Weekly Highlights
• Ghana’s international reserves increased to US$11.02 billion in 2nd quarter of 2021.
• The GSE extended its year-to-date gains to investors.
• The Ghana cedi lost grounds to all the three major trading peers
• International stock indices registered mixed outturns.
• Major international commodities inched up their weekly values.

Macroeconomic Update

Mid-Year Fiscal Policy Review of the 2021 Budget Statement and Economic Policy of Government of Ghana

The Government of Ghana, through the Ministry of Finance and on behalf of the President, presented the Mid-Year Fiscal Policy Review of the 2021 Budget Statement and Economic Policy of the Government of Ghana in the week under review. Beginning with the impact of Covid-19 pandemic globally he stated that the global economy contracted by 3.3 percent in 2020, a 6.7 percent decline compared to the 3.4 percent growth forecast by the IMF in October 2019. Growth in Sub-Saharan Africa was -1.9 percent. Ghana has outperformed its peers and rebounded strongly in the last quarter of 2020 through to the first quarter of 2021, faster than expected after recording negative growth in Q2 and Q3 of 2020.

Overall GDP growth for the first quarter of 2021, as reported by the Ghana Statistical Service, was 3.1 percent, with non-oil at 4.6 percent. The Bank of Ghana’s Composite Index of Economic Activity (CIEA) attest to the strong recovery, with the index growing at 33.1 percent at the end of May 2021 as against a contraction of 10.23 percent recorded at the end of May 2020. On the inflation front, Ghana is witnessing one of the lowest figures on record in nearly two years. Headline inflation at the heights of the covid-19 pandemic hovered around 11.8 percent, dipped to 7.5 percent in May 2021 before rising marginally to 7.8 percent in June 2021. The Monetary Policy Committee of the Bank of Ghana will continue to implement appropriate monetary policy to maintain inflation rate within government’s target of 8 percent ± 2.

On the forex market, the Ghana cedi has been relatively stable in the past four years and continue to maintain its stability even in this pandemic year, with a year-to-date depreciation of 0.6 percent against the US dollar and 3.6 percent, appreciation against the Euro as of June 2021. This stability is expected to continue as we move towards the close of the year. Ghana’s international reserves increased to US$11.0 billion equal to 5.0 months of imports cover and records, one of the highest so far as compared to the US$9.2 billion equivalent to 4.3 months of imports cover, recorded in the same period last year.

On the fiscal front, for the first half of 2021, overall budget deficit was GH¢22.32 billion, equivalent to 5.1 percent of GDP. The corresponding primary balance for the period was a deficit of GH¢7.3 billion, equivalent to 1.7 percent of GDP, against a target deficit of GH¢4.80 billion or 1.1percent of GDP. Provisional debt stock at the end of first half of the year stood at GH?334.56 billion (US$58.04 billion), representing 77.1 percent of GDP and an uptick from the GH?291.6 billion (US$50.8 billion), recorded at the end of December 2020. This is inclusive of the financial and energy sector bailouts.

On the revenue side, the outturn for Total Revenue and Grants represents an execution rate of 87.5 percent compared to the period’s target, and an annual nominal growth of 18.2 percent. Non-Oil Tax Revenue—which comprises non-oil Taxes on Income and Property, Taxes on Goods and Services, and International Trade Taxes—constituted 78 percent of Total Revenue and Grants and amounted GH¢22,099 million (5.1% of GDP) against a target of GH¢24,384 million (5.6% of GDP). Despite the shortfall from target, the outturn represents an annual appreciation of 21.9 percent

