Ghana’s Finance Minister, Ken Ofori-Atta, will address the nation today, Thursday, March 24, on measures instituted by government to resolve the current economic challenges in the country.
The Finance Minister’s address is expected to highlight the outcome of deliberations that took place during cabinet’s weekend retreat, a crunch meeting that discussed the current fiscal challenges in the country and how to resolve them. President Akufo-Addo said the measures to be announced, will go a long way to calm public anxiety regarding the country’s economic fortunes.
Ahead of the address, Political Scientist at the University of Ghana, Professor Ransford Gyampo said the Finance Minister’s address “must be done in plain and simple language for ordinary people to understand. The confusing terminologies that are typically deployed by demagogues to talk their ways out, without communicating, must be toned down”.
Ghana’s economy is currently facing several challenges including rising inflation, ballooning public debt and interest payments, loss of investor confidence, increasing transportation and energy prices and fast-depreciating domestic currency. Some of the revenue measures announced in the 2022 budget are also facing serious resistance from the public, especially the e-levy, which has since not made a headway in parliament.
There is increased volatility in the foreign exchange market during the first few months of the year, driven by demand pressures from offshore secondary market activities, corporate sectors, oil importers, and weakened sentiments due to the downgrade by the rating agencies. Data from the Bank of Ghana, show that cumulatively, the Ghana Cedi depreciated by 14.6 percent against the US dollar, and 11.6 percent each against the Pound Sterling and Euro, so far this year as of 15th March 2022.
Compared to the same period last year, the Ghana Cedi appreciated by 0.6 percent and 3.4 percent against the US Dollar and the Euro, and depreciated by 1.0 percent against the Pound Sterling. This clearly shows that the Cedi has lost its grounds, resulting in the rise in imported inflation.
Presidency approves measures to mitigate hardship
As a remedy, the Office of the Presidency announced that government is set to pump $2 billon into the economy as a way of rescuing the fast-depreciating Cedi. But experts believe this measure may only have an impact in the short-term but may not proffer a lasting solution to the instability of the local currency. Meanwhile, the Presidency also announced that government will cut the salaries of government appointees by 30% as part of measures to reduce government expenditures.
Akin to the announced slash in salaries of government appointees, Chairman of the Council of State, Nana Otuo Serebour II, said “Mr President, in tandem with your decision, we as the Council of State, have also decided that we will reduce our monthly allowances by 20% until the end of this year. This move is our way of contributing our widow’s mite to our total efforts towards economic recovery”.
Already, the government announced plans to cut down the budget expenditures of all Ministries, Departments and Agencies for the 2022 fiscal year by 20%. However, an Educationist has warned Ghanaians not to think that cutting salaries alone is the panacea to the country’s economic woes.
To curb inflation, the Monetary Policy Committee of the Bank of Ghana, in its recent meetings, raised the policy rate to 17% which means “cost of loans to go up”, the Presidency warned in a statement. The imminent rise in the cost of borrowing in the country may have growth-crippling effects on the economy. Already, data from the BoG show that the pace of recovery has slowed since Q4 2021 to January this year.
Review of government flagship programs
Meanwhile, Information Minister, Kojo Oppong Nkrumah, disclosed that all 16 flagship programs of government will soon be reviewed to ensure their objectives are well achieved.
In a reaction, Mr. Franklin Cudjoe said a review of the flagship programs should not be based on the premise that government does not have enough resources to continue with these programs.
“The Fiscal Council established by gov’t seemed not to have been engaged in conducting value for money or cost benefit analyses for all major flagship programs and projects when they were birthed. Not seen any evidence. Nor did we see evaluation reports from the presidency and agencies commandeering these huge projects and programs. Makes it difficult to understand the basis for the proposed “review”. It should never be the absence of money that calls for “reviews” which is what is driving the haste to announce the heavily publicized reviews. You should not be sloganeering with the word “review” as if it was another manifesto- promise. Kwame Pianim was right”.Franklin Cudjoe, Founding President and CEO of IMANI Centre for Policy and Education
Still commenting on the Minister’s address, Professor Ransford Gyampo said “I expect the announcement of some delicate-balanced interventions that show massive sacrifices at the top, provide some reliefs for the already burdened Ghanaian, and at the same time, appeal to all of us to tighten our belts”.
Expectation are high as Hon. Ken Ofori-Atta addresses the nation today as cost of living in the country continues to rise, making life very difficult for the ordinary Ghanaian. Finance Minister Finance Minister Finance Minister