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Tag: IMF programme

  • Finance Minister highlights fiscal achievements under IMF programme

    Finance Minister highlights fiscal achievements under IMF programme

    Finance Minister, Dr. Mohammed Amin Adam, has outlined the government’s successful attainment of several key fiscal targets within the framework of the International Monetary Fund-supported program.

    These achievements encompass significant milestones such as zero Central Bank borrowing, maintaining a ceiling of GH¢4.3 billion for the primary deficit on a commitment basis, ensuring zero accumulation of external debt payments, and adhering to a non-concessional borrowing limit of $66.2 million in present value terms.

    Moreover, by the conclusion of December 2023, the government had met its indicative targets, including securing a minimum of GH¢114.19 billion for non-oil public revenue and allocating at least GH¢4.07 billion for social spending.

    Addressing reporters at the Monthly Press Briefing, Dr. Amin Adam emphasized that ongoing assessments were being conducted regarding the indicative target of maintaining a ceiling of zero net change in the stock of payables of the central government and payables to the Independent Power Producers (IPPs).

    These assessments are slated to be finalized ahead of the IMF Executive Board meeting for the 2nd Review.

    Furthermore, Dr. Adam highlighted the implementation of structural reforms as part of the IMF-supported program’s second review. These reforms encompass the expansion of the GIFMIS infrastructure to include over 280 IGF-reliant institutions and the publication of the final report of the first quarterly audit of the Electricity Company of Ghana’s single account on the Public Utilities and Regulatory Commission’s website.

    “The positive results of the first and second reviews of the implementation of the IMF-supported Programme testify that we are achieving the Programme’s objective of restoring macroeconomic stability and debt sustainability, building resilience through the implementation of strong and wide-ranging structural reforms, and laying the foundations for stronger and more inclusive growth, while protecting the poor and vulnerable. We are now seeing signs of macroeconomic stability and economic recovery”, he added.

    Growth turned out to be more resilient and robust in 2023 than initially programmed as Gross Domestic Product grew by 2.9% compared to the original projection of 1.5% and the revised projection of 2.3%.

    Headline inflation also declined by 31 percentage points from 54.1% at the end of 2022 to 23.2% at the end of Dec 2023 before inching up slightly to 25.8% in March 2024 due largely to base effect.

  • There is Light Ahead – Council of State Chair to Ghanaians on IMF Programme

    There is Light Ahead – Council of State Chair to Ghanaians on IMF Programme

    The Chairman of the Council of State, Nana Otuo Siriboe II, has urged Ghanaians to unite in support of the government’s recovery programme, and see the light ahead in Ghana’s economic trajectory.

    During a Council of State meeting attended by Finance Minister, Ken Ofori-Atta, Chairman Otuo Siriboe II said it is time Ghanaians to stick together and rally behind government as the country embarks on a path of renewed growth.

    “There is light ahead for Ghana. We must remain optimistic and steadfast in our belief that our country will overcome the challenges it currently faces,” Nana Otuo Siriboe declared.

    “The IMF Programme approval marks a turning point, which will energise our path to renewed growth and catalyse further opportunities for economic recovery.”

    The Chairman expressed his optimism about the country’s prospects, highlighting the approval of the International Monetary Fund (IMF) Programme as a turning point that would invigorate Ghana’s growth trajectory and open doors to further opportunities for economic recovery.

    IMF programme: There is Light Ahead - Council of State Chair to Ghanaians

    He stressed the need for unity, resilience, and unwavering belief in Ghana’s potential to overcome the challenges it currently faces.

    He said the IMF’s $3 billion bailout presented a unique opportunity for Ghana to reboot its economy,  and encouraged Ghanaians to embrace this opportunity and work together to optimise its benefits.

    He emphasised that by joining forces, Ghana can achieve remarkable progress and build a prosperous future for all its citizens.

    The meeting, which was attended by key government officials including the Finance Minister and members of the Council of State, aimed to educate stakeholders about the details of Ghana’s Growth Agenda and the IMF Programme, while also soliciting input for effective implementation.

    On his part, Finance Minister Ken Ofori-Atta, acknowledged the significant strides already made in Ghana’s recovery journey.

