'1992 excesses will not be repeated' - IEA
Reduction in interest rates had adverse effects on La Community bank
'1992 excesses will not be repeated' - IEA
Accra, (Greater Accra) 26 July '99
The Institute of Economic Affairs (IEA) on Friday predicted that the economic excesses recorded in the 1992 general elections are unlikely to be repeated next year.
The institute feared the impact the absence of a defined campaign financing law could have on the economy as there is no clear distinction between state funds and party coffers.
"Therefore, it is likely that the broad deficit will fall within the range of 5.5 per cent and 6 per cent as compared to the projected 5.2 per cent".
Charting the Prospects and Projections for the Future in its Annual Economic Review and Outlook for 1998, the Institute, a non-profit donor-sponsored public policy research body, said this will be possible to the extent that dramatic decline in the rate of expenditure growth in 1998 can be credited to fiscal and monetary restraints.
It said the ability of the Bank of Ghana to check government borrowing and the re-introduction of the Value Added Tax (VAT) regime can offset mechanisms against anticipated increases in expenditure.
The Review said the boundaries of fiscal discipline will be "sorely tested in 2000 and, to some extent, in 1999".
It noted that domestic expenditures could be expected to accelerate, as domestic interest payments grow in response to the increase in domestic debt and relatively high interest rates.
The Review, however, said there is real danger that fiscal and monetary controls enjoyed last year will be threatened this year, viewed against the huge wage demands that hit the country in 1992.
On inflation, the IEA said the rate of domestic inflation could be influenced by both domestic and external factors.
"At the external level, exogenous shocks such as sustained increases in oil prices and other imports will, all things being equal, in variably increase the inflation rate.
"The behaviour of the nominal exchange rate will also influence the rate of inflation".
The Review said rapid depreciation of the Cedi in relation to foreign currencies would increase the domestic currency price of imports and thus fuel inflationary impulses while a stronger Cedi would have a reverse effect.
On the domestic level, trends in the growth of money supply and performance of food crops constitute the main inflationary impulses, citing the printing of Cedis and the inability of the Central Bank to sterilise capital inflows to finance cocoa purchases in the past as one of the major factors.
The IEA said gloomy commodity price trends for cocoa and gold in particular suggest that the trade deficit will deteriorate in the upcoming year unless lower prices for traditional commodity exports are offset.
"The deterioration will, however, be moderated due to forward sales of gold and cocoa on the world market".
But current events have made other analysts more sceptical, saying lower prices will linger on for a much more protracted period.
The Services sector is expected to continue its dominance in the growth process while the agricultural sector, the most dominant, is not expected to repeat its 5.3 per cent growth rate of 1998.
This, among others, will compromise overall GDP growth rate that is not expected to exceed five per cent.
GRi../
Accra (Greater Accra) 26 July '99
The Security Regulations Commission (SRC) has affirmed the decision of the Ghana Stock Exchange (GSE) to expel United Securities Trust Limited (USTL) and revoke the Dealer's and Investment Advisers Licenses issued to USTL.
It has, therefore, directed that USTL closes all accounts of clients and return all clients' monies and assets to them on or before July 30 in accordance with Section 62 (2) (b) (vi) of PNDCL 333.
A statement by Dr Charles Asembri, Director-General of the SRC, warned the investing public that USTL can no longer carry out the business of dealing in securities and that no one should transact business with the company except to recover any monies or assets in its possession.
The SRC assured the public that it will continue to work with th Ghana Stock Exchange in its efforts to maintain the integrity of the capital market and will not hesitate to sanction any market operator that violates the provisions of the securities industry laws and regulations.
On June eight, the GSE Council expelled USTL from its membership on the grounds that it was in gross violation of Regulations 42 and 44 of the Exchange's Membership Regulations, 1991 (LI 1510) in that it had misappropriated certain funds lodged by Enterprise Insurance Company.
GRi../
Reduction in interest rates had adverse effects on La Community bank
Accra (Greater Accra) 26 July '99
Mr Emmanuel Noi Nortey, Chairman of the Board of Directors of the La Community Bank said on Friday that high operating cost and reduction in interest rates by the central bank had an adverse effect on the bank's performance in 1998.
Despite this and huge capital expenditure, the bank managed to operate within the stipulated minimum capital adequacy ratio.
He was speaking at the bank's 11th annual general meeting in Accra.
Mr Nortey said the bank's expenditure increased by 23 per cent from 527 million cedis to 653 million cedis but could not match total income, which went up 12 per cent from 1,036 million cedis to 1,162 million cedis.
He described the 12 per cent yield as very minimal saying, that this was the result of reduction in call deposit and Treasury bill rates and the inability of the bank to increase it investment portfolio due to fixed capital expenditure on its new premises.
As a result, the bank failed to live up to its policy of ensuring a steady growth in dividend and thus declared a-20 cedis dividend per share amounting to 36.32 million cedis as against a total dividend of 90.81 million cedis paid in 1997.
The bank declared a dividend per share of 60 cedis in 1997.
The total net profit after tax for 1998 amounted to 443.8 million cedis compared to 458.4 million cedis for 1997.
Mr Nortey told the shareholders that the use of the new premises is expected to enhance volume of business and this would lead to growth in total income for increased dividend in future.
However, the bank's plan of becoming a commercial bank in the next three years cannot be achieved because new regulations by the central bank such as the five billion Paid-up Capital is too high, the Chairman said.
"Our objective of becoming a fully fledged commercial bank in the next three years will have to be shelved for the time being.
"The option now left for us is to explore possibilities of establishing agencies".
Mr Nortey expressed the hope that the bank would be fully computerised by the year 2001 since the programme has reached an advanced stage.
Mr Isaac Amartei, General Manager, was formerly elected director of the bank to replace Mr Hector Quaye who resigned last year.
GRi../
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