President Nana Addo Dankwa Akufo-Addo has given the strongest indication yet of his administration’s determination to provide relief, in the short term, to households and businesses as they continue to grapple with rapidly deteriorating economic conditions.
He has pledged to take necessary steps to restore stability to the wider economy in the long-run, adding that negotiations with the International Monetary Fund (IMF) are “at advanced stages, and are going well,” with a deal expected to be concluded “before the end of the year.”
In his first address to the nation following recent broad stakeholder consultations to solicit inputs on a range of measures required to salvage the sinking economy prior to the formal agreement and implementation of an IMF programme, the President outlined a number of measures ranging from the provision of comparatively cheaper fuel products to a prioritisation of exports, whilst assuring investors in government securities will not lose their investments.
With inflation accelerating to a 21-year high in September 2022, largely propelled by food and fuel costs, he said: “I know that the cost of living is the number one concern for all of us… Government is working to secure reliable and regular sources of affordable petroleum products for the Ghanaian market. It is expected that this arrangement, when successful, coupled with a stable currency will halt the escalation of fuel prices and bring relief to us all.”
Despite calls from some quarters for the government to directly intervene in the cost of retail consumer goods, by applying price control mechanisms – as has been witnessed recently in some countries, most notably, the Bahamas and Malaysia – the President applied moral suasion, appealing to the minds and consciences of traders to act in a manner that promotes the collective good.
“I hear from the market queens also that another factor fueling the high prices is the high margins that some traders are slapping on goods, for fear of future higher costs. I say to our traders, we are all in this together. Please let us be measured in the margins we seek.
"I have great respect and admiration for the ingenuity and hard work of our traders, especially those that take on the distribution of foodstuffs around the country, and I would hesitate to join in calling them names. I do make a heartfelt appeal that we all keep an eye out for the greater good, and not try to make the utmost profits out of the current difficulties,” he said.
The President indicated that the standards required for imports into the country will be reviewed with a prioritisation of local manufacturing and exports, which have a direct bearing on foreign exchange reserves.
“Government will, in May 2023, six months from now, review the situation. We must, as a matter of urgent national security, reduce our dependence on imported goods, and enhance our self-reliance, as demanded by our overarching goal of creating a Ghana Beyond Aid,” he added.
No Haircuts
Financial market stakeholders had been on edge as concerns have grown over the government’s ability to repay its debt, with some anticipating haircuts to the principals of holders of government security.
But the President said no investor will lose their investments, likening it to the banking sector reforms.
“I also want to assure all Ghanaians that no individual or institutional investor, including pension funds in Government treasury bills or instruments, will lose their money, as a result of our ongoing IMF negotiations. There will be no ‘haircuts’, so I urge all of you to ignore the false rumours, 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,” he remarked.
Fiscal targets
While stressing that the set of measures being implemented will go beyond fire-fighting, the President suggested that macroeconomic stability would be attained within the next three to six years, with an emphasis on maintaining debt sustainability in order to support long-term, inclusive growth and safeguard the underprivileged.
He set forth an ambitious target to restore debt sustainability, reducing the total public debt to GDP ratio to 55 percent in present value terms, compared to the more than 80 percent currently, whilst pegging external debt servicing at less than 18 percent of total annual revenue by 2028.
“We are committed to improving the revenue collection effort, from the current tax-revenue to GDP ratio of 13 percent to between 18 and 20 percent to be competitive with our peers in the West Africa Region. The GRA is rolling out an extensive set of measures to support this enhanced revenue mobilisation. All of us must do our patriotic duty, and support the GRA in this exercise,” he added.
Other measures include a review of the reforms in the energy sector, capping of statutory funds, implementation of the Exemptions Act and a new property rate regime, adding that the 30 percent cut in the salaries of political office holders including the President, Vice President, Ministers, Deputy Ministers, MMDCEs, and SOE appointees and cuts to discretionary expenditure will be maintained into 2023.
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President Nana Addo Dankwa Akufo-Addo