Bussiness
EIU’s prediction on cedi is inaccurate – Prof Gatsi
The Dean of the University of Cape Coast Business School, Professor John Gatsi, has cast doubt on the accuracy of the projection made by the Economist Intelligence Unit (EIU) on the local currency.
In its latest assessment of the Ghanaian economy, the London-based organisation indicated that the cedi’s recent depreciation against the dollar would cease till at least the end of the year.
It noted that the local currency will end the year at around ¢7.87 against the dollar, indicating a slowdown in the cedi’s poor performance.
But Professor Gatsi disagrees with their assertion.
According to the economist, discussions surrounding the currency’s stability can be held, but the EIU cannot indicate that this is the end of erratic depreciation for the entire year.
“We cannot predict from now until the end of the year the shock that may affect the economy, whether from the domestic economy or the international developments.
“We were not expecting that there will be some crisis between Ukraine and Russia. However, it happened, and it has its effect on the global economy and currency management, and we do not know what shock will come ahead of us,” he said.
Implications
Based on the forecast by the EIU, one can say the cedi’s worse and challenging depreciation against the US dollar is over.
Some may also argue that the depreciation rate against the dollar will slow down significantly over the next eight months of this year.
This is because, based on the average quotes by some of the major commercial banks in the country, they are selling a dollar ¢7.80 to their retail clients.
The development may mean that for the next eight months, the cedi’s depreciation against the dollar may not be more than ¢0.7.
It may bring some comfort to businesses that had raised concerns about the sharp depreciation rate against the dollar in the past.
EIU on cedi’s woes in the first quarter of 2022
The cedi weakened sharply in the first two months of 2022, reflecting increased demand for hard currency due to a strengthening in Ghana’s (structurally import-dependent) business activity and profit repatriation by Ghana-based multinationals (which is primarily carried out during the first quarter of the calendar year).
In a bid to stabilise the cedi, the Bank of Ghana announced foreign-exchange interventions, with $450m to be released via foreign-exchange forward auctions in the first quarter of 2022.
Some $300m had been released as of early March.
Regardless, strengthening growth will continue to reinforce import dependency, causing the cedi to depreciate on average over 2022.
EIU and Ghana Monetary Policy
The Unit said some further tightening by the Money Policy Committee of the Bank was needed to supply-side price pressures – including high utility and food prices, new taxes, rising global commodity prices and heightened freight charges, alongside supply-chain disruptions due to the Ukraine conflict, which are likely to keep inflation (especially fuel costs) elevated in 2022.
We expect the headline inflation rate to remain high (averaging about 15%) throughout early 2022, driven by supply-side price pressures, including rising global oil and food prices—exacerbated by logistical bottlenecks related to the Russia-Ukraine war.—and high utility and transport costs.
Background
Average inflation will rise from 10% in 2021 to 13.4% in 2022 as prices for global commodities continue to increase, domestic demand starts to pick up further, and the currency depreciates sharply.
Inflation is forecast to average 8.8% in 2023-26, falling towards the lower end of the year.
This will reflect monetary tightening and weakening supply-side price pressures as the forecast period progresses, in part offset by ongoing local-currency depreciation.
Source: MyJoyOnline.com
Bussiness
Ghana’s GDP shows economy is fast recovering despite DDEP – Finance Ministry
Ghana’s Gross Domestic Product (GDP) indicates a rapid economic recovery despite global challenges and ongoing debt restructuring, according to the Ministry of Finance (MoF).
The Ministry in a statement today indicated that latest data from the Ghana Statistical Service (GSS), cumulative economic growth for the second quarter (Q2) of 2024 reached 6.9%, a notable increase from the 4.7% recorded in the first quarter of 2024.
The MoF statement further noted that, “The economy’s robust recovery is in response to the macroeconomic stability and growth interventions that government is pursuing under our IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG).”
According to them, the overall real GDP growth for the first half of 2024 rebounded strongly, with year-on-year GDP growth averaging 5.8% for the period, significantly higher than the 2.9% recorded in the same period in 2023.
By Edem Mensah-Tsotorme
Read full statement below
Bussiness
Facebook, Youtube, online trading companies must be taxed – Deputy Finance Minister
The Deputy Finance Minister Dr Alex Ampaabeng, has proposed that online trading companies should be taxed to bolster the economy.
He noted that these companies, both local and international, generate significant revenue from their Ghanaian clients, which underscores the necessity for taxation.
In an interview with Bernard Avle on Channel One TV’s The Point of View, Dr Ampaabeng pointed out various potential revenue sources for Ghana, including online businesses and content creation companies.
He questioned why other national companies operating in Ghana are taxed, but social media platforms like Youtube and Facebook, which run numerous advertisements, are not included in the Ghanaian tax system.
According to him, these social media companies earn profits from the advertisements they display, and online trading companies also generate income from the sale of their products and services.
He mentioned online trading companies such as Jiji, Jumia, and Tonaton, which he believes surpass all physical marketplaces in Ghana in size.
According to him, “I can’t think of a country which has not gotten a digital service tax system of some sort, so Ghana is long overdue. Just to make an example so that people will appreciate where I’m coming from. Go to Youtube and play a video, within one or two minutes, you are going to watch about two, or three adverts.”
“What it tells you is that Facebook or Youtube is making profits right here in Ghana. Go to your Facebook account, and you are going to see a number of adverts on your right, left. What it is telling you is that Facebook is making profits right here in Ghana and not being taxed. Meanwhile, there are companies operating in Ghana, for jurisdiction reasons, of course, that are being taxed,” he said.
The Deputy Minister added that “So then, it comes to the question of the application of our tax laws. Revenues generated in Ghana are subject to taxes. We have Facebook, TikTok and all those players, these are digital platform owners.”
He stressed, “Then we have the digital or market players, here we are talking about individuals who are using the digital platforms. We have Jiji, Jumia, Tonaton, these combined, are bigger than all physical marketplaces in Ghana. And it tells you the volume of transactions, that are going on there.”
He expressed his hope that individuals earning online profits from Ghanaian residents would be taxed.
“There are conversations ongoing, I wouldn’t want to pre-empt anything, maybe in the future, it might not be anytime soon, what I would like to see, is a Ghana where people who are earning all forms of profits in the country are subject to taxes. People who are trading online to Ghanaian residents, people who are generating revenue from Ghana are allowed to pay taxes,” he noted.
Additionally, he proposed a collaboration with the government to curb cybercrime by registering and verifying these online trading companies.
“We can have a system where the government engages these operators, so individuals will submit their Ghana Card and are registered and verified,”he concluded.
Source: Citinewsroom.com
