The recent peaceful elections Ghana experienced could count for something very important for the economy should the government decide to borrow from the international capital market, an economist at the University of Ghana Business School, Prof. Patrick Asuming has noted.
The economist maintains that the peace the country has enjoyed before, during, and after the crucial elections is a profound statement and a great signal the country has sent to investors.
Speaking in an interview monitored by The High Street Journal, Prof. Asuming argues that the success chalked with the elections as well as the calm pre and post-election atmosphere will enhance investor confidence and position Ghana for favourable loan agreements from investors.
Already investor confidence in the economy has seen an upward tick immediately after the elections as the government exceeded its treasury bill target. This over-subscription came after four weeks of successive under-subscription of the government’s short-term instruments. The under-subscriptions ahead of the election, some analysts explained signified the uncertainty shrouding the elections hence the “stay back and watch approach” by many investors.
Even successive increases in the interest rates on these instruments could not lure the investors leading to significant revenue shortfalls anticipated from the bills. However, there was a massive rebound after the elections as the government’s target was exceeded by GHC1.35 billion representing an excess of 19%. This signifies that investors are regaining confidence in the economy due to the peaceful polls.
This development in the short-term bills market buttresses Prof. Asuming’s views that the peaceful elections has bolstered Ghana’s position as a safe haven and stable destination for capital inflows.
“I think the goodwill and the peaceful elections is going to count for something. Before the election, the tension was there to see, and the manner in which, especially within 24 hours of the election, there had been a concession, and then all the tension seemed to die down. I think investors will look at that and say, okay, at least the political stability is expected to continue, so Ghana is still a worthy place to put your funds. So that definitely counts for something,” the economist explained.
The peaceful elections, the economist is convinced will translate into tangible benefits for Ghana’s credit ratings on the international capital market as political stability is a priority for many investors.
Already the next administration has given a hint of a possible return to the Eurobond and other international avenues to borrow. Leading member of the NDC and former finance minister, Seth Terkper has noted that considering the current debt overhang and the state of the economy makes procuring loans inevitable in the NDC resetting agenda.
With these peaceful elections strengthening Ghana’s democracy and political stability, Prof. Asuming is optimistic that it will serve as a goodwill for the government to source more favourable and less costly loans for socio-economic development.
