Ghana's Journey To Economic Recovery

The global environment is fragile, and the outlook remains uncertain. Global economic activity has slowed down more broadly and sharply than anticipated due to the decline in global economic growth; the rise of public debt above sustainable levels across major economies, especially in emerging markets; the degree of decay when it comes to public health due to the COVID-19 pandemic; and now the Russia-Ukraine war and its attendant consequences. Overall, this has affected global inflation.

A CHART OF GHANA'S RISING INFLATION RATE IN 2022

In all these uncertainties and global crises, no single country was exempted and Ghana had its fair share of the cake. Ghana's public debt has risen past the sustainable level for an emerging economy. The country's current debt is over 80% of its GDP The overall fiscal deficit doubled to 15.2% in 2020 and public debt increased to 81.1% in 2020, placing Ghana at a significant risk of debt distress. Economic situations continually grew worse such that as at November, 2022, the Ghana cedi depreciated cumulatively by 54.2 percent against the US Dollar. Similarly, the Ghana cedi depreciated cumulatively by a 48.5 percent against the British Pound.

GHANA'S FINANCE MINISTER OUTLINING STRATEGIES TO REVIVE THE COUNTRY'S ECONOMY

In view of these fiscal management challenges, government has developed and introduced policy measures and programmes aimed at restoring fiscal discipline, reversing the fiscal deterioration, and putting the public debt on a downward and sustainable path. Ghana's 2023 Budget Statement presents solutions and the way forward in restoring the country's economic stability which are mostly home grown economic recovery plan. These included; increasing its domestic revenue base, reducing government expenditure, and reviewing the tax laws to block leakages of tax revenue, significantly expanding local production. These proposed solutions are to be achieved utilizing a seven-point schedule. These comprise of aggressively mobilizing domestic revenue; streamlining and rationalizing expenditures; boosting local productive capacity; promoting and diversifying exports; protecting the poor an vulnerable; expanding digital and climate-responsive physical infrastructure; and implementing structural and public sector reforms.

Finance and how is it managed is integral to making plans that will generate substantial revenue to revitalise and transform the economy. The country plans to make this feasible through three (3) critical means; that is; negotiating a strong IMF programme; coordinating an equitable debt operation programme; and attracting significant green investments.

Firstly, domestic revenue would be mobilized through the increment of VAT by 2.5 percent; fast tracking the implementation of the Unified Property Rate Platform programme and a review on the E-Levy Act by reducing the headline rate from 1.5% to one percent (1%) of the transaction value as well as the removal of the daily threshold for a better reception from the citizens.

Also, a 50% cut of imports of public sector institutions that rely on imports either for inputs or consumption to boost local productive capacity; the production of strategic substitutes, large-scale agriculture and agribusinesses interventions which would be supported via the Development Bank Ghana and ADB Bank; policies for the protection and incubation of newly formed domestic industries would be introduced to allow goods produced here become competitive for local consumption and also for exports.

GHANA'S ECONOMIC RECOVERY PATH

Furthermore, exports will be promoted through the expansion of the productive capacity in the real sector of the economy and actively encouraging the consumption of locally produced rice, poultry, vegetable oil and fruit juices, ceramic tiles among others.

In addition, to pursue efficiency in Government expenditures, there would be the implementation of Government directives on expenditure measures; Integration of public procurement approval processes with GIFMIS to ensure that projects approved are aligned with budget allocation; a review of key government programmes to reflect relevance, promote efficiency, and ensure value for money; and a review of the efficiency of Statutory Funds.

Again, for structural and public sector reform implementation, there would be an imposition on a debt limit on non-concessional financing; major structural reforms in the Public Sector by reviewing the operations of agencies; enforcing compliance with legal and regulatory framework on foreign exchange; initiating measures to overhaul the tax structures in the extractive industry; expanding the gold purchase programme by Bank of Ghana to support FX Reserve accumulation, promoting an LBMA certified gold refinery in Ghana and promoting the local currency stability

The Ghanaian economy has suffered a great deal of economic difficulties at the macro and micro levels which has affected both the citizens and foreign investors in both personal and business life. The governments policies in pushing this agenda are quite difficult and challenging and will demand a lot of cooperative effort, commitment and sacrifices from all its citizens and various sectors of the economy