The Nana Addo Dankwa Akufo-Addo-led administration is negotiating a deal with Ghana's gold mines, the social innovator and political analyst stated in a tweet on August 9, 2022.
According to his sources, these conversations are intended to strengthen Ghana's weakening cedi, but he also indicated that certain problems may result from the action.
"As a measure to sustain the depreciating currency, the government of Ghana is negotiating a contract with the nation's gold mines to purchase a share of the output in local currency.
Three issues stand out:
"A. The reserves to liquidity ratio will continue to be a problem unless the Bank of Ghana (BoG) trades actively.
B. The amount of Cedi risk that the large miners are prepared to take on is constrained by their high costs & liabilities in USD.
"C. The small miner's hedge in dollars in order to dodge increased regulatory attention and the tax limelight. Thus, they rarely take the current PMMC route, Bright Simons tweeted.
As of the end of June 2022, according to information from the Bank of Ghana, Ghana's debt stood at 393.4 billion dollars or nearly 78.3% of its GDP.
Out of this, external debt totals 203.4 billion ($28.1 billion).
In comparison to a 29.5% growth in total debt issuance between June 2020 and June 2021, the government's total debt issuance climbed by 17.6% between June 2021 and June 2022. The government now faces higher borrowing costs on both the domestic and foreign markets as a result of this increased debt issuance and the high level of global inflation in 2022.
Due to investor apprehensions regarding the government's financial situation and the depreciation of the Ghana cedi versus other currencies, the issuance of debt and payment of interest have become more expensive on the international markets. Due to these unfavorable market conditions, the government was unable to issue sovereign bonds in 2022.
Content created and supplied by: Francisca (via Opera News )
Opera News is a free to use platform and the views and opinions expressed herein are solely those of the author and do not represent, reflect or express the views of Opera News. Any/all written content and images displayed are provided by the blogger/author, appear herein as submitted by the blogger/author and are unedited by Opera News. Opera News does not consent to nor does it condone the posting of any content that violates the rights (including the copyrights) of any third party, nor content that may malign, inter alia, any religion, ethnic group, organization, gender, company, or individual. Opera News furthermore does not condone the use of our platform for the purposes encouraging/endorsing hate speech, violation of human rights and/or utterances of a defamatory nature. If the content contained herein violates any of your rights, including those of copyright, and/or violates any the above mentioned factors, you are requested to immediately notify us using via the following email address operanews-external(at)opera.com and/or report the article using the available reporting functionality built into our Platform See More