Author: Bernard Quayson (IT Specialist)Nana Akufo Addo on the causes of Ghana’s current economic situation.
According to the president, Ghana’s economy grew from 0.5% to 5.4% in 2021, signifying a strong recovery from the COVID-19 pandemic. So the country’s economy was on a verge of growth at 7% in the last quarter of 2021. He admits the Russian invasion of Ukraine in the first quarter of this year has worsened the effect of COVID-19 and dived the global economy into a greater state of uncertainty and confusion.
He also admits that both big and small economies in the world have experienced, over this year alone, the highest rise in the cost of living over generations; the highest increase in government borrowing in over 50 years; the highest increase in inflation for forty years (40); the steepest depreciation in their currencies to the US dollar over the last 30 years; the fastest peak in interest rate; and the greatest threat of unemployment; with over 100 million people being pushed into extreme poverty.
The president; admits our economy is in great difficulty to the extent that the budget drawn for the 2022 fiscal year has been thrown out of gear, destroying the structure of payments and debt sustainability due to the recent global crises.
The president believes that the increasing cost of living is driven by the fast escalating of fuel prices at the pumps, which is caused by high crude oil in prices on the world market and our depreciated cedi.
The president also blames the market queens who slap on goods, because of fear of future higher costs and to make the utmost profits out of the current difficulties.
According to the president; not enough of the traders are paying taxes and producing to generate the revenues that we need.
The president believes our high dependence on imported goods is a major factor in our current economic situation. He believes it is because the majority of goods in our shops and marketplaces are not those we produce and grow here in Ghana.
According to the president; the recent unsteady movement in the financial markets was due to a low inflow of foreign exchange. Particularly, by the activities of speculators and the Black Market.
Nana Akufo Addo’s action plan to combat the current economic crisis.
According to the president; they are negotiating to secure a strong IMF Programme by the end of the year, which will support the implementation of our post-COVID-19 Programme for economic growth, and additional funding to support the 2023 Budget.
The president claims the government is working to secure reliable and regular sources of affordable petroleum products for the Ghanaian market. This, with a stable currency, will halt the escalation of fuel prices.
The president intends to reduce our total public debt to GDP ratio to about 55%, with the servicing of our external debt pegged at not more than 18% of our annual revenue by 2028.
According to the president; they are going to improve the revenue collection effort to be competitive with our peers in the West Africa region. GRA will roll out extensive measures to support this enhanced revenue mobilization.
Capping of statutory funds to be reviewed.
It includes reviews of areas such as imports, reforms in the energy sector, implementation of the exemptions Act, and a new property rate regime. This is part of the efforts to diversify the structure of the economy from an import-based one to a value-added exporting one (capitalizing on 1D1F).
The president has also decided to continue with the policy of a 30% cut in the salaries of political office holders. This includes the President, Vice president, Ministers, Deputy Ministers, MMDCEs, and SOE appointees in 2023. And a 30% cut in discretionary expenditures of Ministers, Departments, and Agencies.
He will also review the management of foreign exchange reserves. Steps have been taken to restore order in the forex market. Thus;
Enhance supervisory action by the Bank of Ghana in the forex market And the black market to flush out illegal operators, as well as ensure that those permitted to operate legally abide by the market rules.
Fresh inflows of dollars will provide liquidity to the foreign exchange market, and address the pipeline demand.
The government with the help of the Bank of Ghana, and oil-producing and mining companies will introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana is, initially, paid to banks based in Ghana to help boost the domestic foreign exchange.
The bank of Ghana will enhance its Gold purchase programme.
The bank of Ghana will issue its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy run in a stable manner, till the IMF programme kicks in and other financing assurance that is expected from partners.
According to the president; he has had a fruitful engagement with stakeholders including, the Trade Union Congress and Organized Labour, the Ghana Employer’s Association, the Association of Ghana Industries, the Ghana Association of Banks, the Private Enterprise Federation, the association of Forex Bureau Operators, the Association of Market Queens and Women, to help Government sanitize our foreign exchange market and propose solutions on how best to solve our problems.
Assurance by the president.
It is the president’s desire that Ghanaians trust his government with the best implementation of policies and social interventions that can alleviate Ghanaians’ hardships. He urges that just as they were able to deal with Corona, and provided free water and electricity as well as reduced tariffs cumulatively by 10.9% for the entire population during a whole year of the COVID-19 pandemic. And Increase the share of the District Assemblies Common Fund to persons with disabilities by 50%, and also expanded the LEAP by one hundred and fifty thousand (150000) beneficiaries; and school feeding from 1.6 million to 2.1 million children; restored teacher and nursing training allowances; absorbed the cost of BECE and WASSCE exam registrations for the parent; and eliminated guarantor requisition to obtain student loans.
Ghanaians are urged to remain hopeful that the government, which has implemented policies such as free SHS, free TVET, and 1-District-1-Factory as well as being able to sack Corona from the country, can implement policies that will reduce hardships in the country.
He assures individuals and institutional investors, including pension funds in Government treasury bills, to disregard the false rumours of losing their money as a result of the ongoing IMF negotiations. Just as in the banking sector clean-up, the Government ensured that the 4.6 million depositors affected by the exercise did not lose their deposits.
According to the president; he has total confidence in dealing with the current difficulties, and he will be coming regularly to keep you updated about the measures your government is making to move the country forward because he really cares.
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