    “We have come a long way, and we are determined to continue on this path of progress. The IMF Programme will provide the necessary support to restore our economy and set us on a trajectory of sustained growth,” the Minister affirmed.

    He took time to outline Ghana’s Post Covid-19 Programme for Economic Growth (PC-PEG).

    The economic blueprint encompasses four key objectives. The first objective, he said, focuses on restoring macroeconomic stability, including managing inflation, stabilizing the exchange rate, and creating a favorable business environment.

    The second pillar of the PC-PEG addresses Ghana’s fiscal challenges. The Minister highlighted the government’s commitment to bringing fiscal operations and public debt to sustainable levels. Measures such as comprehensive tax administration reforms and prudent fiscal policies will be implemented to ensure a sound economic foundation.

    Structural reforms comprise the third objective of the PC-PEG. The Minister emphasized the importance of improving the business environment, attracting private sector investments, and bolstering infrastructure development. The financial sector will also receive support through regulatory forbearances and the operationalization of the Ghana Financial Stability Fund (GFSF).

    The final objective of the PC-PEG centers around promoting strong and inclusive growth while safeguarding the poor and vulnerable. The government plans to stimulate economic activity, create job opportunities, and attract investments. Concurrently, social safety nets and targeted support programmes will protect the most vulnerable members of society, ensuring that the benefits of recovery are widely shared.

    Nana Otuo Siriboe II expressed his gratitude to the Finance Minister and his team for their dedication and tireless efforts in formulating the growth programme and securing IMF support.

    He encouraged the government to continue spreading the message of hope and progress throughout the nation.

  • Ghana’s Energy sector faces challenges, proposes reforms under IMF programme

    Ghana’s Energy sector faces challenges, proposes reforms under IMF programme

    Ghana is currently grappling with significant challenges in its energy sector, prompting the government to propose a series of reforms as part of its International Monetary Fund (IMF) programme.

    The IMF has identified several issues plaguing the sector, including below-cost-recovery tariffs, substantial distribution losses, and excess capacity, which have led to significant financial burdens for the central government.

    These challenges have resulted in annual transfers equivalent to two percent of GDP since 2019, along with mounting payables to independent power producers (IPPs) and fuel suppliers.

    To tackle these pressing concerns, Ghanaian authorities, with the support of the World Bank, have developed an energy sector reform programme aimed at revitalising the entire sector.

    The programme encompasses various aspects, such as renegotiating Purchasing Power Agreements (PPAs) to mitigate take-or-pay liabilities, tariff adjustments, improving the operational performance of energy state-owned enterprises (SOEs), subsidy reforms, reducing distribution losses, and enhancing collections.

    However, the implementation of these measures is expected to be a challenging and time-consuming process.

    In an attempt to bridge the financial gap, the Public Utilities Regulatory Commission (PURC) recently raised electricity tariffs by nearly 30 percent, with cumulative increases reaching 57 percent since mid-2022.

    Further quarterly tariff adjustments are planned for 2023 to account for exchange rate and price fluctuations and bring tariffs closer to cost-recovery levels. Nonetheless, it remains uncertain whether these adjustments will be sufficient to alleviate the sector’s financial strain.

    Recognizing the need to protect vulnerable households from the impact of tariff adjustments, the government intends to redefine lifeline tariffs to better target low-volume users and the poorest households.

    Additionally, a mapping exercise will be conducted to assess the effectiveness of the existing cash transfer program in supporting economically disadvantaged households with electricity access.

    The goal is to calibrate the program more effectively, although concerns persist regarding its ability to adequately address the needs of the most vulnerable.

    Despite the proposed reforms, there are lingering concerns about the transparency and sustainability of Ghana’s energy sector. Previous budgets have faced criticism for relying on overly optimistic revenue projections and unrealistic spending cuts.

    While the 2023 budget aims to address these issues by adopting more realistic assumptions, doubts remain regarding the government’s ability to fully implement the reforms and ensure transparency within the sector.

    The success of the reform programme hinges on effective execution and collaboration among various stakeholders. However, given the complex nature of the challenges faced by Ghana’s energy sector, achieving significant progress may prove to be an uphill battle.

