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Ghana: Press focuses on slash in benchmark rate, others

The report that the Bank of Ghana has slashed its benchmark rate, the policy rate by 100 basis points, signalling…

The report that the Bank of Ghana has slashed its benchmark rate, the policy rate by 100 basis points, signalling a return to monetary easing after a year of tightening and the assurance by the European Union not to place a ban on the purchase of cocoa from Ghana because of child labour claims are some of the leading stories in the Ghanaian press on Tuesday.The Graphic reports that the Bank of Ghana (BoG) has slashed its benchmark rate, the policy rate by 100 basis points (bps), signalling a return to monetary easing after a year of tightening.

The bank reduced the rate from 14.5 per cent to 13.5 per cent today after concluding its 100th Monetary Policy Committee (MPC) meeting on May 29.

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who chairs the seven-member committee, said at a news conference in Accra yesterday that the reduction in the rate followed the waning in risks to the inflation and growth outlooks, which had occasioned a sustained rate-hold between May 2020 and March this year.

He said the bank now expected the rate cut to blend with existing fiscal and monetary policies to boost growth at a time when data showed a stronger rebound in economic activities.

Some analysts, however, told the Graphic Business that the cut was “a huge surprise,” given that inflation had not fully stabilised in spite of falling from 10.3 percent in March to 8.5 percent in April.

Dr Addison said after cutting the rate by 150bps in March 2020, the central bank was met by dampened growth and rising inflation on the back of the COVID-19 pandemic.

The newspaper says that the European Union (EU) has said it does not intend to place a ban on the purchase of cocoa from Ghana because of child labour claims.

Rather, the EU is working closely with the Ministry of Employment and Labour Relations, the Ghana Cocoa Board (COCOBOD), among other stakeholders, to agree on the proper definition of child labour.

According to the Head of the EU Delegation in Ghana, Ms. Diana Acconcia, “the issue of child labour is complicated, but we are working very well together to come to a common understanding to see what we can do to make cocoa more sustainable”.

Ms. Acconcia, who gave the assurance when she called on the Council of State in Accra yesterday, added that the EU was open to further discussions on the subject.

The visit was to open a channel of conversation with the council on issues of mutual cooperation.

On the COVID-19 pandemic, Ms Acconcia said Ghana was a priority country to benefit from the COVAX vaccine supply should the EU take a definite decision to donate the vaccine to countries in need of it.

She said the union was currently deliberating on the modalities, after which a decision would be taken on countries to which to donate the vaccine, in line with the COVAX arrangement.

The EU is the world’s largest importer of cocoa, accounting for 60 percent of imports.

The Graphic also reports that Ghana cedi lost grounds against the three major trading currencies on the international currency market.

The US dollar advanced on the international currency market buoyed by chains of upbeat economic data from the US economy which are likely to compel the Fed to reconsider its position of leaving interest rate unchanged.

On the back of this, the US dollar recorded 0.18 percent week-on-week appreciation against the local currency as its selling price rose to GH¢5.74 on the interbank currency market. The year-to-date appreciation of the cedi thus reduced to 0.32 percent.

The British pound gained support after hawkish commentary by the Bank of England on interest rate outlook in the UK. The British pound ended the trading week with 0.25 percent appreciation against the cedi at a selling price of GH¢8.15 on the interbank currency market. The year-to-date depreciation of the local currency thus rose to 3.27 percent.

The Euro posted a marginal appreciation on the international forex market as its support in the week’s trade was nearly eroded by negative developments. The euro saw 0.12 per cent appreciation against the cedi at a selling price of GH¢7.00. The year-to-date appreciation of the cedi thus lowered to 0.99 per cent.

At the recently held auction, interest rates on the GoG treasury securities were mixed adjusted. The yield on the 91-Day T-Bill rose by two basis points to 12.78 percent.

The Times says that Surface Rental payments to the government by companies in the petroleum sector in 2020 remain in arrears to the tune of $2.1 million, the Public Interest and Accountability Committee (PIAC) 2020 Annual Report, has said.

The PIAC Report said the 2020 arrears represent a 34.71 percent increase over the 2019 arrears of $1.57 million.

The report indicated that the non-payment of the surface rentals denied the Petroleum Holding Fund of the needed revenues for development projects.

Against this backdrop, the PIAC recommended that the Ghana Revenue Authority, should, as a matter of urgency, initiate action to recover surface rental arrears with the appropriate interest as recommended by the Petroleum Revenue Management Act.

The report mentioned some of the companies owing surface rentals as Medea Development, which operated  at East Cape Three Points, owed $156,540, Heritage (GOSCO) at East Keta, owed $532,366.67, and Sahara Energy Fields Ghana at Shallow Water Cape Three Points, owed $71,934.93.

The rest the PIAC Report mentioned were Britania-U, which operated at South-West Saltpond, owed  $657,708.33, UB Resources Ghana Limited, Offshore Cape Three Points South,  $67,666.58 and Swiss Africa Oil Company Limited, which operated at Onshore/Offshore Keta Delta Block, owed  $712,500.00 and Exxon Mobil $30.00.

The Chairman of Public Affairs and Communications Sub-Committee of PIAC, Eric Defor, said it was the responsibility of Ghana Revenue Authority (GRA) to collect surface rentals from the companies operating in the oil and gas sector.

He said one of the companies operating in the oil and gas sector some few years ago left the country without paying surface rentals.

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