Ghana: Finance Minister’s address on new measures to revive economy

PRESS STATEMENT ON THE ECONOMY

PRESENTED BY KEN OFORI-ATTA

HON. MINISTER FOR FINANCE
THURSDAY 24TH MARCH 2022

A. INTRODUCTION
1. Good afternoon, Ladies and Gentlemen of the Press and fellow
citizens. Thank you for availing yourselves.
2. I am here today to announce to you measures to address the
economic difficulties we are facing due mainly to recent global and
domestic events. These difficulties have manifested in:
i.
rising fuel prices;
ii.
rising inflation and cost of living;
iii.
exchange rate depreciation;
iv.
rising interest rates; and
v.
revenue mobilization challenges.
3. Cabinet had its first regular quarterly retreat for 2022 from 18th to 20th
March at Peduase, concluding in Accra on Monday, 21st March.
During the retreat, Cabinet deliberated extensively on a number of
issues and approved a number of measures to support current
efforts to address the challenges we are facing. Also on Monday,
March 21st 2022, the Bank of Ghana announced a number of
complementary, monetary measures to address the rising cost of
goods and services on the market and the worrying performance of
the cedi against major currencies such as the Pound Sterling, Euro
and Dollar.
4. 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.
A: GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENTS
5. If we look at the world today, there are two clear forces shaping global
events: the impact of the novel coronavirus pandemic and the crisis in
Ukraine. With the virus, the records show that our decision to focus first
on protecting lives and then livelihoods has paid off. By February, globally
some 7.03% of those infected by Covid-19 had died. For Africa the figure
was 4.03% (251,444 people). In comparison, less than 0.89% (1,445
people) of infected people died in Ghana.
6. Against all odds, but due to firm leadership, bold initiatives and responsive
citizens, Ghana has so far “collectively” managed the virus remarkably
well. But, we knew 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)
7. For government, 2022 was now the time to go full steam ahead in healing
the economy to create jobs, especially for our young generation. This was
evidenced by our growth figures, averaging 5.2% in 2021 up from 0.4% in 2020 and a startling 6.6% growth in the 3rd quarter of 2021. We outlined
our comprehensive recovery programme, the GhanaCARES ‘Obaatanpa’
programme to focus on the real sector to do just that. Our GHS10 billion
YouStart programme will be the most historic intervention for youth
employment in our country.
8. However, three (3) things that we did not (and could not) predict hit us:
(1) that Parliament would approve Government’s 2022 Budget Statement
and its expenditure plans and then turn around to vote against one of the
key revenue generation measures that was being introduced, the e-levy.
(2) That the unyielding stance of the Minority in Parliament against the Elevy would gravely affect investor confidence in our capacity to implement
our programmes and settle our debts, triggering a downgrading by credit
rating agencies, and now leaving the cedi vulnerable as we could not
access the International Capital Market.
9. Ladies and gentlemen, the third hit was the launch of the attack on
Ukraine by Russia on February 24, 2022. The war in Ukraine could not
have come at a worse time for the global economy. Already global efforts
toward economic recovery from the devastation wreaked by the
Coronavirus pandemic were being disturbed by supply chain disruptions,
surging inflation, and uncertainties in the financial markets, with
anticipated hikes in interest rates.
10.After February 24 we saw a sharp hike in global oil prices, food price
shocks (especially wheat), oil and gas price hikes, capital risk
aversion/flight to safety, affecting private capital flows to emerging markets as a whole, and all with serious macro-economic implications.
For example, crude oil prices (per barrel) increased by 75.3% from
US$74.17 in Dec 2021, when the 2022 Budget was passed to US$130 on
7
th March 2022, before ‘moderating’ to US$115 as today 24
th March 2022.
Crude oil prices crossed the US$100 mark for the first time since
September 2014. We recall that prior to the pandemic, we had built
resilience through the implementation of bold and prudent economic
measures.
11.By April 2019, we had successfully completed that four-year IMF
programme. We did so and more by:
i.
achieving an annual average real GDP growth of 7 percent
between 2017-2019 – from 3.4 percent in 2016;
ii.
maintaining a fiscal deficit below 5 percent of GDP for three
consecutive years;
iii.
maintaining a positive primary balance for three (3) consecutive
years which put our debt on a sustainable path;
iv.
lowering lending rates by over 10 percentage points;
v.
restructuring the banking sector to protect the savings of 4.6 million
depositors and strengthening the financial sector. So far,
government has spent over GHS25 billion since 2018 to clean-up
the financial sector;
vi.
reducing inflation from 15.4 percent in December 2016 to 7.6
percent in 2019 and preserving the integrity of the local industry;
vii.
improving the gross international reserves to reach US$8.6 billion
or about 4 months of import cover by February 2020;

