Ghana's Cedi Heads for 25th Straight Annual Drop Against the U.S. Dollar
Added 12-05-19 08:04:02am EST - “(Bloomberg) -- Sign up to our Next Africa newsletter and follow Bloomberg Africa on TwitterGhana's cedi is headed for its 25th straight year of depreciation against the dollar as the government's fiscal challenges erode investor confidence…” - Finance.yahoo.com
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Ghana’s cedi is headed for its 25th straight year of depreciation against the dollar as the government’s fiscal challenges erode investor confidence in the currency of the world’s second-biggest cocoa producer.
The cedi is down 13% so far in 2019, according to data compiled by Bloomberg, poised for the worst decline since 2015, when it slumped 18%. It has declined every year since Bloomberg started keeping records in 1994.
Investors are concerned the government won’t stick to spending targets as it gets closer to an election next year, according to Cobus de Hart, chief economist for west, central and north Africa at NKC African Economics in Paarl, South Africa. The cedi slipped 0.1% on Thursday to 5.67 per dollar, bringing its decline this quarter to 5%.
“The overshooting fiscal deficit and debt from arrears is putting pressure on the cedi,” De Hart said by phone. “We have an election coming up next year and portfolio investors are concerned that the plan outlined in the 2020 budget will not be met because revenue continues to underperform.”
Ghana’s budget deficit is forecast to widen to 4.9% of gross domestic product this year, from 4.1% in 2018, according to the median estimate in a Bloomberg survey of economists. The shortfall is rising as the government increases spending to pay for financial-sector bailouts and liabilities in the energy sector.
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