Business24 Newspaper 23rd June, 2021 by Business24 Online

WEDNESDAY JUNE 23, 2021

IMF rules out Zimbabwe bailout

Mustapha Abdul-Hamid heads NPA See page 9

See page 13

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WEDNESDAY MONDAY MAY JUNE 3, 2021 23, 2021

Electricity demand rises 10% in 2020 despite virus

Maritime players urged to consolidate data to boost blue economy

By Benson Afful affulbenson@gmail.com

By Eugene Davis

ugendavis@gmail.com

espite the impact of the global pandemic on economic activities, demand for electricity in the country increased by 10.2 percent last year, the Energy Commission has said. According to the commission’s 2021 Energy Outlook for Ghana report, the total energy including losses consumed in the country was 19,717 GWh (Gigawatt hours) as against 17,887 GWh in 2019.

he Minister for Transport, Kweku Ofori Asiamah, has asked maritime sector players to collaborate effectively and bring together all existing data in the industry for the update of Ghana’s nautical chart. Cont’d on page 3

Cont’d on page 2

Population census results to be ready in August By Eugene Davis ugendavis@gmail.com

rovisional results from the 2021 National Population and Housing Census are expected by the end of August, Government Statistician Prof. Samuel Kobina Annim has told Parliament. The census will begin across the country from Sunday, June

Remittance flows to Ghana hits US$3.6 billion

he World Bank Migration and Development Report for 2021 has revealed that remittance to Ghana last year hit US$3.6b despite lockdowns in many of the remittances sending countries. Host countries for Ghanaian migrants include Cont’d on page 5

Prof. Samuel Kobina Annim

Cont’d on page 2

instagram.com/business24gh

Cont’d on page 2

Editorial / News

WEDNESDAY JUNE 23, 2021

Editorial

Let’s tackle cocoa-related child labour head on

lobal Civil Society, a group of civil society organisation working on human rights in the cocoa sector across the world has made some interesting revelations about child labour concerns in the local cocoa industry. The group cited a recent survey University of Chicago which showed that close to 1.5 million children are engaged in hazardous or age-inappropriate work on cocoa farms in Ghana and Cote d’Ivoire. The vast majority of these child labourers, they said, are exposed to the worst forms of child labour, such as carrying heavy loads, working with dangerous tools, and increasing exposure to harmful agrochemicals.

The continual use of children in the cocoa production process has seen widespread condemnation from several fronts, which some countries threatening to boycott cocoa made from the sweat of children. Interestingly, perpetrators of these practices use the lack of regulation as an excuse not to shoulder their own responsibility. It is a fact that child labour is still a reality on West African cocoa farms, and there is strong evidence that forced labour continues in the sector as well. It said the impact of these systems must be communicated publicly and transparently in a way that enables meaningful participation and access to remedy for workers and their

representatives. The group urges effective partnerships between producer and consumer countries are needed to work on the necessary enabling environment. These must be developed in a much more inclusive manner than previous attempts, bringing in civil society organisations, independent trade unions, local communities, and farmer representatives, they said. The time has come for collective efforts to tackle the issues with child abuse in the cocoa sector head-on. For an economy that is highly dependent on the commodity, this issue demands utmost attention from stakeholders in the agricultural space.

Electricity demand rises 10% in 2020 despite virus Continued from cover

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“Analysis conducted to determine the impact of COVID-19 on electricity demand in 2020 showed that there was a dip in demand during the partial lockdown, attributed to reduced activities in the industrial and service sectors. However, following the easing of restrictions and the announcement of electricity relief by the government on April 11, 2020, system demand returned to normal such that electricity

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Dr. Matthew Opoku-Prempeh, Energy Minister

demand in 2020 grew by 10.2 percent over that of 2019,” said the report. “This suggests that COVID-19 did not affect load much, as there has not been any significant change in the load trend in 2020,” it added. The system peak demand last year was 3,090 MW (megawatts), according to the report, an increase of 10.2 percent above the 2019 peak and almost equal to the 10.3 percent annual growth rate of system peak demand in the last five years.