viii.
introducing the most ambitious social welfare policy ever seen in
our country: the Free SHS;
ix.
constructing and rehabilitating more roads and cumulative of
6,250km, completing 6 of 11 interchanges and flyovers than any
government in history;
x.
employing more new teachers, nurses, doctors, Agric extension
officers and young graduates than any government in history;
xi.
saving the entire financial sector from an inherited, neglected crisis
that has cost Government some GHS25 billion so far;
xii.
instigating more value-for-money audits on public procurements
than any other government in history; and
xiii.
investing more resources in the Police, Military, governance and
anti-corruption institutions than ever before.
12. It is this proven record of fixing what is broken that gave the NPP
government the confidence to tackle head-on the devastation unleashed
by Covid-19 and it is this same can-do and will-do attitude that gives us
hope that we shall overcome the current crisis. We are not a people to
bow to the spirit of despondency and despair.
13.As well as threatening global peace, the conflict in Ukraine has had a farreaching impact. We do not know how long the conflict will last, but it is
clear that it has already forced many countries, in Europe and beyond, to
adjust their economic plans for 2022 and Africa is likely to be amongst the
worst hit outside of Ukraine. UNCTAD’s rapid assessment of the war’s impact on trade and development shows a rapidly worsening outlook for
the world economy, with the situation especially alarming for African
countries.
i.
the Russia-Ukraine war has also compounded the global
supply chain and trade disruptions brought about by the
COVID-19 Pandemic as well as adversely impacted the
dreaded 3 Fs- food security, fuel price escalation, and
financing conditions thus impacting living conditions with the
capacity to derail global recovery efforts in 2022;
ii.
global inflation trending upwards has led to Central Banks
raising interest rates globally resulting in tight financing
conditions and reversal of capital inflows especially in
Emerging Markets. For example, the U.S. Federal Reserve
Bank announced a hike in interest rates by 0.25 percentage
points on 16th March and has signaled more of such to follow.
Similarly, the Bank of England has raised its policy rate by
another 25 basis points to 0.75 percent on 17th March, 2022;
iii.
We have seen the highest inflation in US, UK, Germany, and
other advanced countries since 1974. The US’s inflation
increased by 6.5 percentage points from 1.4% in Jan 2022 to
7.9% in Feb 2022. Similarly, inflation in Germany increased by
4.1 percentage points from 1% in Jan 2022 to 5.1% in Feb
2022. Similar trends are observed in UK inflation and across
the EU countries;
iv.
Since the Covid-19 pandemic struck, more than 60% of African
Sovereigns have suffered downgrades across the region.