On the money market, interest rates generally trended downwards for the short-dated instruments but mixed for the medium-to-long dated securities, with the policy rate trimming by 100 basis points from 14.5 percent in January to 13.5 percent at June ending. The 91-day and 182-day Treasury bill rates, respectively, declined to 12.65 percent and 13.40 percent in June 2021, from 13.97 percent and 14.05 percent in June 2020. Similarly, the rate on the 364-day instrument decreased marginally to 16.34 percent from 16.87 percent over the same period in 2020. Rates on
the government treasury bonds also saw dips at the end of June 2021.
As Government is keen on rolling out several programmes and projects aimed at addressing developmental gaps, it remains committed to deliver on the mandate to protect lives and livelihoods as it works to reverse the devastating impact of COVID-19, return the country to the pre-COVID growth trajectory, and improve lives through education as well as major social policies, including Free SHS and school feeding. The Government plans to partner the private sector to create job opportunities for young people, as enterprises will continue to enjoy an enabling environment to expand and improve income levels.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8± 2 7.80
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 10.1
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 13.50
GDP Growth (y-o-y %) 6.3 6.5 0.4 5.00 3.1
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 5.1 Q2
Public Debt (% of GDP) 57.6 63.00 68.3 n/a 77.1
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 5.0
Source: BOG; MOFEP; GSS.

Government of Ghana Treasury Securities

Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Aug 02 – Aug 06 12.55 13.37 16.40 17.25 17.70 18.80
Jul 26 – Jul 30 12.56 13.36 16.40 17.60 17.70 18.80
Jul 19 – Jul 23 12.56 13.36 16.32 17.60 17.70 18.80
2021 Yr Open 14.09 14.12 17.00 18.50 19.25 19.85
NB: The above are the annual yields on Government of Ghana Treasury Securities.

The last weekly GoG Treasury auction for July 2021 ended with interest rates on Treasury securities registering mixed outturns. Yield on the 91-Day T-Bills dropped by a basis point to end the month at 12.55 percent, while the 182-Day yield also inched up a basis point to settle at 13.37 percent. The yield on the 2-Year Note eased by 35 basis point to settle at 17.25 percent whiles that on the 364-Day T-bill and the long-dated treasury bonds remained unchanged, as they were not scheduled for the week’s auction.

Results of Auction held on 30th July, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 475.08 267.32 12.5483
182-Day T-Bill 211.38 211.38 13.3708
2-Year Note 1,530.21 1,530.21 17.2500

At the close of the auction, Government accepted GHS 478.70 million out of the GHS 686.46 million worth of bids tendered in by investors for the 91-Day and the 182-Day T-bills. This was GHS 151.30 million short of the week’s target, weighed by the issuance of the 2-Year Note as government seeks to reduce the frequency of interest payment, by wooing investors to bid for the long-date instruments. All the GHS 1,530.21 million bids for the 2-Year Note was accepted by government, trending down the yield by 35 basis points to close at 17.25 percent. For the upcoming auction, Government seeks to raise GHS 1,101.00 million from the sale of the 91-Day, 182-Day, and the 364-Day T-Bills.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2017 2018 2019 2020 2021
GSE-CI 52.73 -0.29 -12.25 -13.98 39.95
GSE-FSI 49.51 -6.79 -6.23 -11.73 6.02

Trading on the Ghana Stock Exchange ended the month with the indices settling in mixed year-to-date performance, buoyed by profit taking activities in some blue-chip stocks. The GSE Composite Index went up by 66.38 points to settle at 2,717.30 points adding 2.50 percentage points to extend investors’ year-to-date returns to 39.95 percent. The GSE Financial Stock Index, however, trimmed 0.46 points off to bring its index level to 1,890.15 points, with a year-to-date return of 6.02 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 8.43 6.97 -17.36
Total Value Traded (GHS M) 11.45 12.21 6.69
Market Cap (GHS M) 61,551.37 62,248.75 1.13

A total of 6.97 million shares valued at GHS 12.21 million were traded in fourteen equities. MTNGH extended its bullish rally, leading the activity chart by 84.70 percent of total traded volume. This translated to more than 60 percent of total value of trades recorded for the week. The market capitalization, thus, raised by 1.13 percentage points to close the month of July at GHS 62,248.75 million.

