• The two major indices on the local bourse, the GSE-CI and GSE-FSI, recorded slides of 21.47 points and 42.71 points to close at 1,854.94 points and 1,682.50 points respectively.
• Government was able to fill only GHS 807.31m (71%) of its intended target of GHS 1,137m from the issuance of 91 and 182-Day Bills. 

ECONOMIC SCOOP

Producer Price Index (PPI) drops to 9.30% in July 2020

• PPI for July 2020 was at 9.30%, 0.20% below the previous month’s figure of 9.50%.  
• Inflation in the Mining and Quarrying sub-sector increased by 3% to settle at 38.20%.
• The Manufacturing sub-sector which accounts for two-thirds of the PPI posted moderate inflation of 4.40%, up from 3.80% in June 2020.
• The Utility sub-sector saw a sharp decline in inflation from 12.00% in June 2020 to 5.80% in July 2020.

Read the full report here

• The GSE-CI closed the week at a lower level of 1,876.41 points on the back of losses in UNIL and FML, while the GSE-FSI remained flat
• On the secondary market, Government could only raise GHS 802.67m out of the GHS 1,025.00m it sought to raise form 91, 182 and 364-Day Bills issuance. An additional amount of GHS 590.33m was raised from the new 7-Year August 2027 Bond.

ECONOMIC SCOOP

Government reveals budget guidelines for 2021-2024 fiscal period

• The Government of Ghana has released its budget guidelines for the 2021-2024 fiscal period with fiscal deficit expected to be 9.40% of GDP for 2021, improving on the 2020 target of 11.40% of GDP.
• Government projects Total Revenue and Grants to come in at GHS 56,956 million (13% of GDP) for 2021.   
• Total Expenditure for 2021, which includes payments for the clearance of arrears, is projected at GHS 98,462 million (28.2% of GDP).

Inflation goes up to 11.40% in July 2020

• Headline inflation moved up by 0.20% in July to close the month at 11.40%.
• Non-food inflation was the main driver of headline inflation for the month, increasing from 9.20% to 9.70%.
• Food and non-alcoholic beverages prices also continue to influence the general rate of price increase, albeit easing from 13.80% to 13.70% in July.
• Inflation was highest in the Greater Accra Region at 16.20%, while the Volta Region recorded the lowest rate of 4.20%.

Read full report here

• The two main indices on the GSE continued to show signs of a rebound from the string of poor performance so far in the year.
• Government settled for a total of GHS 667.26m from 91 and 182-Day Bill issuances.

ECONOMIC SCOOP

1. Bank of Ghana (BoG) maintains policy rate at 14.50%    

• On account of a general slowdown in economic activity in the second quarter of the year, the BoG maintained the policy rate at 14.50% p.a.
• The decision was premised on a slowdown in GDP growth in Q1 2020 at 4.90% as against 6.70% for the same period in 2019.
• The BoG Composite Index of Economic Activity (CIEA) also witnessed contraction over the period, with business and consumer confidence remaining below the pre-pandemic level.
• The BoG also cited the slowdown in credit to the private sector as another reason its decision.
  

   2.  An estimated 22 million Ghanaians suffer reduced income due to the COVID-19 pandemic

• This was revealed through the Ghana Statistical Service’s Households and Jobs Tracker survey which sampled 3,265 households across all 16 regions in the country.
• The results showed that the Greater Accra Region was the least affected region while the Upper West, the Bono and Bono East Regions were the worst-hit regions.

  3. Government suspends 5% fiscal deficit threshold for the next 4 years

• The impact of the COVID-19 pandemic has forced Government to suspend the Fiscal Responsibility Act 2018, (Act 982) which prescribed a fiscal deficit threshold of 5% of GDP.
• Consequently, Government has revised its target from 4.70% to 11.40% on expectation of raising expenditure while revenues are expected to lag their initial targets.
• Total Revenues have been revised downward from GHS 67.10 billion (16.9% of GDP) to GHS 53.70 billion (13.90% of GDP).
• Expenditure on the other hand are projected to increase from GHS 86 billion (21.60% of GDP) to GHS 97.70 billion (25.4% of GDP).

Read full report here

• With a gain of 1.60% in GCB, the GSE-CI and GSE-FSI posted gains of 0.08% and 0.16% respectively.
• Government accepted all bids tendered to raise GHS 1,063.42m out of the GHS 1,261m it sought to raise from last week's auction.

ECONOMIC SCOOP

1. Bank of Ghana to announce the Policy Rate today
   

• This follows the conclusion of the 95^th Monetary Policy Committee meeting which was held from 22^nd to 24^th July 2020.
• We expect the Policy Rate to be maintained at 14.50% as the Central Bank monitors economic activity and inflationary trends following the mid-year 2020 Budget Review.
  

  2.  Minister of Finance presents mid-year budget review with focus on relief programmes and revision in macroeconomic targets

• As the economic fallout of the COVID-19 pandemic continues to wear on, the Finance Ministry sought approval for supplementary funding of GHS 11.90 billion to tackle rising expenditure.
• The review indicated Government’s plan to roll out a GHS 100 billion Coronavirus Alleviation & Revitalization of Enterprises Support (CARES) programme over the next 3 and half years to aid economic growth recovery.
• The Government intends to start a GHS 2 billion Guarantee Scheme in order to facilitate long-term credit to businesses at affordable rates to ensure job retention, while also rolling out the National Unemployment Insurance Scheme to provide temporary income support to  workers who have lost their jobs.
• Real GDP growth has been revised down from 6.80% to 0.90%.
• Owing to revenue underperformance and increased expenditure, the fiscal deficit has been revised from GHS 18.90 billion (4.70% of GDP) to GHS 44.10 billion (11.40% of GDP).
• The Government has extended the free-water relief programme for the next three months, while free-electricity supply to lifeline consumers will run for the rest of the year.
• The Communication Service Tax (CST) will be revised downward from 9% to 5% at the start of September 2020.

Read full report here