According to Ghana’s Finance Minister Ken Ofori-Atta, the market’s negative reactions to the country’s economy were caused by Parliament’s failure to enact the Electronic Transaction Levy (E-levy) in the 2022 Budget.
He said that this had a detrimental effect on market confidence and significantly influenced the downgrading of Ghana’s sovereign credit ratings in January 2022, which caused a general worsening of the country’s financial situation and cut off access to the global capital markets (ICM).
He claimed that the country’s financial resources dramatically shrunk, which ultimately caused the unavoidable depreciation of the cedi.
He emphasized that this suggests that pressure will remain on the Cedi.
When the Finance Minister went before the Parliamentary Committee on Friday, November 18, to lead evidence in his defense, he was replying to ground seven as it was stated in the Vote of Censure Motion submitted by the Minority.
He argued that it is impossible to ignore the period of time during which the nation experienced economic problems and that it is time for an open national discussion about spending habits as well as for Ghanaians to rethink their preference for imported goods that demand foreign currency that the nation lacks.
He said that the government is constrained to use the IMF as a lender of last resort in order to safeguard all the macroeconomic and social policy advancements accomplished over the previous five years in addition to addressing the urgent and active balance of payment need.
Undoubtedly, there has been a lot of economic uncertainty and hardship over the past few months, he said. These have been distinguished by high rates of inflation and a swift depreciation of the cedi.
In fact, the economic difficulties we are experiencing call for careful but urgent, well-considered strategic actions in addition to the backing of the Ghanaian people.
Despite the uncertainty, the Minister expressed optimism about a few areas. He pointed out that the overall growth outturns for Q1 and Q2 were 3.4% and 4.8%, respectively, and that when combined with modest improvements in the fiscal position, this suggests that the economy is gradually on the upswing despite the numerous shocks it has experienced over the past two years.
He claims that this development has provided the economy a strong base on which to take on the difficulties that lie ahead.
Mr. Ofori-Atta emphasized that the Ministry of Finance is dedicated to working with all stakeholders, including Parliament, to ensure that the Ghanaian economy is put back on a path of growth and prosperity. He also informed the government that it is very aware of the risks that still exist.