The Bank of Ghana would soon announce a threshold for foreign investors who participate in the country’s domestic bonds, Economy Times has learnt.
This is aimed at reducing the rate at which foreign investors participate in the local bond market and also to reduce the vulnerabilities that the economy endures. Currently, the country’s total domestic debt of GHC101.4 billion, 30 percent of this is been held by foreign investors.
Foreign investors participating in the local bond market has been a major concern to the economy especially when they redeem their investment prematurely which normally puts pressure on the local currency, the cedi.
The large foreign investor component has made the economy vulnerable to the sentiments of those non-resident investors.
The stock of public debt rose to 60.3 percent of GDP (GH¢208.6 billion), at the end of September 2019 compared with 56.8 percent of GDP (GH¢170.8 billion) at the end of September 2018. Of the total debt stock, domestic debt was GH¢101.4 billion, of which GH¢11.2 billion (3.8 percent of GDP) represented bonds issued to support the financial sector clean-up, while external debt was GH¢107.2 billion, with a share of 51.4 percent in the total public debt.
The foreign exchange market has continued to remain calm since the sharp depreciations in the first quarter of the year. In November, the Ghana cedi has depreciated by 10.4 percent against the US dollar compared with an 8.1 percent depreciation for the corresponding period in 2018. Against the British pound and euro, the Ghana cedi cumulatively depreciated by 11.2 percent and 7.4 percent respectively, compared with 2.6 percent and 2.8 percent over the corresponding period in 2018. In trade-weighted terms, the real effective exchange rate continued to be broadly aligned with the underlying fundamentals.