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Bond Market News
Ghana’s Dollar Bonds Rally after Passing Key E-Levy Tax Law
March 30, 2022
Ghana approved a tax on electronic payments (e-levy), an important law by the government to reduce its budget deficit this year. Government has the budget-deficit target of 7.4% of GDP this year and 12.1% last year. The e-levy proposed by finance minister Ken Ofori-Atta in November was passed after he cut it to 1.5% from 1.75%. Before the revision, the e-levy was projected to boost revenue to 15.4% of GDP by end-2022 from a forecast of 12% last year. After the e-levy announcement mobile-money transactions in Ghana fell 13% to GHS 76.2bn ($10.1bn). Previously, investors were concerned about the credibility of Ghana meeting its fiscal targets. Its dollar bonds sold-off from 85-90 cents on the dollar to around 60 cents. Kevin Daly, an investment director at Aberdeen Standard said, “The recent Ghana bond rally may reflect some of the measures the government put in place recently but Ghana risk premiums are also benefiting from the broader risk rally on the back of better headlines on the Russia-Ukraine conflict”.
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