Installed generation capacity, excluding embedded capacity, at the end of 2020 was 5,134 MW, an increase of 2.9 percent over 2019. The dependable capacity was 4,710 MW, 3.1 percent more than in 2019. The installed capacity increases to 5,288.1 MW (with a dependable capacity of 4,842 MW) if embedded capacity at the subtransmission (distribution grid) level is added, said the report. Touching on the outlook, the report projected a power generation capacity of 5,328.1 MW, with a dependable capacity of 4,879 MW, in 2021. The bulk (68.5 percent) of the dependable capacity will come from thermal sources, it added. The commission said considering the planned unit maintenance and fuel supply situation, it anticipates that up to 4,054 MW of capacity will be made available to meet the expected system peak demand of 3,304 MW in 2021. Hydropower and thermal plants are projected to generate 7,001 GWh (32.9 percent) and 14,112 GWh (66.4 percent) of total electricity supply in 2021. The remaining supply of 152 GWh, representing 0.7 percent, is expected to be met by other renewables, including solar PV biogas. and

WEDNESDAY JUNE 23, 2021

Population census results to be ready in August Continued from cover 27. The exercise, which will run till July 11, is meant to generate data that will be used for national decision-making and planning. The census had initially been planned for March last year but was rescheduled due to the COVID-19 pandemic. About 70,000 enumerators and supervisors will take part in the exercise, which will cost GH₵521.3m. Each enumerator is expected to be paid GH₵2,520 for the period June 13 to July 11,

whereas supervisors will receive GH₵2,940.

“For the first time, we are doing a digital census, so ahead of

the census, we procured 76,500 tablets, with over 80,000 people trained,” Prof. Annim said. “We are working towards the release of the provisional results— to give us the population headline with some basic demographics— at the end of August 2021, and by end of October 2021, we are going to come up with a summary report that gives us further disaggregation,” he added. Other reports from the census are expected to be produced in 2022. Ghana’s last census occurred in 2020.

Maritime players urged to consolidate data to boost blue economy Continued from cover According to him, the nation’s nautical chart at the moment comes mainly from port and patrol activities, a situation, he noted, requires further improvement. A nautical chart, according to the United States’ National Oceanic and Atmospheric Administration, is a map that depicts the configuration of the shoreline and seafloor. It provides water depths, locations of dangers to navigation, locations and characteristics of aids to navigation, anchorages, and other features. “Fortunately, activities such as exploration of oil and gas in

our maritime domain generate hydrographic data, hence the need to consolidate all existing data for the update of Ghana’s nautical chart,” said Mr. Asiamah in a keynote address at this year’s World Hydrography Day celebration in Accra on Monday. “We must acknowledge the enormity of the task and equally be motivated by the overwhelming benefits we stand to gain through the availability of relevant hydrographic data for the emerging blue economy,” he added. Hydrography is a branch of applied sciences that largely deals in the measurement and description of the physical

features of oceans, seas, coastal areas, lakes and rivers. It also includes the prediction of changes in the water body for the primary purpose of safety of navigation and in support of all other marine activities. World Hydrography Day is celebrated every year on June 21 to lay emphasis on multilateral cooperation and effective collaboration in data exchange, charting and standard development in the marine environment. This year’s celebration was under the theme “100 years of international cooperation in hydrography” and was meant to highlight the past, present, and future of hydrography. The Transport Minister said knowledge of the shape of the ocean basin and the nature of the seabed is critical to understand water movement within the ocean basin, which affects climate and weather patterns as well as tidal and wave action, segment transport, and underwater geohazards. “Therefore, it is evident and obvious that the absence of relevant hydrographic information may result in negative consequences. Without hydrography, ships cannot sail safely, ports cannot be built and operated, no coastal infrastructure can be developed, exploration activities cannot be attempted, [and] no maritime boundary can be delineated. There is no doubt that hydrography has played and will continue to play a significant role in the development of our marine resources.”

He lauded hydrographers for their enormous contribution to national development. Touching on Ghana’s status within the International Hydrographic Organisation (IHO), Mr. Asiamah said as a party to the United Nations Convention on the Law of the Sea, the country has ratified the IHO Convention, becoming the 92nd member state to do so and the 11th on the African continent. This is further boosted by the opening of the National Hydrographic Office (the local chapter of the IHO) under the auspices of the Ghana Maritime Authority (GMA) in 2020, following the establishment of the National Hydrographic and Oceanographic Committee in 2015. The National Hydrographic Office collates and processes all hydrographic information for the production of charts and dissemination of maritime safety information for the Ghana Ports and Harbours Authority, Volta River Authority, Ghana National Petroleum Corporation, Petroleum Commission, Fisheries Commission, Lands Commission, Environmental Protection Agency, as well as academic institutions. Mr. Asiamah assured the international community of Ghana’s commitment to continue putting in place the necessary mechanisms to build national hydrographic capacity and implement the recommended practices of international hydrographic organisations.

