🇬🇭 IFRS 17 Discounting Calculator

Handle Ghana's Variable Interest Rates with Confidence

⚠️ Ghana Market Rates (November 2024)

Bank of Ghana Rate

27.0%
Policy Rate

91-Day T-Bill

25.2%
Risk-free rate

182-Day T-Bill

26.8%
6-month rate

1-Year Note

28.5%
Annual rate

Inflation Rate

22.1%
YoY CPI

Real Rate

4.9%
Nominal - Inflation

Template 1: Basic Claims Discounting

Calculate present value of future claims payments

Payment Period Nominal Amount (GHS) Years from Now Discount Rate Discount Factor Present Value (GHS)
Q1 2025 5,000,000 0.25 28.5% 0.9375 4,687,500
Q2 2025 4,500,000 0.50 28.5% 0.8754 3,939,300
Q3 2025 3,800,000 0.75 28.5% 0.8174 3,106,120
Q4 2025 3,200,000 1.00 28.5% 0.7782 2,490,240
2026 2,500,000 1.50 28.5% 0.6712 1,678,000
2027 1,800,000 2.00 28.5% 0.6056 1,090,080
2028+ 1,200,000 3.00 28.5% 0.4718 566,160
TOTAL 22,000,000 - - - 17,557,400

💡 Discount Impact:

At Ghana's current rates (28.5%), your GHS 22 million in future claims is worth only GHS 17.6 million today - a 20% reduction!

Template 2: Ghana-Specific Yield Curve

Build your discount curve using Ghana government securities

Maturity Instrument Current Yield (%) Adjusted for Illiquidity (%) Use for IFRS 17?
3 Months 91-Day T-Bill 25.2 25.2
6 Months 182-Day T-Bill 26.8 26.8
9 Months 270-Day T-Bill 27.5 27.5
1 Year 364-Day T-Bill 28.5 28.5
2 Years 2-Year Note 29.0 29.5
3 Years 3-Year Bond 29.5 30.0
5 Years 5-Year Bond 30.0 30.5

⚠️ NIC Guidance on Discount Rates:

  • Use Government of Ghana securities yields as base rates
  • Illiquidity premium allowed up to 0.5% for non-life
  • Must document and justify any adjustments
  • Update quarterly based on Bank of Ghana publications

Template 3: Discount Rate Sensitivity Analysis

See how rate changes affect your liabilities

Scenario Discount Rate Present Value Impact (GHS) Impact (%)
Base Case (Current) 28.5% 7,123,000 - -
Rate Decrease (-5%) 23.5% 7,654,000 +531,000 +7.5%
Rate Decrease (-2%) 26.5% 7,342,000 +219,000 +3.1%
Rate Increase (+2%) 30.5% 6,912,000 -211,000 -3.0%
Rate Increase (+5%) 33.5% 6,623,000 -500,000 -7.0%
Hyperinflation Scenario 40.0% 5,987,000 -1,136,000 -16.0%

📊 Key Insight:

Every 1% change in discount rate impacts your liabilities by approximately GHS 100,000 per GHS 10 million of claims. In Ghana's volatile rate environment, this sensitivity is critical for risk management.

Template 4: When to Discount Under PAA

Decision tree for PAA discounting requirements

Product Claims Pattern Settlement Period Financing Component? Discount Required? Estimated Impact
Motor Comprehensive Fast (< 6 months) 4 months No NO -
Motor Third Party Slow (bodily injury) 18 months Potentially CONSIDER ~5-8% reduction
Fire & Burglary Fast (< 3 months) 2 months No NO -
Professional Indemnity Very slow (litigation) 36 months Yes YES ~20-25% reduction
Engineering CAR Project-based 24 months Yes YES ~15-18% reduction

✅ PAA Discounting Rules:

  • No discounting needed if claims settled within 12 months AND no financing component
  • Must discount if significant financing component exists (>12 months settlement)
  • Optional for borderline cases - but be consistent!
  • Motor Third Party in Ghana: NIC accepts both approaches - document your choice

Quick Reference: Discounting Formulas

Present Value Formula:

PV = FV / (1 + r)^t


Where:

PV = Present Value

FV = Future Value (nominal claim amount)

r = Discount rate (annual)

t = Time in years


Example with Ghana rates:

FV = GHS 1,000,000 in 2 years

r = 28.5% (current 1-year rate)

PV = 1,000,000 / (1.285)^2 = GHS 605,600