Ghana witnessed a downgrade from Fitch On 21st January
2022 to ‘B-‘ with a Negative Outlook whilst Moody’s
downgraded Ghana to ‘CAA1′ with a Stable Outlook On 4th
February 2022, even though S&P affirmed Ghana’ rating at ‘B-
‘ with a Stable Outlook on 7
th February 2022. These
downgrades have had implications for market access,
exchange rate depreciation, capital flight and increased cost of
financing;
14. Ladies and Gentlemen, on the domestic front, the challenges
include the impasse in Parliament which is adversely affecting
government business such as the passage of some revenue bills
including the E Levy bill. This is creating uncertainty which has been
highlighted as a key risk by the Ratings Agencies and affected our
credit spreads, limiting our access to the International Capital
Markets.
15. The adverse global developments are impacting severely on
exchange rate depreciation and domestic inflation as investors take
refuge in safer assets, by stocking up on the dollar, which is
considered the safest currency to hold. The dollar has in recent
weeks gained its highest level since Covid-19 two years ago.
16. The cedi has not been spared. Cumulatively, our local currency has
depreciated by 15.6% against the US dollar, and 13.4% and 13.3%
respectively against the Pound Sterling and Euro, in the year to 23rd
March 2022. This, understandably, is causing a lot of anxiety among
traders and consumers alike. However, we also need to recognize
that, in spite of it all, the cedi has held under these extreme challenges better than it did between 2014 and 2015. This is
because the fundamentals are stronger. The Bank of Ghana has
announced measures to address the exchange rate depreciation
and we believe in the propriety of the measures they outlined on
Monday.
17. The rising international price of crude oil and the exchange rate
depreciation are also affecting the ex-pump prices of fuel
domestically as it feeds into high transportation fares, and hence
inflation. For example, the average ex-pump price of diesel for three
OMCs (Goil, Total, and Vivo) increased by 59.7% from GHS6.7 per
litre on First January 2022 to GHS10.7 by 21st March 2022. Ghana
is not alone here. From Angola, and Malawi, through Nigeria and
Rwanda, to Senegal, down to Zimbabwe, fuel prices are soaring.
Some neighbouring countries are not only dealing with rising petrol
prices, but also scarcity on petroleum products, leading to long
queues at filling stations.
18. It remains the case, however, that one of the biggest drivers of price
increases in goods and services in Ghana, is a fuel price hike.
Inflation has surged to 15.7% at the end of February 2022. Food
inflation increased from 12.8% in December 2021 to 17.4% in
February 2022, while non-food inflation rose from 12.5% to 14.5%
over the same period.
19. Ladies and Gentlemen, provisional data on the stock of debt as at
the end of December 2021, show that, the stock of public debt
increased to GH¢351.8 billion (80.1 percent of GDP), compared with
GH¢218.2 billion (61.2 percent of GDP) at the end of December 2020. Of the total debt stock, domestic debt was GH¢181.8 billion
(51.7 percent), while the external debt was GH¢170.0 billion (48.3
percent).
20. Ladies and Gentlemen, the global and domestic developments I
have outlined above, are affecting the effective implementation of
the Budget. Urgent and decisive actions are, therefore, required to
address the challenges and ensure the achievements of the
objectives and targets of the 2022 Budget, including unleashing the
entrepreneurial verve of the Ghanaian youth.
21. Whilst we are in the process of revising the 2022 fiscal framework
to reflect current developments with the view to go to Parliament to
seek approval for the revisions during the Mid-Year Review in July,
Government will pursue additional measures to ensure the
achievement of the fiscal deficit target of 7.4% of GDP.
B. MEASURES TO ADDRESS THE CHALLENGES
22. Ladies and Gentlemen, Government had already started the new
year with spending cuts as Parliament failed to approve key revenue
streams at the appropriate time. In January 2022, Government
announced and, immediately, began implementing a 20%
expenditure cut as part of fiscal stabilisation and debt sustainability
measures.
23. This has been done through the quarterly expenditure ceiling
allotments to MDAs. Quarter 1 allotment is currently under implementation whiles Q2 allotments will be issued shortly. The
ministry has strengthened its Expenditure Monitoring systems and
processes to ensure effective implementation of these measures. In
addition, Government has decided to take the following measures to
ensure the achievement of the fiscal deficit target of 7.4% of GDP
for 2022:
C. Expenditure Cutting Measures
i. Discretionary spending is to be further cut by an additional
10%. The Ministry of Finance is currently meeting with MDAs
to review their spending plans for the rest of the three (3)
quarters to achieve the discretionary expenditure cuts;
ii. these times call for very efficient use of energy resources. In
line with this, there will be a 50% cut in fuel coupon
allocations for all political appointees and Heads of
government institutions, including SOEs, effective 1
st April
2022;
iii. with immediate effect, Government has imposed a complete
moratorium on the purchase of imported vehicles for the rest
of the year. This will affect all new orders, especually 4-wheel
drives. We will ensure that the overall effect is to reduce total
vehicle purchases by the public sector by at least 50 percent
for the period;
iv. again, with immediate effect 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
December 2022;
vi. Government will conclude the renegotiation 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;
vii. impose a moratorium on establishment of new public sector
institutions by end April, 2022;
viii. prioritise ongoing public projects over new projects. This is to
enhance the efficient use of limited public funds over the
period by finishing ongoing or stalled but approved projects;
ix. reduce expenditure on all meetings and conferences by 50%,
effective immediately;
x. Finally, Cabinet approved that Ministers and the Heads of
SOEs to contribute 30 percent of their salaries from April to
December 2022 to the Consolidated Fund; We would like to
thank the Council of State in their leadership in
complimenting the Government on this policy.
xi. pursue a comprehensive re-profiling strategies to reduce the
interest expense burden on the fiscal; and
xii. liaise with Organised Labour and Employers Association to
implement with immediate effect, the measures captured in
the Kwahu Declaration of the 2022 National Labour
Conference, including reforms towards addressing salary
inequities / inequalities (e.g. Article 71 Office Holders), the
weak link between pay to productivity and the sustainability
of the payroll.
xiii. 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.
24.All of these measures are aimed at ensuring that we achieve the
7.4% deficit target set in the 2022 budget.
D: Fuel Price Mitigation Measures
25. Ladies and gentlemen, the rising prices of fuel at the pumps is
influenced largely by the rising crude oil prices on the international
market and the exchange rate depreciation. Though the rise in crude
oil prices should have been to our benefit on net basis, Ghana’s
import of petroleum products amounts to 5.2 times the value of the
proceeds from its crude oil exports. In 2022, we exported $3,947.70
million of which Ghana’s portion was $513 million. However, we
imported $2,719.00 of crude oil and finished products. The purported
windfall gain in foreign exchange is a mirage. From January to date,
the average ex-pump price of diesel and petrol have increased by
57% and 45% respectively.