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News

WEDNESDAY JUNE 23, 2021

Remittance flows to Ghana hits US$3.6 billion Continued from cover the USA, the UK, Côte d’Ivoire, Italy, Germany, and Canada. The resilience of Ghanaian migrants has been commended in the face of the harsh economic impact on the top ten remittances sending countries because of the COVID-19. Madam Abibatou Wane, Chief of Mission, International Organisation for Migration (IOM), speaking at the GIZGhana Programme Migration and Diaspora Multi-Stakeholder Dialogue on Remittance in Accra. The Dialogue which was on the theme, “Leveraging Remittances for Recovery and Resilience Post-COVID-19” also marked the International Family Day of Remittances. She said the World Bank had projected that remittance flows to low and middle-income countries was expected to fall by 7 percent, to $508 billion in 2020. This is followed by a further decline of 7.5 percent to $470 billion in 2021 due to the lockdown and expected economic effects of the Covid-19 in the remittances sending countries but contrary

to expectations, remittances to Ghana rather increased. Madam Wane said in Ghana, remittances were a growing source of foreign funds, raising the standard of living for vulnerable and low-income households across Ghana. She said from a study conducted by IOM in the Ghana market, Ghana as of 2019 was the second largest recipient of remittances in Sub-Saharan Africa. Madam Wane said the flows

through official channels have increased from $117.6 million in 2007 to an estimated $3.8 billion in 2018, with remittances equate to 7.4 percent of Gross Domestic Product. “It is estimated that if monitored, remittances sent through informal channels could increase total flows by as much as 50 percent,” she said. She said the Financial Sector in Ghana, according to Findex, had gone through a period of

change over the last 5 years, with financial inclusion reaching 57 percent in 2017. Madam Wane informed that increase in mobile penetration had created opportunities for the expansion of financial services by mobile money providers, making Ghana to overtake several markets to become the fastest growing mobile money market in Africa. GNA

AMEA Power launches 50MW solar power plant in Togo

MEA Power, a subsidiary of UAE-based Al Nowais Investments (ANI), has announced the official commissioning of its 50MW solar photovoltaic (PV) plant in Blitta, Togo, marking the country’s first utility-scale renewable energy project developed by an Independent Power Producer (IPP), and one of the largest solar PV IPP plants in West Africa.

Officially named Sheikh Mohamed Bin Zayed, after His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, the PV plant has been delivered in record time, with just 18 months between the signing of the Power Purchase Agreement (PPA) and commencement of commercial operations. Built by AMEA Togo Solar, a subsidiary of AMEA Power, the

plant, located 267km from Togo’s capital, Lomé, has a planned production of nearly 90,255 MWh of power per year. This will supply power to approximately 158,333 Togolese households per year, with 9% of energy generation feeding into the local Blitta distribution network, enough to meet demand in the area. The power plant will be operated for 25 years by AMEA

Togo Solar, saving more than 1 million tonnes of CO2 emissions over the course of its life. The plant is instrumental in supporting Togo’s ambitious US$8 billion 2018 – 2022 National Development Plan (NDP), which aims to achieve universal access to electricity by 2030 and to increase the share of renewables in the energy mix to 50%. Hussain Al Nowais, Chairman of AMEA Power, commented: “We are delighted to launch the Sheikh Mohamed Bin Zayed PV plant and extend our congratulations to all those involved. Togo was an obvious choice for AMEA Power’s first operational power plant in Africa, with it being an important trade hub in West Africa, along with the government’s progressive regulatory framework for renewable energy projects, which was key in ensuring the completion of the project in a fast, efficient, and responsible manner. This is an incredibly exciting time for AMEA Power, and we are on track to becoming one of the fastest-growing renewable energy IPPs, with several additional projects set to achieve financial close in 2021.”

