Deputy Minister for Finance and Member of Parliament (MP) for Ejisu, Hon. Dr. John Ampontuah Kumah, has shot down claims by former President John Dramani Mahama that the country’s major macroeconomic indicates are headed South, stressing that Ghana is not faced with any liquidity challenge that would compromise debt service for 2022 and beyond.
He said government of Nana Addo Dankwa Akufo-Addo has reduced debt maturing under one year, through the active liability management programme.
According to him, former President John Mahama was economical about the economy because indeed, the NPP government enacted the Fiscal Responsibility Act (FRA), which by law cupped deficit at 5% of GDP and required the Government to maintain a positive Primary Balance at all times.
“Indeed, the government went ahead to sign an MOU with the Bank of Ghana, which prohibited funding from the Central Bank. Until COVID-19 hit our shores, Government had maintained; deficit under 5%; Positive primary balance (which measures our ability to service debt); and maintained zero financing from the central bank,” he stressed.
The Deputy Finance Minister also posited that in the face of COVID-19, government has drawn a credible plan to return to the fiscal deficit threshold by 2024 and that already, it forecast to post a positive primary balance in 2022.
John Kumah said although there is the GHS10.0billion Asset Purchase Programme in 2020, government has maintained zero financing with the Bank of Ghana hence, the fiscal framework has been standardized to reflect recent macro-fiscal measures for 2022.
He said: “As a result, the overall budget deficit is projected to moderate downwards from 7.4% in 2022 to 5.5%,4.5 and 4.2% in 2023,2024, and 2025 respectively.
The GDP growth of 6.6% recorded in the 3rd quarter of 2021, and the projection of end year GDP growth of 5.3% give us confidence that we may consolidate much quicker than anticipated.”
On depreciating currency, the Deputy Minister averred that the performance of Nana Addo is unparalleled in that regard. He mentioned that from a high of 9.6 percent in 2016, the average exchange rate dropped to 4.9 percent in 2017, 8.4 percent in 2018, and reduced to a low of 3.9 percent in 2020.
In February 2020, the Cedi was the best performing currency in the world, he said, adding that “this clearly indicates that the NPP government has managed the currency better than we saw in the past. The Cedi remained stable in 2021 underpinned by the Central Bank’s proactive support and close monitoring of the domestic and external markets. The Cedi depreciation against the US dollar in 2021 was 4.09%. It is among the lowest depreciation seen in recent times.”
He revealed that under the NDC, the cedi suffered the most as at the end of September 2012 it had depreciated by 17.9% to the dollar, 14.1% to the GBP and 13.1% to the Euro at the interbank market and by September 2013, the Cedi gained marginally when it depreciated by 4.12% to the dollar, 9.97% to the GBP and 14.1% to the Euro.
“By the end of 2013, the Cedi maintained its level at 4.12% depreciation. However, the GBP further depreciated from 9.97% to 16.73% and Euro from 14.1% to 20.05%.
By September 2014, the currency saw it worse when it depreciated by a whopping 31.19% to the dollar, 29.32% to the GBP and 23.63% to the Euro. This development certainly reflected the competence or otherwise of the managers of the economy at that time.”
He noted that the situation improved slightly when the local currency depreciated by 14.8%, 12.6%, and 7.8% to the dollar, GBP, and Euro, respectively, by September 2015 and by the end 2016, the Cedi depreciated by 9.6% to the dollar, appreciated by 10% to the GBP and depreciated by 5.4% to the Euro.
Hon John Kumah also debunked John Mahama’s claims that there is loss of confidence in the Ghanaian economy.
According to John Kumah, there is no evidence to point to a loss of confidence in the Ghanaian economy and that there have been some problems occasioned by the delay in passing the e-levy bill and general negative sentiment propagated by the opposition NDC.
“However, the markets have rallied back, and the spreads in our bonds have started narrowing, on the back of the Finance Minister’s recently announced 20% cut in expenditure and the recently held investor engagements.”
He also expressed surprise at John Mahama when he (Mahama) showed his ignorance about the much-touted GHS10.0 billion COVID-19 Alleviation and Revitalisation of Enterprise Supports (GhanaCARES) programme Obaatan Pa programmes.
The Obaatanpa Programme, he said, is a clear strategy to stabilise, revitalise, and return the economy to its pre-Covid growth and fiscal deficit path by 2024. It is funded through a GHS3.0 billion public sector contribution and GHS7.0 billion Private sector contribution.
He explained that the GhanaCARES has Two (2) Phases which include providing relief and support to Ghanaians, ensure food security, protect businesses and workers, strengthen the health system, and attract private investments to support Ghanaian businesses, and also accelerating the Ghana Beyond Aid economic transformation agenda.
“We note that JM’s assertions on election spending are not backed by the evidence. If the former President wants to appreciate mismanagement during election years, there is classical evidence before him. Unlike 2012 when Mr. Mahama spryly spent billions of cedis in three months to win elections and subsequently led Ghana to turn to IMF, the Nana Addo government never did that.
To appreciate election spending, one must know that elections-related spending is done through the budget’s Good and Service component. We noticed that in 2012, Good and Services increased by 37% from a budgeted amount of GH¢967.0 million to an actual expenditure of GH¢1,322.0 million.”
Meanwhile, John Kumah said the nominal increases in public debt stock post covid arise from crystallisation of contingent liabilities which the NDC created, exchange rate effect on external debt stock, disbursements from old loans from previous governments, exchange rate depreciation, financing the budget & Covid-19 pandemic.
He however maintained that the country’s debt sustainability indicators are on the right path.
