"More tough times ahead for Ghana\u2019s cedi as debt workout drags"

" More tough times ahead for Ghana\u2019s cedi as debt workout drags \r\n\r\nThe worst may not be over for Ghana\u2019s cedi, Africa\u2019s third-worst performing currency this year.\r\n\r\nAnalysts said the unit, which has already lost more than 7% against the dollar, could continue to weaken despite the International Monetary Fund\u2019s $3 billion bailout following the country\u2019s 2022 default.\r\n\r\nGhana has secured workouts with its domestic and official creditors but is still trying to hammer out a deal with eurobond investors. And while the country\u2019s international reserves have improved to a 10-month high of $5.9 billion in December, they remain too thin to effectively defend the currency.\r\n\r\n\u201cThose are weak reserve levels that no one expects to support currency stability,\u201d said Courage Boti, an economist at GCB Capital Ltd. in Accra, who said the cedi would have fallen further already if Ghana had not suspended foreign debt payments. \u201cMoreover, elections this year is a big risk in terms of foreign exchange demand pressure,\u201d he said. The vote for a new president is due to be held in December.\r\n\r\nGhana announced a moratorium on its foreign obligations in December 2022, as it grappled with the aftermath of the Covid-19 pandemic and the shock to prices caused by Russia\u2019s invasion of Ukraine. It has completed a domestic bond revamp and reached an agreement in principle with bilateral lenders in January to rework $5.4 billion of loans. It is still negotiating with eurobond holders who are owed $13 billion.\r\n\r\nForeign investors might look more kindly on Ghana investments once the the debt restructuring is completed, but political risk ahead of the election will be a reason for continued caution, Boti said.\r\n\r\nThe economy of the world\u2019s second-biggest cocoa producer depends on imports of everything from tooth-picks to heavy machinery, and they are expected to increase ahead of the vote. The government projects GDP growth to quicken to 2.8% this year from 2.3% last year.\r\n\r\n\u201cOne of the policy priorities of the central bank under the IMF program is to rebuild foreign reserves,\u201d said Kweku Arkoh-Koomson, an economist at Databank Group. \u201cThis means Bank of Ghana will not necessarily intervene on the market the way it should but just to smoothen volatilities,\u201d he said, forecasting the cedi to weaken to 13.7 per dollar by the end of the year.\r\n\r\nThe Cedi traded almost unchanged at 12.9267 per dollar at 10:41 a.m. in Accra, the capital, according to data compiled by Bloomberg."

"More tough times ahead for Ghana\u2019s cedi as debt workout drags"

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