WEDNESDAY JUNE 23, 2021

News

WEDNESDAY JUNE 23, 2021

Covid-19 vaccines: World Bank to monitor Ghana’s procurement regime By Henry G. Martinson

he World Bank has assured that it will regularly monitor the progress made by government on the procurement of Covid-19 vaccines for Ghanaians. According to the Bank, it is keen on monitoring the progress made in order to ensure that there is proper value for money. So far, the Bank has approved US$435 million for Ghana via the COVID-19 Emergency Preparedness and Response Project which is targeting the acquisition of vaccines from a range of sources to support Ghana’s target to vaccinate 17.7 million people. Speaking to journalists in Accra, Pierre Laporte, the Country Director of World Bank, assured that: “in terms of pricing, we have an idea of the range of prices, now it is a question for the Ministry of Health to manage properly and adequately and also our procurement team will also look at that and if it is overpriced, we will not approve it.

“We are working closely with COVAX, Africa Union platforms and others and these are platforms that I know the Ministry of Health is also looking at. There are options to go through these platforms or to go directly to the manufacturers. The World Bank is supplying the vaccines through these platforms and we are counting the government to make the right decisions on pricing,” he

emphasised. Commenting on whether the World Bank is likely to support local manufacturing of the vaccines as the Government of Ghana wishes to undertake, Mr. Laporte indicated that: “in this specific project no, but does the World Bank supports local manufacturing of the vaccines? Absolutely, the branch of the World Bank that deals with

the private sector, the IFC they have already indicated their willingness to support the process in which ever country this happens and if Ghana has a good proposition am sure the IFC will support it. But in this project we do not deal with that, we only deal with procurement and distribution of vaccines,” he stressed.

Fifty SMEs benefit from cosmetic formulation training

he West Africa Competitiveness Programme (WACOMP), a programme funded by the European Union and implemented by the United Nations Industrial Development Organization in collaboration with the Global Shea Alliance, has trained 50 SMEs in cosmetic product formulation to promote industry sustainability, quality practices, and standards. The training held on Saturday is part of activities implemented under the WACOMP–Ghana SubContracting Matching Scheme being implemented by GSA to provide technical assistance to SMEs in the cosmetic and personal care value chain to strengthen their competitiveness. Participants were taken through ways of exploring the various functions of ingredients for a consumer, and how to leverage it to create products that are desirable by customers particularly formulation for Sheabase lotions. The cosmetics producers were also given information on different ingredient suppliers that cosmetic companies have access

to in Ghana and took part in B2B sessions to exchange contacts with ingredient suppliers. Aaron Adu, the Managing Director of Global Shea Alliance in his opening remarks said the training in collaboration with WACOMP has provided technical assistance to SMEs in the cosmetic and personal care products value chain.

“At the end of the training, you will be able to develop your unique cosmetic formulae with practical demonstration skills on skin lotion formulation,” he assured. Charles Kwame Sackey, the Chief Technical Advisor of WACOMP-Ghana recounted the various training since the collaborative effort between

Global Shea Alliance and WACOMP while stressing the importance of the formulation training. “Since September 2020, 150 SMEs in the cosmetic and personal care value chain’s capacity have been built on branding and marketing, packaging, labelling and standard compliance to enhance their ability to produce cosmetic products that can compete internationally,” he revealed. “The last in the series of capacity building which focuses on product formulation training seeks to equip SMEs with the functionality of different ingredients in formulations in line with customer expectations and to sustain best practices in the cosmetic and personal care products value chain,” he explained. He advised the SMEs to adopt the Good Manufacturing Practice (GMPs) and relevant product standards from Ghana Standards Authority (GSA) to enhance their compliance to standards in the production of quality cosmetic products.

WEDNESDAY JUNE 23, 2021

Companies

WEDNESDAY JUNE 23, 2021

Eni, partners support Ghana Health Service COVID-19 fight

ni Ghana, on behalf of its partners Vitol Upstream and Ghana National Petroleum Corporation (GNPC), in the Offshore Cape Three Points (OCTP) project, has donated some items to the Ghana Health Service (GHS) to help them in the fight against Covid-19 pandemic. The items include 66 laptops and 20 monitors and are expected to support the fight against COVID-19 through the implementation of the Surveillance Outbreak Response Management and Analysis System (SORMAS). The equipment will be deployed at GHS headquarters and in each health directorate of the 16 regions of Ghana, and will help to ensure reliable health data gathering, processing and transmission. The initiative is intended to contribute to the coordination efforts by Ghana Health Service while ensuring a timely provision of health services and preemptive actions in order to curb the spread of Covid-19 across the country. Eni Ghana’s Managing Director, Giuseppe Valenti, said reliable