    Moreover, the projected reduction in the sector’s financial shortfall appears modest, raising doubts about the government’s ability to create sufficient fiscal space for priority spending.

    While Ghana’s efforts to reform the energy sector are commendable, the road ahead is riddled with uncertainties.

    The true test lies in the implementation and effectiveness of these measures, as well as the government’s commitment to transparency and long-term sustainability.

    Only time will reveal whether these proposed reforms can genuinely address the deep-rooted issues and pave the way for a more stable and resilient energy sector in Ghana.

    Source: The Independent Ghana

  • Government using economy to intimidate legislators – Gatsi

    Government using economy to intimidate legislators – Gatsi

    The government’s justifications for tax approval, according to Cape Coast University Business School (CCUBS) Dean, Professor John Gatsi, could be characterized as parliamentary blackmail.

    Speaking on Starr Today with Lantam Papanko, the Cape Coast University Dean indicated that the International Monetary Fund (IMF) has still not approved Ghana after a number of approvals for the deal by Parliament.

    “I think he is just using the economy to blackmail Parliamentarians to vote for the bill and to use a section of Ghanaians to press on Parliamentarians to approve the bill. We started with E-Levy. The government told all of us that when E-Levy is passed everything is going to be cool. E-Levy was passed that was not to be. E-Levy should be passed so that we don’t go to IMF and E-Levy is passed and we are on our way to IMF.

    “Other bills came the same way. We have to do Domestic Exchange Program and after that the IMF will be out. If the Domestic Exchange is not done then the IMF deal will not go through. Domestic Exchange was done and then they say we need to expand the revenue bill. Increase VAT by 2.5 percent, it was approved,” Mr. Gatsi stated.

    He continued: “Remove the Bunch-mark Value from the port it was approved, then they say they were going for External Debt and Restructuring and about clinching the deal but something is left. We have to approve these tax bills again before we are over. If that is not done the IMF deal will not be approved and if the IMF deal is not approved then the economy will collapse. That is just blackmail.”

    Meanwhile, Parliament March 31, 2023 through a Majority decision has passed three new taxes.

    These are Income Tax Amendment Bill, Excise Duty Amendment Bill, and Growth and Sustainability Amendment Bill.

    These taxes are expected to generate approximately GH¢4 billion per year to supplement domestic revenue.

  • We’ll compel government to reduce unnecessary spending and taxation – Ricketts-Hagan

    We’ll compel government to reduce unnecessary spending and taxation – Ricketts-Hagan

    The Member of Parliament for Cape Coast South, Kweku Ricketts-Hagan has asserted that rather than concentrating on passing revenue laws, the government should reduce excessive expenditure.

    The government is seeking approval for some revenue bills which are currently before Parliament to rake in about 4 billion Ghana Cedis annually.

    The bills are the Income Tax Amendment Act, the Excise Duty Amendment Act, and the Growth and Sustainability Act.

    Ahead of the consideration of the financial bills, the lawmaker spoke to journalists in Parliament.

    “There are serious expenditure items that need to be looked at. One of them remains obviously to reduce government ministers and other wasteful expenditures like the National Cathedral and other things they intend to spend money on. I don’t want anybody to be telling us that without those things we cannot survive.

    The lawmaker added, “we don’t need that together with an IMF programme. We have got countries that went to IMF without going through debt restructuring and these kinds of tax reviews, before they got the programme. They got the programme and worked through these things to achieve whatever the IMF wanted us to achieve”.

    The government fears failing to pass the new tax bills on Friday, March 31, will jeopardize the country’s chances of a quick economic recovery and Board approval for an International Monetary Fund (IMF) bailout.

    Kojo Oppong Nkrumah, the Information Minister, is concerned that if these bills are not passed, plans to raise money to supplement domestic revenue will be thwarted.

    “If we don’t do what we have to do for the country, we will have major challenges. So, this is a set of measures we must ensure is worth passing. This is a major bridge we have to cross in closing this revenue gap and ensure that there is more liquidity”, he stressed.

    He thus appealed to the Minority in Parliament to support the passage of the revenue bills currently before the house in order to help the government secure the $3 billion from the International Monetary Fund (IMF).

