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This research report was written taken into consideration that the 2015 fiscal year has been challenging for most developing countries including Ghana.
Low commodity prices on the world market coupled with anticipation of a possible increase in U.S key policy rate compelled most central banks to further tighten monetary policy stance.
In particular, the central bank of Gambia increased its policy rate by 100 basis points to close the year at 23%, Malawi by 200 basis points to 27%, Kenya by 300 basis points to 11.5% and Ghana by 500 basis points to 26%.
Nonetheless, the Central Bank for West African States (that serves eight Francophone countries in West Africa) and the central bank of Egypt kept their rates at 3.5% and 9.25% respectively.
The central bank of Nigeria and Tunisia also reduced the policy rate by 2% and 0.5% respectively to stimulate real sector growth.
Hence, by December 2015, the 91-day Treasury bill rates for Nigeria hovered around 3.65%, 2.3% for Mauritius, 4.3% for Tunisia, 4.5% for Rwanda, 10.8% for Kenya, 13.6% for Tanzania, 17.5% for Gambia, 22.5% for Malawi and 22.9% for Ghana.
Lending rates for most North African countries remained below 8.50%.The average maximum lending rate for francophone countries in West Africa was 13.9% by the end of first half of 2015 with Cote d’Ivoire recording the highest rate of 14.99% and Togo recording the least rate of 12.96%.
However, the prime Lending rates for Nigeria remained within the 16% to 17.3% whilst the average lending rate for Ghana stayed within 27.9% and 29%.
As at December 24, 2015, the Zambia kwacha recorded the highest Year-to-date (YTD) depreciation of 71.3%, followed by Malawi kwacha (41.1%), South African Rand (31.4%), Namibian dollar (31.1%) and the Tanzanian shilling (23.1%).
The Ghana cedi, Botswana pula and Kenyan shilling recorded a YTD depreciation of 18.4%, 17% and13% respectively.
This translated into increases in prices of goods and services on the domestic market, made most countries less competitive and increased current account deficit to GDP drastically.
Coupled with an increase in monetary policy rates, consumer price inflation for Ghana and Malawi averaged around 17% and 21% respectively instead of the 11.5% and 16.4% target set for 2015.
As at October 2015, current account deficit to GDP also worsened to 7.9%, 8.3%, 9.6%, 41.6% and 12.1% for Burkina Faso, Ghana, Kenya, Liberia and Namibia respectively as against 5.6% for sub-Saharan Africa (World Bank, 2015).
Thus, all efforts by most governments to reduce government debt to GDP proved futile. As at September 2015, Ghana’s debt to GDP stood at almost 70% (one of the highest in Africa) as compared to 53.4%, 35.7%, 32.2% and 43.9% recorded by Kenya, Liberia, Cameroun and South Africa respectively.
Even so, South Africa, Ghana and Nigeria were named among the most corrupt countries in Africa whereas Cote d’Ivoire, Burkina Faso and Mali made it into the list of least corrupted nations in Africa in the latest People and Corruption report conducted by Transparency International.
Meanwhile, the outlook for Ghana in 2016 looks a bit promising given the possible minimization of the energy crisis, relatively stable cedi and expected rise in government expenditure ahead of the December elections.
Source: Groupe Nduom
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