Ken Ofori-Atta, Finance Minister
The Minister of Finance, Ken Ofori-Atta, yesterday said Ghana’s economy is experiencing a rapid rebound from the devastating ravages of the Covid-19 pandemic.
He explained that “the rapid post-pandemic rebound” is as a result of the economic turnaround programme and the solid foundation the government built between 2017 and 2019.
The solid foundation, he said, was marked by an annual average of seven percent economic growth rate between 2017-2019, from 3.4 percent in 2016; containing the fiscal deficit below five percent of GDP for three consecutive years; restructuring the banking sector by spending GHS21.6 billion to protect the savings of 4.6million depositors and 81,700 investors; reducing inflation rate from 15.4 percent in December 2016 to 7.6 percent, among others.
“Last year, together, we made a lot of progress in our recovery effort after the devastating impact of the COVID 19 pandemic on our economy. Our GDP grew at a provisional 5.2% (in the first three quarters of 2021), and we continued to focus on improving the lives of our people. This compares to IMF estimates of 3.7 percent for SSA, and 3.6 percent for ECOWAS,” the Finance Minister said at a press conference.
“As the end of 2021, we had exceeded our domestic tax revenue target for 2021 by 0.5% and are well on course to exceed our GDP growth target of 5.0% for 2021 as well; [we also]sustained financing for Government flagship programmes,” he added.
Mr Ofori-Atta explained that this resulted in 1.26 million people benefitting from Free SHS; 3.45 million pupils covered by school feeding; 100,000 young persons employed under NABCO; 344,023 households being given a lifeline under the LEAP programme, among others.
Covid-19 disruptions
“However, by end-April 2020, the outbreak of the COVID-19 pandemic disrupted our progress. The cost of saving the lives and livelihoods of Ghanaians during the pandemic has been enormous. With revenues drastically reduced by GHȼ13,404 million and unplanned COVID-related expenditures rising by GHȼ11,788 million, public finances were stretched.
“In fact, our management of the Covid pandemic has received worldwide acclaim and these expenditures may account for the relatively low mortality rates (Total deaths in Ghana of 1,350 out of 235,210 for Africa as of yesterday 18th January 2022),” he stated.
He explained that the government was compelled by the situation to mobilise additional resources which included borrowing, adding that this compounded the country’s already stretched finances.
“To mitigate the impact of the COVID pandemic, Government immediately recruited additional 24,285 health professionals, provided 3.6 million reusable face masks, 50,000 medical scrubs, 90,000 hospital gowns and head covers to health facilities as at June 2020; rolled-out the GH¢750 million CAP-BuSS Programme in May 2020 to directly support Micro, Small and Medium-Sized Enterprises (MSMEs) to 302,001 MSMEs and to save 768,184 jobs; provided cooked meals to 2,744,723 vulnerable persons and worked with Faith-Based Organisations to distribute dry food packages to 470,000 families; supported household electricity (4,772,512 customers) and water (10.2m urban dwellers alone) subsidies for all Ghanaians; spent GH1.9bn to ensure that our children and teaching staff at all levels return to school safely and save the year as they were able to sit for their BECE and WASSCE Exams with historic results,” he added.
The Finance Minister said the government did all these “whilst still protecting and paying for the flagship programmes including the Free SHS, NABCO, Nurses and Teacher Trainee allowances, 1D1F, Planting for Food and Jobs, Road infrastructure, and Railways development, amongst others”.
2022 and beyond
He said the government would continue with its recovery efforts this year. “With a growth target of 5.3%, anchored around our GHS100bn GhanaCARES ‘Obaatan pa’ programme, we remain unwavering in our commitment to promote inclusive growth, encourage investment and raise the standard of living for our citizens,” he stated.
“This year, we have outlined in the 2022 Budget our plan and strategy to deliver opportunities for all Ghanaians in creating an entrepreneurial nation. The 2022 Budget enables us to stabilise the economy and address the greatest challenges of our time; that is the triple helix of Debt, digital and physical infrastructure deficit (especially Roads) and Unemployment.
“Indeed, the indignity of our youth sitting at home unemployed must be eradicated. Youth unemployment is not a statistic; it is real lives of Ghanaians like you and I and no one should hide his and her head in the sand,” he added.
E-Levy
Against this background, he urged the citizenry to embrace the proposed introduction of E-Levy, saying “it is important to our lives as Ghanaians and achieving our aim of moving beyond Aid.”
He explained that the country’s revenue to GDP ratio had languished between 11.3 percent in 2016 to 12.5 percent in 2021, compared to 16 percent to 20 percent with neighbouring countries.The country’s VAT revenue is also at 11 – 13 percent, compared to 18-44 percent of its peers.
“Clearly, this is an unsustainable way to anchor the extensive transformation agenda (articulated in our GhanaCARES ‘Obaatanpa’ Programme),” the Finance Minister stressed.
“This is further compounded by the fact that out of the total population of 30.8 million only about 2.4 million people pay personal income taxes. The question is: what is the most efficient way to bring all Ghanaians into the tax net to build a Ghana Beyond Aid that we and our children and grandchildren will be proud? The most efficient way must take into consideration technology and the structural changes in the tax handles, the fact that we have over 40.5 million mobile phone subscribers and over 17.1 million active mobile money subscribers,” he stated.
He observed that the country had, unfortunately, paid the price for low resource mobilisation through insufficient investment.
He explained that the E- Levy is a necessary tool to increase the country’s Tax to GDP from 13% to 16% and above guarantee that everyone pays.
“The E-Levy would not only ensure that we move towards a more sustainable debt level but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure. The E-Levy also provides a means for all Ghanaians to help support their country and grow this economy as compliant citizens giving to Caesar what belongs to Caesar,” he added.
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