  • Approve the three new tax bills to revive the economy – Deputy Finance Minister to Parliament

    Approve the three new tax bills to revive the economy – Deputy Finance Minister to Parliament

    The deputy minister of finance, Ms. Abena Osei-Asare, has backed the new tax legislation that are being introduced to Parliament today, Thursday, March 23.

    She alleged that these bills are critical in order to help the government’s attempts to raise funds and to boost the faltering economy.

    Ms. Osei-Asare stated that the passing of these bills will also help the government provide aid to vulnerable individuals who have been severely impacted by Covid-19 and the Russia-Ukraine war. 

    “This is to support the economy to get back on track and implement the agenda of supporting the vulnerable who have been hit hard by Covid-19 and the Russia-Ukraine war,” she said in an interview on Citi FM. 

    “Inasmuch as we are raising revenue, we also need to look at the vulnerable who have been hit hard and these are the revenues that we believe that if we raise we can use some to support them.”

    She added that the bills are necessary for effective budget implementation and increasing Tax-to-GDP from less than 13% to the sub-Saharan average of 18%. 

    “As a country, we need to mobilise our own domestic revenue to pursue our own national development agenda and so these are some of the things we can do to raise revenue. As we speak if you compare the revenue we raise to our GDP we are still way below the West African target of below 16 to 18 per cent we are still doing 13 per cent and so there is more that we feel we can do.”

    Today, Parliament will vote on several bills related to income tax, excise duty, excise tax stamp, growth, and sustainability levy. 

    If approved, these bills will allow for the implementation of the $3 billion IMF Programme staff-level agreement. 

    The government has completed various measures to meet the criteria set by the IMF, such as tariff adjustments, publication of the Auditor-General’s report on Covid-19 spending, and onboarding of various funds on the Ghana integrated financial management information system. 

    The international and domestic bond markets are currently closed, which means the government must rely on Treasury Bills and concessional loans to finance its programmes. 

    She argued that it was therefore critical for Parliament to consider and approve fiscal measures to help the country recover from the current economic crisis.

  • Market maintains inflation outlook

    Market observers have kept the inflation outlook for a peak at the end of Q1 2023 even though consumer inflation has had its largest increase in nearly two decades and has broken the 50% threshold for an accelerated 18th consecutive month.

    Due to the pass-through effects of the lower cedi and increased oil prices, headline inflation jumped from 40.4 percent y/y in October 2022 to 50.3 percent y/y in November 2022, and is currently around 5x higher than the Bank of Ghana’s top policy objective of 10 percent.
    Since January 2003, when the rate rocketed up by 12 percentage points from 13.5 percent observed the month before, this represents the biggest rate increase for a single month.

    GCB Capital, in its analysis of November inflation, indicated that inflation will continue getting higher in December and January – albeit at a moderated pace.

    “Regardless of the cedi’s sharp appreciation and the marked slowdown in ex-pump fuel prices, we expect inflation to continue higher through January 2023, albeit at a moderated pace. The anticipated downward price adjustment in response to the cedi’s resilience and easing fuel prices could be marginal. The Yuletide-induced demand pressures could also sustain the uptick in headline inflation,” it said.

    In forecasting what to expect, the investment advisor said: “We anticipate a sharper cooling of inflation beyond 1Q 2023, as we believe we have seen the worst of cedi depreciation. With government committing to fiscal consolidation under an IMF programme from 2023, we expect the much-needed BoP support and policy credibility from the programme to anchor cedi stability through 2023”.

    It is expected that the extended Covid-induced lockdown in China and the increasing threat of recession in major economies will continue to undermine oil demand. However, Chevron and other major oil producers resuming production in Venezuela following the US government lifting sanctions against the oil major will moderate the impact of supply shock from Russia, given the anticipated increase in oil supply.

    “We believe cedi depreciation and rising petroleum prices are the primary triggers of inflation; and given this improved outlook for 2023, we expect a sharper cooling of inflation beyond 1Q 2023,” it said.

    Commenting on the outlook, Constant Capital also maintained its outlook of higher inflation in Dec-2022 with a potential peak deferred to Q1-2023.

