The World Bank Group has revealed that Ghana’s portfolio investment in the 2018 fiscal year declined to 1.2 percent of GDP in 2018 from 4.4 percent of GDP in the year 2017.
According to the 4th Ghana economic update document released by the World Bank, the Ghanaian cedi came under pressure resulting in a reversed flow of portfolio investment in the year 2018.
“Lower than expected foreign capital inflows narrowed the capital and financial account to an estimated surplus of only 1.7 percent of GDP. This was driven by a rapid decline in inflows through portfolio investment.”
Henry Kerali, World Bank Country Director for Ghana mentioned that Ghana’s economic growth is expected to be stronger in 2019, but over the medium term, a more diversified economy is vital.
According to him, addressing the remaining vulnerabilities in the financial sector is urgent and will require additional efforts in 2019.
Also, Michael Geiger, Senior Economist and co-author of the 4th Ghana economic update report indicated that “an effective domestic resource mobilization strategy is an urgent priority as the reduction of expenditures, including public investment, in response to revenue underperformances may not be suitable adding that the next election cycle in 2020 will be an important test to fiscal sustainability.
Meanwhile, Carlos Vicente, Senior Financial Sector Specialist and co-author of the report stated that in order to strengthen resilience and stability of the banking system in the medium term, the government of Ghana should continue strengthening supervision, including through enforcement of prudential standards, implementation of new capital requirement directives, introduction of risk management and corporate governance.