Aberdeen Standard Investments, “All issues related to debt, including the need to increase tax revenue, “Are likely to be addressed quicker by the incumbent party as they can hit the ground running. The government’s deficit plan for 2021 is ‘positive’. The country should consider tapping international debt markets early and issuing up to $3 billion.”

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He adds that payment for energy-sector liabilities, “another key issue that must be addressed,” could be sought from multilateral lenders so as to reduce the amount of market financing, adding that “The new government should be opened to approaching the IMF given the large 2021 financing needs.”

Nana Adu Ampofo and Kobi Annan, analysts at UK and Ghana-based Songhai Advisory, also noted that the NPP deserved credit for the economic successes maintained between 2017 and 2020 pre-Covid-19.

They continued that taming debt “will remain the critical challenge if the NDC wins,” adding that reorganization of debt on the heels of an NDC victory would introduce waste “at a time when the country could ill afford it.”

Mark Bohlund, senior credit analyst at REDD Intelligence, said, “Most of the fiscal slippage occurred during the NDC’s time in office.”

The havoc wreaked by the coronavirus pandemic drove Ghana’s ratio of debt to gross domestic product to 71% in September, the highest in four years. Before the global health crisis, Ghana was already under fiscal pressure due to the costs of cleaning up the banking sector and meeting energy-sector liabilities.

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The government was forced to abandon a fiscal rule it introduced in 2018 to cap the budget deficit at five per cent of GDP in any year, with the shortfall forecast to reach 11.4% for 2020.

Akufo-Addo’s NPP plans to cut the deficit to 8.3% of GDP in 2021, and below five per cent of GDP by the third year of the presidential term.

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