According to available data, one thousand Mobile Mobile (MoMo) transactions occur in Ghana every second, according to Charles Adu Boahen, Minister of State at the Finance Ministry.
He said this when breaking down the value of Mobile Money transactions from 2016 to the present.
“So, in 2016, the overall value of mobile money transactions was around 20 billion dollars, or roughly 79 billion cedis.” It has risen to 99 billion dollars by 2020, according to the most recent figures.
“In 2017, it was 35 billion dollars, or 156 billion cedis, and in 2018, it was 48 billion dollars, or 223 billion cedis.”
“In fact, by 2020, the figure will have risen to $99 billion.” Per second, a thousand transactions are made. “All the government is asking for is a modest part,” he remarked on Thursday’s Good Evening Ghana show.
Meanwhile, the Ministry of Finance (MoF) stated in response to the E-levy plan that a healthy debate in a lively Parliament is an important aspect of Ghana’s expanding democratic credentials and should not be considered a fiscal risk.
The Ministry of Finance stated that when Parliament reconvenes on January 25, the E-Levy Bill, which had previously been discussed and approved by Parliament’s Finance Committee, will be passed.
“It is regrettable to note that foreign investors and market players are on edge as a result of the impasse in Parliament over the E-levy Bill’s passing. The market now appears to be pricing the risks of a slender majority in Parliament and the implications into our bonds.
“Markets appear to be concerned that this may affect the government’s ability to pass and implement some of the main revenue policy changes outlined in the 2022 Budget.”
“The Ministry would like to clarify that a healthy debate in a dynamic Parliament is an important aspect of Ghana’s strengthening democratic credentials and should in no way be viewed as a fiscal risk,” says the statement. The E-Levy Bill, which has already been discussed and approved by the Finance Committee of Parliament, will be passed when Parliament starts sitting this month,” the Ministry stated in a statement in response to a Bloomberg piece on Ghana’s debt crisis.
According to Bloomberg, as the age of cheap money comes to an end, bondholders are no longer willing to give Ghana any leeway.
Investors believe that re-financing debt in the Eurobond market won’t be an option when the Federal Reserve raises rates and budget targets remain elusive, thus the West African nation’s dollar bonds have dropped 10% in ten days, pushing it deeper into crisis territory.
The premium paid on Ghana’s sovereign dollar debt increased to an average of 1,105 basis points on Wednesday, up from 683 basis points in September. According to a Bloomberg index, its $27 billion in foreign debt has suffered the worst start to the year among emerging economies, extending last year’s 14 percent loss.
Investors are concerned that Ghana, the region’s second-largest economy, may be unable to maintain current debt levels if borrowing costs rise, thus shutting it out of international markets. According to data published by Bloomberg, government debt reached 81.5 percent of GDP at the end of last year, up from 31.4 percent a decade ago.
Despite solid economic growth, Ghana is now one of the most vulnerable countries to tighter US monetary policy.
Kevin Daly, investment director at Aberdeen Standard Investments in London, stated, “The market has woken up to the fact that this is a country with a lot of outstanding bonds.” “A lot of people started the year with overweight postures, and a lot of them have started to give up.”
The yield on the West African country’s $750 million bonds due in March 2027 slid 10 cents to 79.4 cents on the dollar on Thursday, bringing the yield to nearly 14%. A Bloomberg index tracking government debt showed that 13 of 14 Ghanaian dollar bonds are trading with an extra premium of at least 1,000 basis points, a level deemed distressed.
“I don’t expect them to default in 2022 since they have sufficient foreign-exchange reserves,” said Joe Delvaux, a portfolio manager at Amundi in London. “However, in the medium to longer term, it becomes an issue because Ghana has lost access to the Eurobond market for debt rollover,” he added. “They have too much debt for their size of economy, and investors have lost faith in the government’s commitment to cut expenditure and implement required reforms.” h
The government’s failure to approve a new fee on electronic money transfers through parliament in November raised investor concerns about the government’s political capital to pass revenue-raising measures or cut spending to decrease borrowing demands.
The administration will struggle to fulfill this year’s budget deficit target of 7.4 percent, down from 12.1 percent last year, due to opposition to the tax reform and plans to eliminate a subsidy on pharmaceutical and vehicle imports.
“At this time, there is no appetite for a fresh Ghana issue, and there probably won’t be until the government has more significantly controlled its public finances,” said Carlos de Sousa, who oversees a $3.8 billion developing-nation bond fund at Vontobel Asset Management in Zurich.
“There are some severe factual mistakes in the report,” the Ministry of Finance responded, “which may cause investors considerable concern if not remedied.” Bloomberg, for example, reported an end-of-year debt-to-GDP ratio of 81.5 percent. This isn’t true. Our provisional nominal debt to GDP ratio was 78.4 percent at the end of November 2021, according to the most recent data available. Because December income collections are the highest of the year, it’s doubtful that our financing needs in December would push us over the 80 percent debt-to-GDP mark by December 2021.