Stock Price Movements

Price movements were registered in six equities at the close of trading: Five advancers and a loser. Unilever Ghana PLC led the bulls, as it advanced its value by 10 percent, adding 20 pesewas to end the month’s trade at GHS2.20 per share.

Stock Price Advancers in terms of WK closing price
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
UNIL 8.29 2.00 2.2 0.20 -73
TOTAL 2.83 3.65 4.00 0.35 41
GGBL 0.90 1.41 1.5 0.09 67
MTNGH 0.64 1.20 1.25 0.05 95
FML 1.08 1.37 1.40 0.03 30
GCB Bank Limited was the lone laggard as it shed a pesewa to close the week at GHS 5.39 per share trimming its year-to-date returns to 33.09 percent.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
GCB 4.05 5.4 5.39 -0.01 33.09

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7982 5.8040 CAD 4.6487 4.6531
GBP 8.0589 8.0676 CFA 95.2844 95.3786
EUR 6.8774 6.8842 JPY 0.0528 0.0529
AUD 4.2591 4.2645 ZAR 0.3969 0.3973
NGN 70.8573 70.8659 CNY 0.8967 0.8975
Source: Bank of Ghana 25.05.2021

The dollar took a bearish turn, closing at one-month low on Friday, and registering the worst weekly performance since May 2021. This was because of the dovish remarks by the US Fed, amid disappointing economic data, taking the wind off the greenback’s month-long sail. Fed’s Chairman Jerome Powell’s comments, as the central bank announced its policy decision on Wednesday to keep interest rate at 0.25 percent, sent the dollar southward. Powell affirmed that interest rate hikes were “a ways away” and the job market still had “some ground to cover” before asset tapering could begin. Data released on Thursday showed that US’ GDP inched up 6.5 percent quarter-on-quarter in Q2 of 2021, lower than both the 8.5 percent forecast by investors and the 6.3 percent growth recorded in the first quarter, hence failing to provide support for the greenback. The greenback, thus, reduced its weekly strength against the cedi to 0.01 percent, as it maintained its selling price at GHS 5.80 on the interbank forex market.

The British pound was bullish on the international forex market on the back of rapidly improving UK’s covid-19 situation, a strengthening economy and rising inflation. These propelled the pound in the upward trends, against its major trading partners. Anticipation of a positive economic assessment out of the Bank of England (BOE)’s policy report in the week ahead and perhaps hints of the timing and conditions for a reduction in the Asset Purchase Facility, helped lift the pound to its week’s gains. The Pound, thus, appreciated against the local currency by 1.02 percentage points, to close the month of July at a selling price of GHS 8.07.

The Euro traded at a four-week high to the dollar at the end of July, after touching its weakest level since early April. This followed the US Federal Reserve announcement that it was in no rush to withdraw stimulus amid, investors’ prediction that the European Central Bank will remain dovish for some time, as fears of the spread of the Delta variant continue to linger. The ECB pledged last week to keep interest rates at record-lower levels to bring inflation back to its 2% target. The updated guidance pushed expectations for an interest rate hike further into the future, as the ECB sees inflation below 2% until at least 2023. The shared currency thus strengthened its weekly value against the cedi by 77 basis points, trimming its year-to-date depreciation to 2.66 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,411.80 4,395.26 -0.37 17.02
DJIA 35,061.69 34,936.13 -0.36 14.15
FTSE 100 7,027.58 7,032.30 0.07 8.85
NIKKEI 225 27,548.00 27,283.59 -0.96 -0.59
FTSE/JSEAllShare 68,063.69 68,970.78 1.33 16.10
NSE All Share 38,667.90 38,547.08 -0.31 -4.28
Nairobi All Share 178.98 177.52 -0.82 16.71

US stocks closed July in the red on the last trading day, weighed by concerns about the economic recovery in the face of the fast-spreading delta variant of covid-19 and China’s crackdown on large technology companies. Compounding to a gloomy outlook, Amazon trimmed 7.6 percent of its value – biggest daily percentage dip in two months. This is after reports showed it missed its second quarter revenue for the first time in three years, shy of the market’s expectation. The report further predicted the easing of sales growth in the next few quarters, as customers look outside home. The S&P 500 and the Dow Jones Industrial Average both shed points week-on-week to close the week at indices level of 4,395.26 and 34,936.13 respectively.