13

26. Unlike in other countries where the hike in crude oil prices and
exchange rate volatility are leading to shortages in supply of
petroleum products, government is implementing measures to
guarantee constant supply of petroleum products. To mitigate the
impact of the rising price of petroleum products at the pump, for the
next three months, 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. The details are as follows:
i.
BOST margin reduced by 2 pesewas per litre
ii.
Unified Petroleum Pricing Fund (UPPF) margin reduced by 9 pesewas
per litre
iii.
Fuel Marking Margin (FMM) reduced by 1 pesewa per litre
iv.
Primary Distribution Margin (PDM) reduced by 3 pesewas per litre
27. Ladies and gentlemen, these reductions in margins are expected to
reduce prices of petrol by 1.6% and diesel by 1.4%. We anticipate that
the measures taken to strengthen the currency will help further stabilize
the prices at the pump.
28. Ladies and gentlemen, the NPA is in discussion with the OMCs to reduce
their margins within the spirit of burden-sharing.
29. The Government will do all it can to ensure consistent supply of fuel and
manage the rate of ex-pump price increase by ensuring that BoG has access to adequate foreign exchange.

E: Revenue Measures
30. Ladies and gentlemen, cutting down on expenditures alone will
not be enough. Our focus is therefore twofold: to control
expenditure and to raise more revenues domestically. As such,
we will, therefore:
i.
Begin the implementation and collection of the revised
Property Rate by end of April 2022;
ii.
implement
the
E-VAT/E-Commerce/E-Gaming
initiatives by end of April 2022;
iii.
roll out the simplified tax filing mobile application for all
eligible taxpayers by July 2022;
iv.
impress upon Parliament to fast track the passage of
the E-Levy Bill, Tax Exemptions Bill, and Fees and
Charges Bill;
v.
prioritise the Revenue Assurance, Compliance, and
Enforcement (RACE) Programme to plug revenue
leakages especially at the ports and the infamous fuel
bunkering and small scale mining exporters cabal;
vi.
government will partner the private sector to introduce
digital systems to monitor quarrying, sand winning and
salt winning to get more revenues from our natural
resources; and
6
vii.
immediately enforce the “No Duty – No Exit” policy at
the MPS Terminal at the Tema Port to improve
revenue collection.
Financing and Currency Measures
i.
GoG to conclude external financing arrangement of up
to US$2 billion in the next 2-6 weeks in line with
approved external financing for 2022 and for liability
management;
ii.
MoF will work with the Central Bank to review the
foreign exchange retention policy to ensure
multinational companies in the extractive sectors retain
foreign exchange earnings, from the sale of our
resources, in the country.
31.Additionally, the following measures will be implemented over the
medium-term:
i.
Wean-off public tertiary institutions from government
payroll and provide them with a fixed amount “block
grant” instead.
ii.
Pursue reforms to address structural challenges in
public financial management including procurement
and commitment control, payroll management and human resource management.

