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Government Outline Measures to Ease Economic Challenges and Turn the Economy Around

Government Outline Measures to Ease Economic Challenges and Turn the Economy Around

Accra, Thursday 24th March, 2022 - Minister for Finance, Ken Ofori-Atta has given details of Government plans to address the economic difficulties due to recent global and domestic events and assured that government will not roll back on its major policy interventions such as the free SHS.

“Let me say this, President Nana Addo Dankwa Akufo-Addo has absolutely no intention to roll back on a major policy like Free SHS. We see education as the best enabler for sustainable economic growth and transformation and will do more to improve on it for it to serve more and better our children” he assured.

He made these known when he addressed the media to throw more light on government interventions to address the economic difficulties which were manifested in rising fuel prices, rising inflation and cost of living, exchange rate depreciation, rising interest rates and revenue mobilization challenges.

Mr. Ofori-Atta revealed that, Cabinet deliberated extensively on a number of issues and approved measures to support current efforts to address the challenges Ghanaians were facing at its first regular quarterly retreat for 2022.

“Ladies and Gentlemen, it is important to stress, right from the onset, that the difficulties we are facing in Ghana are not peculiar to Ghana.  It should also be stressed that several governments in both developed and developing countries are busily coming out with various prescriptions to bring their economies back on track, after the devastating impact of COVID-19 which distorted global supply chains, and the ongoing Russia-Ukraine war” he added.

According to Minister, two forces shaping global events were novel coronavirus pandemic and the crisis in Ukraine and Ghana’s decision to focus first on protecting lives and then livelihoods paid off.

Mr. Ofori-Atta disclosed that, Ghana like most countries in the world, had a tall list of coronavirus-induced bills to pay from 2020 and 2021 and came out with plans and policies to boost investor confidence and job prospects for 2022 and beyond.

“As you recall, we lost Ghs13.1 billion of revenue and had to increase our expenditure by GHS14.2 billion with combined fiscal impact of GHS26 billion (6.8% of GDP)”, he noted.

On some of the challenges facing the Government, he cited the unyielding stance of the Minority in Parliament against the E-levy that could gravely affect investor confidence in Ghana’s capacity to implement its programmes and settle debts, triggering a downgrading by credit rating agencies, and leaving the cedi vulnerable as Ghana could not access the International Capital Market.

Again, on the international front, the launch of the attack on Ukraine by Russia after the devastation wreaked by the Coronavirus pandemic had disturbed supply chain, surged inflation, and created uncertainties in the financial markets.

To address the adverse impact of the domestic and international challenges the country was facing, the Minister enumerated measures to address the challenges which included some spending cuts.

Government, he disclosed had announced and, immediately, began implementing a 20% expenditure cut as part of fiscal stabilisation and debt sustainability measures after Parliament failed to approve key revenue streams at the appropriate time.

This, he added had been done through the quarterly expenditure ceiling allotments to MDAs. Quarter 1 allotment was currently under 11 implementation whiles Q2 allotments would be issued shortly.

Other measures to ensure the achievement of the fiscal deficit of 7.4% of GDP for 2022 included 50% cut in fuel coupon allocations for all political appointees and Heads of Government institutions, including SOEs, effective 1st April 2022 and imposition of a complete moratorium on the purchase of imported vehicles for the rest of the year. This will affect all new orders, especially 4-wheel drives.

Again, Government has imposed a moratorium on all foreign travels, except pre-approved critical/statutory travels, government will conclude on-going measures to eliminate “ghost” workers from the Government payroll by end of December, 2022 and conclude the renegotiations of the Energy Sector IPPs capacity charges by end of Q3-2022 to further reduce excess capacity payments by 20% to generate a total savings of GHS1.5 billion.

The Minister further disclosed the imposition of moratorium on establishment of new public sector institutions by end of April, 2022, prioritization of ongoing public projects over new projects which would enhance efficient use of public funds over the period by finishing ongoing or stalled but approved projects, reduction of expenditure on all meetings and conferences by 50%  effective immediately and approval by Cabinet for Ministers and Heads of State Owned Enterprises (SOEs) to contribute 30 percent of their salaries from April to December 2022 to the Consolidated Fund.

Mr. Ofori-Atta stated that Government would pursue a comprehensive re-profiling strategies to reduce the interest expense burden on the fiscal and liaise with Organized Labour and Employers Association to implement with immediate effect, the measures captured in the Kwahu Declaration of the 2022 National Labour Conference.

On the current fuel challenges, he revealed that, unlike other countries where the hike in crude oil prices and exchange rate volatility were leading to shortages in supply of petroleum products, government was implementing measures to guarantee constant supply of petroleum products.

To mitigate the impact of the rising price of petroleum products at the pumps for the next three months, the Minister disclosed that government has decided to reduce margins in the petroleum price build-up by a total of 15 pesewas per litre with effect from 1st April.

Present at the press briefing were Hon. Kojo Oppong Nkrumah, Minister for Information, a Deputy Minister for Finance, Hon. Abena Osei Asare (MP), Chief Director of Ministry of Finance, Dr.  Patrick Nomo, Coordinating Directors of the Ministry, Ms. Eva Mends and Ms. Stella Williams, Financial Sector Division, Director, Mr. Sampson Akligoh, Economic Strategy and Research Division, Director, Dr. Alhassan Iddrisu, Board Chairman of the Ghana Revenue Authority, Mr. Tony Obeng Gyasi, Commissioner General of the Ghana Revenue Authority, Mr. Ammishaddai Owusu Amoah and other officials of the Ministry and the media. END

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