    “In the near-term, we expect to see the impact of pass-through effects from cedi depreciation, elevated petroleum prices, upward transport fare adjustment, lagged impact of utility tariff hikes, as well as the yuletide-induced price increase and consumer demand to continue lifting the CPI,” it said.

    While the exchange rate performance has seen a remarkable rally in recent sessions based on the Staff-Level Agreement (SLA) reached by government for an ECF programme with the IMF, we think the impact on ex-pump petroleum prices will be lagged markedly due to price-stickiness. Petroleum prices will respond relatively faster to the better FX performance and lower global crude oil prices, with lower ex-pump petroleum prices providing support for other sub-classes of inflation that depend on fuel – such as transport and food.

    Money Market

    On the money market, Constant Capital is of the view that demand will remain firm as investors take advantage of Treasury bill exemptions in the debt restructuring conversations. This provides opportunities for the Treasury to reduce its borrowing costs at the short window. “We expect to see relatively lower yields at the short end of the curve.”

    Given the clarity on domestic debt restructuring, GCB Capital also expects domestic market sentiments to improve steadily and nominal yields to gradually correct across the curve. “Excess demand for T-bill has started to depress T-bill yields despite the pronounced negative real returns and the elevated inflation profile; T-bill yields could fall sharply once inflation peaks,” GCB Capital said.

    “While inflation remains elevated, the anticipated risks to inflation appear to moderate in the near-term. Headline inflation is on course to peak in 1Q 2023, even though we expect further increases through January 2023. Thus, the monetary authorities could hold the policy rate at the Jan-23 meeting, as the balance of risk weighs heavily on growth,” it added.

  • IMF fingerprints all over 2023 budget, debt exchange programme – John Kwakye

    Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), claims that the International Monetary Fund influenced the government’s introduction of a debt exchange program (IMF).

    He further said that the 2023 budget proposal made by Finance Minister Ken Ofori-Atta was targeted toward obtaining an IMF financial bailout.

    In a tweet, Dr. Kwakye stated that “the 2023 Budget and the debt exchange offered by the Minister have IMF fingerprints all over it.”

    On December 5, 2022, the finance minister stated at a news conference in Accra that all domestic bondholders would swap their existing securities for new ones as part of the debt exchange scheme.

    Existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.

    The annual coupons on all of these bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.

    Meanwhile, Ghana is targeting an amount of $3 billion over a three-year period from the IMF once an agreement on a programme is reached.

    The new amount requested as a loan is double the government’s initial target of $1.5 billion.

    The IMF programme is aimed at restoring macroeconomic stability and safeguarding debt sustainability among many others.

  • Debt exchange: Public debt stock exceeds 100% of GDP – Ofori-Atta

    According to Ghana’s Finance Minister Ken Ofori-Atta, the public debt stock is far more than the nation’s GDP.

    He claims that one of the factors contributing to Ghana’s high debt levels has been the utilization of a significant portion of tax revenue for debt payments.

    He continued by saying that an IMF review of debt sustainability had shown Ghana’s debt to be unsustainable.

    On December 5, 2022, the minister announced the debt exchange program and stated that the Debt Sustainability Analysis (DSA) had conclusively shown that Ghana’s public debt was unsustainable and that, if nothing was done, the government might not be able to fully service its debt in the future.

    “Indeed, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues, while our total public debt stock, including that of State-Owned Enterprises and all, exceeds 100% of our GDP. This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt,” he added.

    The Minister announced that Ghana is embarking on a debt exchange programme where domestic bondholders are allowed to voluntarily exchange their bonds with fresh bonds.

    He added that the government is expected to reach some level of agreement with the International monetary fund for financial support.

    “We expect to reach a Staff-Level Agreement soon on an IMF programme aimed at restoring macroeconomic stability and protecting the most vulnerable. To this end, as a government, we are determined to implement wide-ranging structural and fiscal reforms to restore fiscal and debt sustainability and support growth,” he said.

    Source: Ghanaweb

  • Cedi will continue depreciation into first quarter of 2023 – Report

    Fitch Solutions has projected that Ghana’s cedi will continue to depreciate until the first quarter of 2023.

    According to the international research firm, inferring from previous studies of the Ghana cedi, it is likely that the cedi will continue depreciating till an IMF programme is secured.

