- Market analysts have described Ghana's economy as one to watch in 2020
- This follows a 2019 which was characterised by a slow economy, creeping inflation and a declining currency
- Experts have indicated that everything changed in 2020 with the country now boasting growth and a strong currency
Investors have described Ghana’s economy as the one to watch in Africa during 2020. The economy seems to have taken a turn for the better after a bruising 2019.
In 2019, investors regarded the country’s economy as slow with creeping inflation and a declining currency which gave little confidence to investors.
Everything changed in 2020 as the Ghanaian cedi is now regarded as the best-performing currency in the world.
Per a report by Bloomberg, investors are currently in a rush to buy into the nation’s $3 billion Eurobond issue and foreigners are gaining interest in its local currency debt.
Reports say investors who expressed fears about election-related spending are now praising the government's fiscal prudence and financial reforms.
This was reflected in the sale of the Eurobond two weeks ago when orders were placed for almost five times the original amount.
This led to a fall in the yield well below the initial price target and with the first local-currency bond sale of the year in January foreign investors bought more than 80% of the 1.4 billion cedis ($258.3 million) of securities, compared with average holdings of 37% over the past two years.
Again, the positive outlook has been credited to reforms started by Ghana three years ago.
These included outlawing large deficits and an aggressive banking-sector overhaul that cut the number of lenders by a third to 23, lowering liquidity and credit risks.
Meanwhile, Africa’s debt is increasing and is causing a rift between the World Bank and other lenders.
The World Bank reports that Sub-Saharan Africa’s total external debt increased by 150% to $583 billion in 2018 from $236 billion 10 years earlier.
Per a report by qz.com, there are fears about rising unsustainable debt as the average public debt increased from 2010-2018 by 40% to 59% of Gross Domestic Product (GDP).
The International Monetary Fund and the World Bank have expressed worry about the lack of transparency, weak debt management, and a lack of capacity in an increasing number of low-income countries as the average public debt increased from 2010 to 2018 by 40% to 59% of the GDP.
They have also raised concerns about China’s influence in Africa with regard to sources of capital.
This comes in the wake of offers of convenient packages of funding through state-owned enterprises. This often leads to the availability of funds for much-needed infrastructure projects across the continent.
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