CONCLUSION
32. It is too early to say the COVID-19 pandemic is over. But it is good
to acknowledge that Ghana has handled it excellently. We have
emerged from its deadliest and most economically damaging phase.
If the measures we have outlined in our economic recovery
programme are executed as planned, the Ghanaian economy
should return to pre-pandemic levels across most economic
indicators by the end of the year.
33. On the other major event driving the global economy, we recognize
that the world is four weeks into this terrible war, and it is quite clear
that both the occupation of Ukraine, and the range of sanctions
imposed on Russia, will have profound effects both in the short and
long-term for global markets. The longer the conflict goes on for, the
greater will be the disruption to the global economy. We shall
continue to monitor the situation very closely and make further
adjustments if and when needed.
34. We may have no control over the trajectory of the conflict, but it only
reminds us how necessary it is for Ghanaians to assert greater
control over our own destiny. That we can do if we share in the
sacrifices before us to strengthen our capacity for greater selfreliance, even in an interdependent world. Government remains
optimistic that our economy will grow even bigger this year. The
challenge now is to marshal this economic growth before us in the
right direction, and ensure that it benefits Ghanaians across board.

35. Ladies and Gentlemen, we are confident that these measures will
address the immediate and short-term challenges confronting our
nation. Government remains resolute and committed to entrenching
the structural transformation of our economy in the long term.
36. To this end, we are aggressively pursuing key interventions such as
1D1F, GhanaCARES and the YouStart programmes to improve our
ability to locally produce more goods and optimise the opportunities
AfCFTA offers us. It is important that, as a country, we reduce our
dependence on imports and increase local production. Public
institutions are reminded of Government’s policy to buy locally
produced goods. It is critical that Ghanaians reconsider their
preference and consume more locally produced goods to support
the economy and guarantee decent jobs for our people.
37. Ladies and Gentlemen, your Government, the Akufo-Addo
administration, is determined to turn things around and has the skills,
discipline and compassion to do it. But to do so, we must not allow
our fortunes to be misdirected by speculators and naysayers – those
who only thrive when we allow avoidable uncertainties to hold sway
in the affairs of our nation. Government will, by this, appeal to
Parliament to put the nation first and work in partnership to serve the
people of Ghana right. Paraphrasing Psalm 122:7, I pray that peace
be within the walls of Parliament and sobriety within its towers.
38. Ladies and Gentlemen, these measures outlined today will
significantly improve the macro-fiscal situation towards the
restoration of confidence and safeguard the achievement of the
2022 budget deficit target of 7.4% of GDP. These measures have
18

been carefully designed to ensure that growth and spending on
social protection are not compromised.
39. Ladies and Gentlemen, these are truly challenging times globally.
No country has been spared. Government, therefore, calls on all
Ghanaians to stand together. Together, we shall surely overcome.
40. Ladies and Gentlemen and people of Ghana, we can do it together.
This is not the first time an NPP Government, working together with
the people of Ghana has succeeded in overcoming an economic
challenge of this nature. We have demonstrated time and time again
our ability to overcome.
41. First, in 2001, the NPP Government led by Former President Kufuor,
together with the people of Ghana, brought the country out of severe
economic difficulties. Second, in 2017, the NPP Government led by
President Nana Addo Dankwa Akufo-Addo, together with the people
of Ghana, brought the country out of the economic doldrums in which
we were at the end of 2016. This third time, still under President
Akufo-Addo, working together with the people of Ghana, will not be
an exception.
42. Ladies and Gentlemen, I have had the privilege of engaging in a
number of townhall meetings from Koforidua to Takoradi, Tamale,
Wa and Ho, and the resolve of our people to burden-share for a
better life for all is palpable. In particular:
i.
They want everyone to pay taxes;
ii.
They want Government to be accessible;
iii.
They want Parliament to get on with its work; iv.
They want employment for our youth;
v.
They want Agriculture and industry to thrive; and
vi.
They want us to tackle our debt problem and raise more
revenue and to prosecute offenders.
43. Ladies and gentlemen, our Mid-Year review will reveal the success
of what we have done. This will ensure that the structural reforms
are crystalised, reduce fiscal dominance and ensure fiscal and
monetary policy coherence.
44. Let me end by a quotation from Jeremiah 29:7
“Seek the peace and prosperity of our nation. Pray to the Lord
for it, because if it prospers, you too will prosper’
45. Together, we will confront the macro-economic challenges head on,
stabilise the economy and set it on the path of economic
transformation for all.
46. Ladies and Gentlemen, fellow Ghanaians, I thank you for the
attention.
47. God Bless our Homeland Ghana!

Source : afticaneditors.com