Dr. Cassiel Ato Forson, Ex- Deputy Finance Minister of Ghana has predicted that the financial sector will be downsized in 2023.
According to Dr. Ato Forson, this will take place even before Ghana’s US$3billion loan requested from IMF to revive the economy is approved.
“Expected layoffs from the financial sector due to the impact of the debt restructuring and expected layoffs from government foreign financed projects will occur.”Dr. Ato Forson
To even worsen the situation will be payment defaults, further depreciation of the Cedi, even before the International Monetary Fund (IMF) approves its US$3 billion loan to the government, Dr. Forson added.
“Ghana will default in the payment of interest and principal on domestic bonds, Eurobonds, and most of our bilateral loans in 2023.”Dr. Ato Forson
The former deputy Finance Minister observes 2023 as an even tougher year for Ghanaians indicating that not only will the economy record one of the worst non-oil GDP growths, but also predicted that individuals, local businesses and the banking sector will be adversely impacted by the haircuts on both domestic and Euro bonds.
Doubling as Member of Parliament(MP) for Ajumako-Enyan-Essiam Constituency and ranking member of the Finance Committee, in his Facebook post today, Tuesday, January 3, disclosed that;
“Unemployment will worsen due to the freeze on employment, debt restructuring, poor business climate, and massive austerity.”Dr. Ato Forson
Dr. Forson made this observation after IMF’s caution by Kristalina Georgieva, the Managing Director came yesterday, that this year, 2023 promises to be a tougher year than the previous,2022.
BoG’s Crucial Move To Assist Commercial Banks
The central bank of Ghana has taken a crucial move to assist commercial banks address their challenge of meeting the increasing demand of large corporates and other businesses for the US Dollar.
This initiative to support is aimed at maintaining the appreciable rate of the cedi, which began December, last year.
“We believe this is a timely move by the Central Bank to maintain its hold on the gains made by the cedi in December 2022.We know that at the beginning of every year, demand for dollars go up.”An anonymous bank treasurer told Joy business.
The Bank of Ghana has been criticized by some financial observers for its slow activity in supplying US dollars on the forex market. The support that is now being provided is seen as a crucial move in response to this criticism.
Meanwhile, it is expected that this move will improve investor confidence and help to maintain the cedi’s recent gains even as Ghana is currently in negotiations with the IMF for a financial support program, which is expected to be finalized in the first quarter of 2023.