Nairametrics| Ghana’s central bank has cut interest rates by 2%, the biggest rate cut in five years. Interest rate is now 23.5% from 25.5%. Inflation in the country has also slowed to 13.2%, its lowest rate since 2013. Ghana’s interest rate is now at a 10% premium to inflation. In Nigeria, our own version of interest rate, MPR, is 14% compared to inflation rate of 17.78%.
Ghana has also decided to cut taxes on fuel to further stimulate growth in the country. GDP growth estimates for 2016 are put at 3.6%. The slowest in three decades. Nigeria’s economy is currently in recession for the first time in over 25 years precipitated by the fall in crude oil prices which is the country’s major source of foreign exchange.
Nigeria on the other hand is facing multiple headwinds. Inflation remains high at over 18%, due to massive increases in petrol prices and an over 30% devaluation of the naira last year. Interest rate has also been left unchanged at 14%. Ghana’s Cedi has appreciated by 3.8% in March alone against the dollar. Nigeria’s revaluation policy has had a positive effect as the naira currently trades between N380-N400 to a dollar. Compared to N520 a few months back.
While Ghana has been able to access an IMF loan of $1 billion to boost its currency needs, Nigeria has yet to conclude discussions with the world bank on a possible loan. The second tranche of the $1 billion African Development Bank (ADB) loan has also been put on hold. Oil prices which hit a high of about $50 dollars a barrel, have started to trend downward again. Despite efforts by Organization of Petroleum Exporting Countries (OPEC) to maintain price cuts. Ghana seems to have luck and the markets on its side.