In 2023, Finance Minister Ken Ofori-Atta anticipates a significant economic recovery.
He is thus, pleading with Parliament to assist the government by approving the Appropriations Bill for the Fiscal Year 2023.
Giving an update on the economy, “We also urge Parliament to support in particular new revenue measures outlined in the 2023 budget which aim to improve revenue mobilization. We cannot afford to repeat the mistakes of 2022.”
“2023 must be our “comeback” year. A year in which we put in place stronger foundations that would allow us to change our country for the better and in a way that is enduring, inclusive and transformational,” he added.
Mr. Ofori-Atta pointed out that the ensuing years will focus on building an entrepreneurial and export driven economy.
He also added that Ghana cannot afford to lose this essential economic momentum as it moves toward stability, predictability, and prosperity.
Mr Ofori-Atta All Ghanaians were asked by him to cooperate with the administration and support the numerous initiatives being carried out to jump-start the country’s economic recovery in a decisive, audacious, and brave manner.
“Above all, I urge us all to maintain an unshakeable sense of optimism about Ghana in the days and years ahead. Indeed, “the LORD is the Lifter of our heads” (Psalm 3:4), as we all witness a new confidence in our currency and the prospects of the certainty of an IMF Board approval of our Staff Level Agreement”.
The Government of Ghana has on Monday, December 19, announced it is suspending debt service payments on certain categories of external debt including Eurobonds, commercial loans and most bilateral debt.
According to the government, this is aimed at bringing the country’s unsustainable debt level under control – a statement from the Ministry of Finance said.
In the said release, the Ministry noted that debt payment suspension is “an interim emergency measure pending future agreements with all relevant creditors.”
Excerpts of the statement from the Finance Ministry
However, this move will not affect debts contracted on or after December 19, 2022.
“This suspension will not include the payments of our multilateral debt, new debts (whether multilateral or otherwise) contracted after 19th December 2022 or debts related to certain short term trade facilities.”
Meanwhile, the government has assured its external creditors that engagement on the move will be fair and transparent.
“The Government stands ready to engage in discussions with all of its external creditors to make Ghana’s debt sustainable through a fair, transparent and comprehensive debt restructuring exercise in line with international best practices.
“The Ministry of Finance will hold an investor presentation at a date to be announced at a later stage,” the statement concluded.
Ghana’s economy is in a somewhat precarious state as a result of recent inflation, cedi depreciation, price increases, and debt.
While the president has come under fire for overseeing the work of Finance Minister Ken Ofori-Atta and keeping him in his job despite what many have called the administration’s obvious economic challenges, Ofori-Atta has been accused of mismanagement on his part.
Amidst all this, the daughter of the President, Gyankroma Akufo-Addo had something to say, she disagrees with naysayers who believe her father is underperforming.
When approached by JoyNews in an interview where she was asked her thoughts about her father’s performance so far, the CEO of the Creative Arts Agency had a simple response; ‘Stellar’.
“Stellar!” she said, adding, “I think a lot of people do not understand the backroom pressures and responsibilities that are needed and the tolls that it takes but this is a leader who has taken it on effortlessly, and has steered the shift that we all feel safe within these times of economic unrest. So for me, and I’m sure a lot of people will say that I am biased but a lot of people who know me understand my objectivity, and I feel that he is leading us on a safe and steady course,” she added.
No finance minister has served a second term since the fourth republic, even when the president who selected them does.
“If Ken Ofori Atta is appointed finance minister.
Ghana will have the chance to elect a finance minister for a second term for the first time in history, he said.
In the country’s Fourth Republic history, no finance minister has served in office for the full two terms of a president.
However, Paul Adom-Otchere is asking if Ofori-Atta is likely to break the one-term cycle in the face of his track record.
Speaking on the Good Evening Ghana Programme, Adom-Otchere said finance ministers do not last in Ghana.
“Since the 4th republic, no finance minister has made a second term even when the president who appointed them gets a second term.
If Ken Ofori Atta is made a minister for finance. This will be the first time that Ghana will have the opportunity to give a finance minister a second term”, he said.
