Ghana’s total revenue projected to increase by 32% this year

Mr Ofori Atta
Researchers at Standard Bank, parent company of Stanbic Bank Ghana, have projected a 32 percent increase in Ghana’s total revenue for this year.

This was reported in the March 2021 edition of the Standard Bank’s Flash Note of the Africa Markets Report (AMR).

According to the report, the revenue increase is likely to be a consequence of increased domestic taxes.

“Total revenues (including grants) for 2021 are projected to increase by 32%, from GHS54.92bn (14% of GDP) to GHS72.45bn (17% of GDP), in 2020; 77% of that will likely come from domestic tax revenues. The government is looking to put a few tax measures in place, such as a percentage point increase each in the National Health Insurance levy and the VAT flat rate,” the report said.

With regard to bonds, the report noted a decline in local bond yields due to relaxed monetary policy by the Bank of Ghana.

“Local bond yields have declined considerably over the past year thanks to looser monetary policy and domestic liquidity conditions. The Monetary Policy Committee (MPC) reduced the Monetary Policy Ratio (MPR) by 150 bps last year and reduced the Cash Reserve Ratio (CRR) to 8% from 10%. Broad money supply growth was also partly driven by the deficit financing of the government by the Bank of Ghana. Consequently, bond yields declined on average by 230bps between March 2020 and March 2021.”

The report further noted that the local currency has enjoyed some stability over the past year due to the exceptional performance of the Ghana Cedi bond on foreign markets.

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According to the report, “GHS bonds have been an investor favourite this year thanks to increased global liquidity and relatively high real yields. Foreign positioning in Ghana local bonds increased to GHS32.86bn (USD5.71bn) in January 21, from GHS28.84bn (USD4.87bn) in December 20. Foreign holdings of Ghana local debt now tops 21%, from 19% in December 20, according to recent data from the Ghana Central Securities Depository.”

“The significant foreign portfolio inflows into Ghana’s bond market have also ensured some level of appreciation in GHS which has gained 3.3% YTD against the USD. However, we still expect some level of upside pressure in the USD/GHS this year as import demand should rebound more meaningfully this year,” the report further said.

Earlier this year, the Ministry of Finance announced the commencement of processes for the 2021 International Capital Market funding programme, seeking to raise up to USD5bn in Eurobonds, diaspora bonds, sustainable bonds, and syndicated bridge loans.

Proceeds may be used to support growth-oriented expenditures in the 2021 budget and conduct liability management for both Eurobonds and domestic bonds.

Indeed, both the 2023 and 2030 Eurobonds have been highlighted as possible bonds for liability management.

The African Markets Revealed Report is a monthly report issued by the Standard Bank Group, parent company of Stanbic Bank Ghana and focuses on the economic and financial outlook of African countries.

The report also reviews current economic situations and makes short to medium-term predictions about the economies of African countries.