data and speedy communication are critical ingredients for effective management of this pandemic hence the company’s decision to support the GHS with computers and video conferencing facilities. The Director-General of GHS, Dr. Patrick Kuma-Aboagye said the service is grateful to Eni and the OCTP partners for their support, which is going to help the service communicate appropriately to all regional

health directorates during pandemic response and also help to improve e-surveillance and data capturing. Since the outbreak of the pandemic, Eni Ghana and its partners have donated medical equipment and consumables including ventilators, medical tents, nose masks and other personal protective equipment to health facilities including the Korle Bu Teaching Hospital in Accra, the Ghana Health Service,

Mustapha Abdul-Hamid heads NPA

resident Nana Akufo-Addo has appointed Dr. Mustapha Abdul-Hamid as the Chief Executive Officer of the National Petroleum Authority (NPA), the regulator of the downstream energy sector. Dr. Abdul-Hamid takes over from Hassan Tampuli, who is now MP for Gushegu and a Deputy Transport Minister-designate. A letter from the President to Dr. Hamid said the appointment has come at a time when the petroleum sector is faced with challenges amidst the coronavirus pandemic. The appointment takes effect from July 1, 2021. The 50-year-old Dr. Hamid previously served in the firstterm government of President Akufo-Addo as the Minister of Information, and subsequently as the Minister for Inner City and Zongo Development Profile of Mustapha Hamid Mustapha Abdul-Hamid was born in the Northern Regional capital of Tamale on the 14th of

June 1971 to Hamidu Yakubu and Adama Musah. He attended the Station Experimental Primary School in Tamale from 1976-1982. He then went to Bawku Secondary School for his Ordinary Level from 19821987. Mustapha Abdul-Hamid entered Tamale Secondary School in 1987 for his Advanced level. In 1991, he entered the

University of Cape Coast to pursue a Bachelor of Arts course with English Language, Classics and Religious Studies. He eventually majored in Religious Studies, obtaining a Second Class, Upper Division. He also pursued a Diploma in Education concurrently with the Degree program. He obtained an M.Phil in Religious Studies from the University of Cape Coast in

St Martins De Porres Hospital in Eikwe and the Ellembelle District Health Directorate, in an effort to contribute to strengthening the provision of health services in the fight against COVID-19. Eni is a global integrated energy company operating in over 60 countries. It has been present in Ghana since 2009 with its upstream activity, and currently accounts a gross production of about 70,000 barrels of oil equivalent per day.

2003. In September 2017, he completed and was awarded a PhD in Religious Studies by the University of Cape Coast. Mustapha Abdul-Hamid has worked in various capacities as a Strategy Planning Manager and Client Service Manager with various Advertising and Marketing Companies such as the Media Majique and Research Systems and Ghana Advertising and Marketing Company. He also worked with and edited newspapers such as the defunct High Street Journal and the Daily Statesman. He was also the News Editor at Choice FM, a radio station based in Accra whose frequency was eventually sold to the Dr. Kwabena Duffuor media group and has now become Kasapa FM. Hamid served as a Minister for Information and later Minister for Inner-City and Zongo Development. Before his ministerial appointment in March 2017, he was a Lecturer at the Department of Religion and Human Values at the University of Cape Coast.

WEDNESDAY JUNE 23, 2021

News

WEDNESDAY JUNE 23, 2021

World Bank and AU team up to support rapid vaccination for up to 400 million Africans

he African Finance Ministers and the World Bank Group met today to fast track vaccine acquisition on the continent and avoid a third wave. In a boost to the African Union’s target to vaccinate 60% of the continent’s population by 2022, the World Bank and the AU announced that they are partnering to support the Africa Vaccine Acquisition Task Team (AVATT) initiative with resources to allow countries to purchase and deploy vaccines for up to 400 million people across Africa. This extraordinary regional effort complements COVAX and comes at a time of rising COVID-19 cases in the region. World Bank financing is available to support the purchase and deployment of doses secured by AVATT. “The World Bank is very pleased to support African countries through this partnership with the African Union to quickly provide hundreds of millions of doses,” said World Bank Group President David Malpass. “Working together, we can expedite doses to countries and support deployment. Countries