    In its latest article on Ghana published on November 14, Fitch said: “Our view is further informed by the fact that previous periods of significant exchange rate weakness in Ghana all lasted roughly 12-14 months suggesting that the cedi will continue to depreciate into the Q123 (the current sell-off started in January 2022). This keeps inflation high, weighing on living standards and eroding support for the government.”

    Fitch also projected an increase in strikes and protests due to the increasing cost of living in the country.

    “While we expect to see an uptick in protests against austerity measures that would likely be implemented under an IMF programme, we do not believe they will threaten the overall stability of the government. This is factored into our Short-Term Political Risk Index, in which Ghana scores 62.0 out of 100 (a higher score implies lower risk), above the Sub-Saharan African average of 50.3,” Fitch added.

    Fitch Solutions also projected that in the possible event of the removal of the Finance Minister, Ken Ofori-Atta, ongoing negotiations with the International Monetary Fund will not be affected.

    According to Fitch, this is because the next person tipped to be Ofori-Atta’s replacement is Mark Assibey-Yeboah who it believes “would take a more accommodative approach towards negotiations with the Fund.”

  • Don’t arrest black market operators, but engage them – Nana Akomea

    Nana Akomea, the Chief Executive Officer of the State Transport Corporation (STC), has pleaded with the government to refrain from detaining those who work in the forex and black markets.

    Following President Nana Addo’s speech on Sunday, October 30, 2022, about the state of the economy at the moment and the steps his administration is taking to address the economic difficulties, Nana Akomea made this call.

    Sika Mpɛ Dede

    Speaking to the nation, the President said; “Fellow Ghanaians, as the French would say, l’argent n’aime pas le bruit, to wit, money does not like noise, sika mpɛ dede. Where there is chaos, where there is noise, where there is unrest, you will not find money. If you talk down your money, it will go down. If you allow some unidentifiable person to talk down your money, it will go down.”

    “The recent turbulence on the financial markets was caused by low inflows of foreign exchange, and was made worse in the last two to three weeks, in particular, by the activities of speculators and the Black Market. An anonymous two-minute audio message on a WhatsApp platform predicting a so-called haircut on Government bonds sent all of us into banks and forex bureaus to dump our cedis, and, before we knew it, the cedi had depreciated further.

    “All of us can play a part in helping to strengthen the cedi by having confidence in the currency, and avoiding speculation. Let us keep our cedi as the good store of value it is. To those who make it a habit of publishing falsehoods, which result in panic in the system, I say to them that the relevant state agencies will act against such persons.”

    He underscored steps being taken to restore order in the forex markets.

    Steps To Restoring Forex Market

    “The following actions have been taken thus far:

    1) enhanced supervisory action by the Bank of Ghana in the forex bureau markets and the black market to flush out illegal operators, as well as ensuring that those permitted to operate legally abide by the market rules. Already some forex bureaus have had their licenses revoked, and this exercise will continue until complete order is restored in the sector;

    2) Fresh inflows of dollars are providing liquidity to the foreign exchange market, and addressing the pipeline demand;

    3) the Bank of Ghana has given its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy continue to run in a stabilized manner, till the IMF Programme kicks in and the financing assurances expected from other partners also come in;

    4) Government is working with the Bank of Ghana and the oil producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana are, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market; and

    5) the Bank of Ghana will enhance its gold purchase programme.”

    President Has Spoken, It’s Time To Act

    Speaking in an interview with Kwami Sefa Kayi on Peace FM’s ‘Kokrokoo’ show, Kojo Oppong Nkrumah called on the State authorities not to let the President’s orders be in vain.

    “The President cannot go and stand at Airport Police station to arrest those selling money on the black market when he has given this direction and the Governor is there, the IGP and the Police officers are at the Airport Police station this morning. So, action must follow . . . and you see if we all decide to dump everything on the President as the only source of our interest and our criticisms, people will go scot free . . . We have to ensure action happens but it is the collective effort and pressure on all the agency Heads to get the action happening,” he stated.

    No Arrests

    But Nana Akomea disagrees with the idea that the black market and forex operators should be apprehended as a solution to fixing the forex markets.

