Finance Minister Ken Ofori Atta
The Minister of Finance and Economic Planning, Ken Ofori Atta, has assured Ghanaians that the Akufo-Addo government is committed to fixing the challenges facing the country. That notwithstanding, he has also called on Ghanaians not to lose sight of the challenges posed to economies around the world due to the novel coronavirus pandemic.
He gave the assurance during a press conference held yesterday to address concerns primarily raised by the youth on social media urging the government to tackle the challenges confronting the country.
Covid effect
According to Mr Ofori Atta, the decisive and unparalleled measures the government took to protect Ghanaians against the effect of Covid-19 came at a cost, “as seen in the sudden relapse in the debt situation from 62.4% (2019) – 76.1% (2020).”
He noted that the situation is not peculiar to Ghana, saying “taking a look at similar sudden rises in debt burdens of countries around the world over the same period may be indicative of the time we live in and where we are coming from.”
Due to the novel coronavirus, countries around the world have had a sudden rise in their debt stock. South Africa’s debt ratio jumped from 62.2% (2019) to 82.6% (2020); Rwanda from 50,7% (2019) to 61.6% (2020), while that of the United Kingdom also jumped from 85.4% (2019) to a region of 100.9% (2020).
In Ghana, “the impact of the pandemic led to a downward revision of revenues by GHC13.4 billion (3.5% of GDP) and expenditures by an additional Ghs11.8 billion (3.1% of GDP) with a combined fiscal impact of Ghs25.2 billion (6.5% of GDP).”
“As a result of the President’s quick and decisive leadership, the Government came through for its citizens, responded swiftly and strongly even as tax collections were drying up. As a result, the Government spent about GHC8,134 million (about 8.1% of Expenditures and 15.1% of Domestic Revenues) to preserve livelihoods.
“The Government provided 1,827,581 and 917,142 cooked food packs to vulnerable and underprivileged persons within Accra and Kumasi. In addition, in partnership with Faith-Based Organisations, Government also distributed dry food packages to about 470,000 families during the period of the partial lockdown in Greater Accra and Greater Kumasi,” he said.
Mr Ofori Atta added that the government also fully covered the consumption of electricity for the over one million lifeline customers and subsidised 50 per cent of the consumption of all other customers for the period.
Other interventions include provision of free water to over 10 million Ghanaians between April to December, 2020, leading to about 43.21 per cent increase in monthly water supply of 9.24 million cubic to reach 13.23 million cubic metres.
“Furthermore, 474 small towns and 1,143 rural communities benefited from the Community Water and Sanitation Agency (CWSA),” he said.
“Under the ‘Operation Return Home’ programme, the government assisted 10,025 Ghanaians whose circumstances had been worsened by the COVID-19 pandemic to return home.
“The government launched and operationalised the GHC750 million Coronavirus Alleviation Programme – Business Support Scheme (CAP-BuSS) which mitigated the impact of the pandemic on several Micro, Small and Medium-Sized Enterprises (MSMEs). At the end of April 2021, about GH¢412.88 million had been disbursed to support 277,511 businesses; 69% being female-owned. The scheme has saved over 650,000 MSME jobs,” he added.
All of these, according to the Minister, contributed to the challenges the country is faced with.
Debt stock
He said the country’s debt stock, as of end-December 2020, stood at a nominal figure of GH¢291,614 million, representing 76.1 per cent of GDP, compared to GH¢217,991 million, equivalent to 62.4 per cent of GDP in 2019.
“The total public debt has increased from GH¢122 billion (56.9% of GDP) in 2016 to GHC 291.6 billion (76.1% of GDP) at the end of December 2020,” he said.
Included in the debt stock and the debt/GDP ratio at the end of 2020 are GHC 25.2 billion from Fiscal Impact of COVID-19; GHC 21 billion from Cost of Financial Sector Clean up; GHC 12 billion, Cost of Excess Capacity Charges paid to IPPs and impact of the reduction in growth from an average of 7 percent(2017-2019) to 0.4percent in 2020.
“If these expenditures are excluded, and the drop in GDP growth in 2020 primarily attributable to the COVID-19 pandemic is taken into account, the total stock of debt for 2020 would have been approximately GHC 238.9 billion, implying a debt to GDP ratio of 58.7%, which is below the ECOWAS threshold of 70%,” he said.
Better management
Mr Ofori Atta added that while Ghana’s debt stock increased by 30 per cent between 2004 and 2008, it skyrocketed by 269 per cent and 243 per cent between 2008 and 2012 and 2012 and 2016 respectively.
Between 2016 and 2020, however, the increase in Ghana’s debt stock was 137 per cent, including the cost of the banking sector clean-up, excess capacity charges and the impact of the COVID-19 pandemic.
Fixing
On the concerns by the #fixtheCountry group, the Minister gave the assurance that he is working with the Minister of Water and Sanitation to immediately ensure potable water to areas with felt need. He added that he is also working with the Ministers of Roads and Highways, Transport and Interior to address congestion along the major highways.
The government is also fast-tracking the implementation of the US$200million Jobs and Skills Programme to enhance job creation significantly while rolling out over eight additional interventions under the GhanaCARES “Obataanpa” programme. He added that by the end of July, “we will have a new Development Bank that will provide long-term wholesale financing to the private sector through Commercial banks.”
“The good people of Ghana have given us a mandate to get things done. For us as a Government, this is a clarion call for a national conversation on the shared burden to renew the social contract of our democracy. At its minimum, we should ensure social justice and social mobility for most Ghanaians. At our best, we should open for all Ghanaians, an economic system under which each citizen shall be guaranteed the opportunity to show the best in him or her,” he added.
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