Ghana’s highest court will probably uphold President John Dramani Mahama’s election win, giving him the authority to rein in the budget deficit and manage the worst-performing West African currency this year, according to Eurasia Group.
The Supreme Court is set to rule tomorrow on a bid by opposition leader Nana Akufo-Addo, 69, to overturn the result of a December vote he lost by almost 326,000 ballots. Akufo-Addo’s New Patriotic Party alleged that thousands of votes cast were invalid and counting was marred by irregularities. Mahama, 54, won 50.7 percent of votes.
Upholding Mahama’s victory “will eliminate the uncertainty” for investors, Philippe de Pontet, Africa Director of New York-based Eurasia Group, said by phone on Aug. 23. There’s no “evidence that irregularities subverted the will of the electorate,” he said.
The threat of political instability accelerated the cedi’s decline as the Supreme Court began hearings in April that were broadcast live on radio and TV. The currency slumped 11 percent against the dollar this year, the worst in Africa after the rand and the Namibian dollar, which is pegged to the South African currency. It was unchanged at 2.15 per dollar by 4:48 p.m. in Accra yesterday.
Court backing of Mahama’s win will allow his administration to follow through with plans to curb a budget deficit that soared to 12.1 percent of gross domestic product last year from 4.3 percent in 2011, undermining the currency. The Finance Ministry is forecasting a shortfall of 9 percent this year.
A win for Mahama will enable the government to “build on its incremental pathway to trimming the deficit,” de Pontet said.
Yields on the country’s Eurobonds due August 2023 climbed 15 basis points to 8.233 percent since listing Aug. 1, compared with a three basis-point increase in dollar-denominated African bonds, according to JPMorgan Chase & Co. indexes.
The Supreme Court hearings in Accra included testimony from former Bank of Ghana Deputy Governor Mahamudu Bawumia, the vice presidential candidate for the NPP, and Kwadwo Afari-Gyan, head of the Electoral Commission.
The evidence lacked a “smoking gun,” de Pontet said. Rather than overturning the election result, the court will probably “shift the focus to reforming the electoral commission,” he said.
While an expected ruling against the opposition may spark protests, there’s unlikely to be “significant unrest,” London-based advisory group, Control Risks, said on its website on Aug. 25.
In December, protesters clashed with security forces in Accra and demonstrated in Kumasi, the second-biggest city and an NPP stronghold. Mahama agreed to abide by the verdict in a statement on Aug. 21 and Akufo-Addo, 69, told the state-owned Daily Graphic newspaper Aug. 26 he was confident the court would “deliver a fair judgment,” urging supporters to accept the outcome.
The challenge prompted a “wait-and-see attitude” among investors, Collins Appiah, director of asset management at Accra-based NDK Financial Services Ltd., said in a phone interview on Aug. 26. Buyers prefer “holding dollar-denominated assets compared with their cedi counterparts,” he said.
Yields on three-year cedi bonds, the minimum duration in which foreigners can invest, rose to 20.65 percent by Aug. 26 on the secondary market from 19.24 percent at an auction on May 30, according to data compiled by Standard Chartered Plc’s Ghanaian unit. The Ghana Stock Exchange Composite Index (GGSECI) rallied 65 percent this year, the third-best performing equities gauge among 94 indexes tracked by Bloomberg.
Whoever wins, the government “will face the challenge of fiscal consolidation,” Razia Khan, London-based head of Africa economic research at Standard Chartered Plc, said by phone on Aug. 23.
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