Finance Minister announces stringent fiscal measures to restore economy
Finance Minister, Mr Ken Ofori-Atta, has announced a series of fiscal measures aimed to reduce the deficit, stem rising inflation and slow the depreciation of the cedi.
The measures include a cut in discretionary spending by an additional 10 per cent, in addition to a 20 per cent expenditure cut announced in January and a reduction in government ministers’ and heads’ of state agencies salaries by 30 per cent.
The government is also imposing a moratorium on vehicle purchases and foreign travel except in special circumstances and a 50 per cent cut in fuel coupon allocations.
“The difficulties we are facing in Ghana are not peculiar to Ghana,” he said, citing the impact of COVID-19 pandemic and the war in Ukraine on the economy.
“We are confident these measures will address the short term challenges our nation is facing.”
Inflation has risen to six year high of 15.7 per cent while the cedi has depreciated about 15.6 per cent against the dollar.
Mr Ofori-Atta said the Government decided to take the measures to ensure the achievement of the fiscal deficit target of 7.4 per cent of GDP for 2022.
However, he said the unyielding stance of the Minority in Parliament against the E-levy was gravely affecting investor confidence and the capacity of government to implement its 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.
He urged parliament to fast-track the passage of the E-levy.
On the depreciation of the cedi, Mr Ofori-Atta said the government would conclude an external financing arrangement with some international banks of up to $2 billion in the next two to six weeks to shore up the cedi.
The Minister ruled out going to the International Monetary Fund (IMF) for bail out.