    Making his submissions on ‘Kokrokoo’, he called for amicable resolution between the authorities and the forex operators.

    “You must sit with them to find out their ways. Why doesn’t the Bank of Ghana have dollar but some are at Cow Lane? You have to ask yourself that question and before you can find answers, you must sit with these people,” he said.

  • Gov’t announces 5 measures to stop free fall of cedi

    The Government of Ghana has adopted five measures to prevent further free fall of the cedi.

    President Akufo-Addo announced these measures on Sunday, when he addressed the nation on the country’s current economic crisis.

    The measures he said are:

    1. Enhanced supervisory action by the Bank of Ghana in the forex bureau markets and the black market to flush out illegal operators, as well as ensuring that those permitted to operate legally abide by the market rules. Already some forex bureaus have had their licenses revoked, and this exercise will continue until complete order is restored in the sector.
    2. Fresh inflows of dollars are providing liquidity to the foreign exchange market, and addressing the pipeline demand;
    3. The Bank of Ghana has given its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy continue to run in a stabilized manner, till the IMF Programme kicks in and the financing assurances expected from other partners also come in;
    4. Government is working with the Bank of Ghana and the oil-producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana are, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market; and
    5. The Bank of Ghana will enhance its gold purchase programme.

    President Akufo-Addo said he was confident that “these immediate measures designed to change the structure of our balance of payment flows, sanitise the foreign exchange market to ensure that the banks and forex bureaus operate along international best practices, together with strengthened supervision, will go a long way to sanitise our foreign exchange market, and make it more resilient against external vulnerabilities going forward.”

    The cedi was tagged by Bloomberg as the worst-performing currency in 2022 with its trading value at around GH¢14 to a dollar.

    Prices of products such as fuel, cooking oil, rice and other imported items have gone up astronomically within the last few weeks following the depreciation of the cedi.

    The continuous free fall of the cedi compelled the Ghana Union of Traders Association (GUTA) to declare a strike to force government to take steps to strengthen the currency.

     

     

     

  • Ghana needs to take an urgent decision to restructure to ensure debt sustainability – Ato Forson

    Dr. Cassiel Ato Forson, the ranking member of the finance committee in parliament, has said that before talks with the IMF move further, a decision should be made to assure Ghana’s debt sustainability.

    He contends that in deciding what kind of debt restructuring regimes to implement, the government must show some initiative.

    “Ghana is currently experiencing hardship related to sovereign insolvency; we are bankrupt. The decision to restructure must thus be made.
    What type of reorganization, though, is the question.

    “That is the kind of conversation I believe we have to go in. We have to consider the kind of restructuring that we’ll do that will safeguard the economy and preserve us going forward. I believe that is where we’ve gotten to at this stage,” he is quoted by myjoyonline.com on October 5, 2022.

    Ghana’s debt has been projected to become unsustainable after its debt to GDP is expected to hit about 104%.

    However, Ato Forson believes that if the government will pursue a debt restructuring, it has to be aware of which debt relief package it will want to adopt.

    “The first thing is after identifying that the debt is unsustainable how do you make it sustainable before you get the IMF programme? You need to agree on the debt relief that you will require. If you’ll need 20%, 30%, or 40% of your GDP in the form of debt relief, that brings the question, who will bear that burden?

    “How are you going to burden share? Are you going to tackle external, domestic, or everybody else? Are you going to add an official bilateral or not? At that point, you need to make a decision, and would debt restructuring alone do the trick? Because remember debt restructuring deals only with commercial debt holders.

    “So, if you’re going to deal with the official bilateral and export credit agency you need more than debt restructuring. You will need what we call a debt suspension initiative under the common framework. So that will mean you’ll need a double do,” he said.

    He advised that government seeks counsel and professional advice from knowledgeable people in the country, especially in academia.

    Ato Forson added that Ghana’s situation is beyond political gimmicks.

    “The academia is big, you can tap into their knowledge, civil society, and even the political divide, across the political divide and pick knowledge. Let’s sit down and confront the situation at the national level. Unfortunately, they’re dealing with it at the partisan and political party level, which isn’t helpful. The situation goes beyond politics. We need to rescue our country because this is all we have and the situation is getting worse by the day,” he added.