• 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).

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• 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.

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• Gains in GCB pushed the GSE-FSI to a week-on-week return of 0.15% while losses in ETI, FML and MTNGH put a -0.62% drag on the GSE-CI.
• Government fell short of its fundraising efforts as GHS 731.68m was raised out of a target amount of GHS 803m from 91 and 182-Day Bills. The 6-Year Bond issuance brought in funds of GHS 358.55m as against a target of GHS 800m.

ECONOMIC SCOOP

Inflation for June 2020 at 11.20% slightly below the May 2020 figure but remains outside the Central Bank’s target band   

• Year-on-year inflation rate at the end of June was 11.20%, which was 10bps lower than the May rate of 11.30%.  
• This was mainly driven by Food and non-alcoholic beverages inflation at 13.80%, although down from 15.10% in May.  
• However, Non-food inflation increased from 8.40% to 9.20%.
• Imported inflation continued to fall as in recent months, closing at 4.70% in June as against 4.80% in May.
• Local inflation declined from 14.10% to 13.90% over the period.

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• Losses in four stocks spurred declines of -0.79% and -0.32% in the GSE-CI and GSE-FSI.
• Government is expected to seek long-term funding with the issuance of a new 6-Year Bond this week. Book building will commence on Wednesday 15th July 2020.

ECONOMIC SCOOP            

African Sovereigns to experience long-lasting economic, financial and social threat post COVID-19 – Moody’s

• International Rating Agency, Moody’s expects African countries to see a slow pace of recovery in the aftermath of the Coronavirus pandemic following border closures and broader lockdown measures which have slowed economic activities.
• Another consideration was the fall in revenues from the economic slowdown, as against a rise in healthcare spending, which is expected to lead to widening fiscal deficits and increase in borrowing requirements.
• Moody’s singled out countries like Mozambique, Zambia and Ghana to possibly face liquidity stress for the rest of the year, on the back of a negative outlook and elevated credit risk.  

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