urgently need more pathways for acquiring vaccines that match their needs and have early delivery schedules.” “As a result of this joint initiative between the World Bank and African institutions such as the Africa Import Export Bank and the Africa Centre for Disease Control, we now have the capacity to vaccinate at least 400 million people, or 30% of our population of 1.3 billion,” said Strive Masiyiwa, African Union Special Envoy and coordinator of the AVATT. “We really appreciate the extraordinary partnership on this initiative between the AU Vaccine Champion, President Cyril Ramaphosa, and David Malpass, the President of the World Bank.” The World Bank has US$12 billion in vaccine financing available to help countries purchase and distribute vaccines and address readiness issues. The World Bank has already approved operations to support vaccine roll out in 36 countries. By end June, the World Bank expects to be supporting vaccination efforts in 50 countries, two thirds of which are in Africa.

The World Bank also has strong partnerships with regional institutions such as the Africa Center for Disease Control, West African Health Organization, and the African Union Commission to enhance crossborder collaboration on disease surveillance, preparedness and response. The World Bank-financed COVID-19 vaccine operations allow countries to purchase vaccines through COVAX, through regional initiatives, and through bilateral procurement

from manufacturers. As such, the Bank has been working closely with AVATT to see that countries in Africa can use World Bank financing to purchase COVID-19 doses through the AVATT initiative as well. The goal of the African Vaccine Acquisition Task Team, which is an initiative of the African Union Commission, Africa CDC, Afreximbank, the AU Special Envoys for COVID-19, and UNECA, is to provide the continent with sufficient and timely access to COVID-19 vaccines.

MTN Ghana CEO admonishes youth to be ambitious

“

If you believe strongly in something then there would be no limit. Many at times we just don’t believe enough”. These were the words of the CEO of MTN Ghana, Selorm Adadevoh, as he took his turn as the guest speaker at the virtual convocation of the Springboard Roadshow. Selorm Adadevoh, in encouraging the teeming youth who joined the virtual convocation, noted the need for the youth to break away from the limitations they place on themselves. He urged the youth to be positive-minded and believe in their abilities to bring about change. He said when people believed in themselves, there will be no limits to the successes they could achieve. Narrating his journey to becoming the CEO of MTN Ghana as an example, Selorm recounted how he left Hewlett-Packard (HP) Consulting at a point when he was earning so much to come to Ghana to pursue his dream of becoming a CEO. As a result, he dedicated time to acquire more knowledge to place him in

Selorm Adadevoh

a better position to achieve that dream. He said, “ the risk we take and the choices we make in life determines our success ultimately. Even if you have bumps on the road, you need to persevere if you truly believe in your cause and journey. ln pursuit of my dreams and vision,

I took several risky decisions because I strongly believed,” he said. Mr. Adadevoh used the occasion to share several attributes and traits of a leader. He mentioned resilience as key to leadership. He explained, “building trust is a fundamental value in leadership shaped by consistency and not

intensity. The ability to stay focused and not give up is a key trait of leadership.” Selorm noted that while challenges would come along the way in the leader’s journey, the youth needed to be bold and determined, while remaining focused on their ultimate objectives. The Executive Director of the Springboard Road Show Foundation, Mrs. Comfort Ocran, addressed participants and explained that after years of inspiring and mentoring many young people to go into entrepreneurship, the organization decided to take a new initiative this year. The initiative dubbed, the ‘Springboard Youth Dialogue’ is meant to connect young people to opportunities and policy interventions meant to accelerate their progress, especially in the area of business. Other speakers on the day were Mr. Ken Ofori-Atta, Minister of Finance who was the Special Guest Mentor and Nathalie Gabala of the Mastercard Foundation.