The FTSE 100 index ended on a negative note on Friday as shares went south after two straight days of gains buoyed by investors’ concerns about Beijing's regulatory crackdown and the spread of the Delta variant. UK carrier, British Airways owner’s IAG dropped after it declined to give a profit forecast for the year due to the COVID-19 pandemic but said its summer capacity would increase to 45% from 22% in the previous quarter. Glencore also dipped after report showed lower production of nickel, lead, and coal in the first half of the year. On a week-on-week basis, the FTSE 100 added 4.72 points to close the week at an index level of 7,032.30

Japan stocks went bearish at the close of week, fuelled by losses in the Paper & Pulp, Railway & Bus and Real Estate sectors led shares lower. The Nikkei 225 went down by 0.96 percentage points, to close the week at 27,283.59 points.

On the African market, the Johannesburg All Share Index extended further by 1.33 percentage points week-on-week, to widen its index level to 68,970.78 points. The Nigerian and Nairobi All Share Indices however dropped points on a week-on-week basis to settle the week’s trades at 38,547.08 and 177.52 points, respectively.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 74.1 76.33 3.01 47.36
Gold $/ounce 1,801.80 1,812.60 0.60 -4.35
Cocoa$/metric tonne 2,321.00 2,361.00 1.72 -9.30
Coffee $/pound 1.890 1.955 3.44 52.44
Source:www.bloomberg.com, www.investing.com & www.tradingeconomics.com

Brent crude oil rolled back of a bullish run, recording just over 3 percent weekly gain, amid a dip in US crude inventories and prospects of a strong recovery on the demand side. The EIA Petroleum Status Report showed US crude oil inventories fall by 4.089 million barrels to the lowest level in more than a year in the latest week and supplies of distillates. A product category that includes diesel, was down the most since April 2020. OPEC+ is to kick start its monthly supply hikes of 400,000 barrels a day from August. The fast spread of delta variant and possible restrictions on movements, however, remains a big threat to the oil market. Brent crude oil thus lifted marginally by $2.23 to close the week at $76.33 per barrel.

Gold experienced a volatile week, as strong rebound in the dollar shifted investors away from the precious metal. Still, the precious metal ended the week on a high note on the back of dovish Federal Reserve. The US central bank kept its benchmark interest rate at a record-low level of near-zero, with the pace of the quantitative easing program unchanged. Latest figures showed the US economy grew solidly in the second quarter, but more slowly than expected, and initial claims beat the market’s forecast. The yellow metal thus raised its value by $10.80 week-on-week to close the week at $1,812.60 per ounce.

Cocoa inched up its value week-on-week, despite below average rainfall recorded in many of Ivory Coast’s cocoa growing regions, following a bumper harvest previously. Farmers at the world’s top cocoa producer said that many trees bore large fruits that should be ready for harvest between September and October but warned the plantations need to receive enough water and sun in the coming weeks. Cocoa went up by $40 at a market price at $ 2,361.00 per metric tonne.

Coffee firmed up its value on the international commodity market despite concerns of eased over the impact of severe weather on Brazil’s three largest growing regions, Paraná, Sao Paulo, and Minas Gerais. According to the USDA, global coffee consumption is expected to exceed production this year for the first time since 2017 and this could drive up its value further. The value of coffee, hence, was raised by 3.44 percent to bring its global market value to $1.96 per pound.

Note: The data in this publication is Friday on Friday (w/w)