WEDNESDAY JUNE 23, 2021

International

WEDNESDAY JUNE 23, 2021

IMF rules out Zimbabwe bailout

he International Monetary Fund will not give Zimbabwe any financial support despite the government having no arrears with the fund for almost five years. Fund staff spent two weeks this month discussing the southern African country’s economy with government officials, and said afterwards that Covid-19 has had a serious impact. Following a destructive cyclone in 2019, a protracted drought and the pandemic have “taken a severe toll on the economic and humanitarian situation,” Dhaneshwar Ghura, who led the IMF staff team, said. “Despite the authorities’ timely actions to support the most vulnerable groups and businesses during the pandemic, real GDP contracted by 4% in 2020, after a 6% decline in 2019,” he said. A rebound of 6% is expected in 2021, according to IMF estimates, boosted by good crop yields, increased energy production and recovery in the manufacturing and construction sectors. But although uncertainty

remains high, Ghura said, with the outlook depending on Covid19’s continued impact and the pace of vaccinations, the fund will limit itself to giving technical support and advice. “Zimbabwe has been a fund

member in good standing since it cleared its outstanding arrears to the IMF in late 2016,” he said. “However, the IMF is precluded from providing financial support to Zimbabwe due to an unsustainable debt and official

external arrears.” Public and publicly guaranteed external debt stood at 83% of GDP in 2019, of which 61% of GDP was external arrears, according to a World Bank from earlier this month. The size of its debt burden limit the government’s access to concessional finance (such as is the case with the IMF), the same report said, and coupled with “shallow” domestic financial markets this makes financing debt difficult. “A fund financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and obtaining financing assurances from official creditors,” said Ghura. A plan of reforms aimed at fostering economic stability and growth, poverty reduction, governance improvements and boosting the social safety net would also be required, he said. Credit: Publicfinancefocus.org

Luxembourg’s ‘extraordinary wealth’ mitigates G7 tax proposal risks

uxembourg’s credit outlook will not be heavily affected by the G7’s international corporation tax proposals due to extraordinary levels of wealth, according to ratings agency Moody’s. Earlier this month, G7 finance ministers agreed in principle to a global tax rate of 15% levied on large companies, alongside a redistribution of receipts dependent on national sales. Despite being a tax haven, Luxembourg is unlikely to be heavily affected by the tax proposal, according to a rating report from Moody’s which affirmed an ‘Aaa’ rating. The report said: “Luxembourg is exposed to international tax initiatives, including the recent commitment by the G7 to a global minimum corporate tax rate of 15%. “If implemented, this commitment would be mildly credit negative for Luxembourg, which has used tax policy as one component of a broader competitiveness strategy. “However, the country’s economic strength goes beyond its tax advantages and encompasses its multicultural workforce, stable macroeconomic environment,

liberal immigration policies and high-quality infrastructure.” The European nation entered into Covid-19 with strong growth averaging 3.1% over the last decade, outpacing both euro area (1.4%) and Aaa-rated peers (2.3%), allowing Luxembourg to build up significant levels of wealth, the report said. GDP contracted by 1.3% last year, lower than the euro area average (-6.5%), and due to the ability for most residents to work from home, restrictions were eased in April 2020, the report added. Moody’s said that authorities implemented a sizeable policy response to provide broad support to households and businesses in the acute phase of the crisis, which later supported the recovery. It said that due a smaller economic shock than many of its peers, the deficit doubled but still remained lower at around 4.1% of GDP last year. This saw debt increase by 2.9 percentage points to 24.9%, which was notably less than 12.5 percentage point rise in the European Union and 8.2 percentage point average increase for Aaa-rated peers , the report

said. Luxembourg’s perfect rating is supported by a strong fiscal framework anchored to European standards, with reviews of budgetary plans by both the public court of audit and its central bank, Moody’s said. Luxembourg’s GDP is forecast to grow by 4% in 2021 and 3.5% in 2022, after the recovery accelerated in the first quarter of this year, driven by investment,

public consumption and net exports, the report said. Moody’s said it expects Luxembourg’s deficit to narrow to 2% this year, before returning to balance in 2023. Due to lower annual deficits, debt will remain low and peak just above 25% of GDP in 2021, below the government’s self-imposed 30% ceiling, Moody’s added. Credit: Publicfinancefocus.org

WEDNESDAY JUNE 23, 2021

Feature

WEDNESDAY JUNE 23, 2021

Brexit’s collateral damage

By Chris Patten

confess straightaway: I am not a football fan. Too often, matches fall well below the sport’s claim to be “the beautiful game.” Nonetheless, I am dutifully watching some of the current European Championship. Naturally, I always want England to win, though I hate how English fans boo other countries’ national anthems. And, being British, I would support Scotland, Wales, or – though they did not qualify this year – Northern Ireland if they were playing a country from outside the United Kingdom. My point is that I never want my country to do badly. And even though I passionately opposed Brexit, I want Britain to fare as well as it possibly can outside the European Union. But staying silent in the face of evidence that it is not amounts to the crudest and most mendacious sort of nationalism. The UK has already incurred steadily rising costs as a result not only of Brexit but of a hard Brexit that people did not necessarily vote for in the June 2016 referendum. Yet, that is what we got in order to appease Britain’s right-wing media and politicians and to pave the way for Boris Johnson to become prime minister. I will not itemize here Britain’s Brexit-induced loss of trade with the EU in food, manufactured goods, and services, which cannot be blamed on the COVID-19 pandemic, nor the UK’s worsening labor shortage – not least in the agriculture

and hospitality sectors. As the OECD has pointed out, Britain is emerging from the pandemic in worse shape than most of its competitors. But I do want to highlight three damaging consequences of Brexit. First, its advocates claimed that leaving the EU would enable Britain to “take back control.” If that phrase meant anything, it suggested that Parliament would have more say in running our national affairs. In practice, it means nothing of the sort. For example, the government recently agreed to a free-trade deal with Australia. Leave aside the fact that the pact’s likely economic benefits to the UK over a 15-year period are so small, even by the government’s estimates, that they amount to a rounding adjustment. Just as significant is that – despite the government’s promises during the passage of the Brexit legislation – Parliament cannot scrutinize, much less mitigate, the deal’s impact, which will be particularly harmful for small farmers in Wales and Scotland. Second, the government was keen to reach an agreement with Australia to show that Britain can negotiate trade deals on its own, without the EU. Although Johnson had hoped to begin with India, and planned to visit the country to discuss a deal with Prime Minister Narendra Modi, the visit became inadvisable as COVID-19 ravaged South Asia. Yet, in the hope that it might still go ahead, the British government delayed imposing a travel ban on people coming to the UK from India, despite

barring visitors from Bangladesh and Pakistan. There was no plausible public-health rationale for this distinction. In fact, given its COVID-19 figures, arrivals from India arguably should have been prohibited first. As many pointed out, the thousands of travelers who arrived in the UK from India during the period when other South Asian visitors were banned must have seeded and spread what is now called the Delta variant of the coronavirus. COVID-19 infections in the UK have increased significantly in the last few weeks, obliging the government to delay the further planned easing of lockdown restrictions in England and deterring other countries from opening their borders to people arriving from the UK. So, this new surge in the pandemic looks like part of the collateral damage caused by the government’s attempt to make the political case for Brexit and trade. Third, trust in Britain and Johnson is declining fast as the government denies the consequences of the agreement it reached regarding Northern Ireland after the UK’s departure from the EU. In those negotiations, Britain wanted to minimize the inconvenience of accessing the EU’s single market while maximizing its ability to establish its own rules and standards. The UK’s only land border with the EU is the one between the Republic of Ireland and Northern Ireland. Avoiding a hard border on the island is a fundamental part of the 1998 Good Friday

Agreement that brought peace to Northern Ireland. But Northern Ireland cannot remain outside the EU’s customs union and regulatory regime and at the same time maintain an open border with the Republic. For this reason, Johnson negotiated and signed a protocol that meant Northern Ireland received, in a sense, the best of both worlds. It stayed in the EU’s customs union and partly in its single market while also remaining a part of the UK market. This was despite the government’s promises to Northern Ireland’s Unionists that there would not need to be any kind of border between Great Britain and Northern Ireland with customs and other checks. Johnson now denies the promises he made and is threatening to tear up the protocol, blaming the EU for the problem he has caused. The EU certainly has scope for flexibility in managing the border, and I hope it will show some. But the UK government can show even more latitude, for example by accepting that Northern Ireland might follow EU standards for food and agricultural products. After all, the government says it does not want to see lower standards in Britain than in Europe. But the most important thing for Johnson to do is to demonstrate trustworthiness in international negotiations. Sadly, a growing number of world leaders, as well as people in Britain and Northern Ireland, have come to doubt that he will keep his word when he has given it.

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WEEKLY MARKET REVIEW FOR WEEK ENDING JUNE 18, 2021

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