President Nana Addo Dankwa Akufo-Addo is expected to nominate persons to steer the affairs of various ministries.
History beckons
Although Professor Kwesi Botchwey served as Finance Minister for 13 years nonstop, a greater part of those years was under the military regime. Under the Fourth Republic, Prof. Botchwey was only Minister of Finance between January 1993 and 1995 before he handed over to Mr Richard Kwame Peprah, who served in that capacity until January 2001.
Since then, all Finance Ministers (Messrs Yaw Osafo Maafo, Kwadwo Baah-Wiredu, Anthony Akoto Osei, Kwabena Duffuor, and Seth Terkper) served for a maximum of four years, with Dr. Akoto Osei, who replaced Baah-Wiredu, serving the shortest period.
Thus, should President Akufo-Addo reappoint Mr. Ofori-Atta as Finance Minister, the latter will be on his way to breaking the pattern that all finance ministers have suffered since the advent of the 1992 Constitution.
It will also set him up on becoming the second longest-serving Finance Minister in independent Ghana, should he remain in that position until the end of the President’s tenure in January 2025 (without prejudice to the election petition at the Supreme Court).
The member of parliament for Builsa South, Dr. Clement Apaak, has requested that Finance Minister, Ken Ofori-Atta be transparent about the exact cost of implementing the Free SHS policy.
He thus wants Mr Ofori-Atta to report to Ghanaians the same figure he gave to the IMF as the cost of the Free Senior High School policy.
Mr. Ofori-Atta has stated that FSHS policy and other social intervention policies of the government will not be affected by the Staff-Level Agreement agreed on with the International Monetary Fund.
Addressing the media in Accra on December 13, 2022, the Finance Minister indicated that various education programmes including the FSHS will not be cancelled as part of the IMF support programme.
The Minister further stated that the government will be embarking on a review of the FSHS for efficiency.
However, the Finance Minister has been accused of giving different figures regarding the actual amount spent on the flagship programme from 2017 to 2021.
In view of this, the Builsa South lawmaker is requesting Mr. Ofori-Atta to begin his so-called review by discussing the actual figures he mentioned to the IMF.
“Start the review by telling us what figure you (Ken Ofori-Atta) reported to the International Monetary Fund (IMF) as cost of implementing Free Senior High School (FSHS) from 2017-2021.
“Is it the 7.62B you reported in the 2021 Mid-Year budget or the 5.3B he reported in the 2022 Mid-Year budget or both?” the MP queried in a tweet on December 14, 2022.
Different Figures Reported As Cost of Free SHS In 5 Years To Parliament And Matters Arising
As it is already known publicly, the NDC in Parliament has filed a motion, sponsored by Hon. Mohammed Mubarak Muntaka and 128 of us – to pass a vote of censure on the Finance Minister, Ken Ofori-Atta; in accordance with Article 82 of the 1992 constitution of the Republic of Ghana.
This historic motion, slated to be moved on Thursday, November 10th, 2022, is composed of seven specific charges levelled against Ken Ofori-Atta. Thus, the purpose of this article, is to provide a specific example of conduct by the Finance Minister which is deliberately dishonest and disrespectful to Parliament, for which sanctions, are justified. I will illuminate my case with figures Mr. Ofori-Atta presented to Parliament in 2021 and 2022 as total cost of funding Free SHS in five years, from 2017-2021. The difference between the cost in five years, reported as GH¢7.62 billion in the 2021 Mid-Year Review Budget and the reported cost for same period, GH¢5.3 billion in the 2022 Mid-Year Review Budget is GH¢2.32 billion. This is and remains problematic. I provide details below.
On Wednesday July 21, 2021, Ken Ofori-Atta, in response to a question as to whether government had taken a loan to fund the implementation of the Free SHS policy I asked, said the following in answer: “Mr Speaker, government has taken no loan to specifically finance the Free SHS policy. The Free SHS has since its inception been financed from the Annual Budget Funding Amount (ABFA) and from the Government of Ghana (GoG) funding sources. Over the five years, a total amount of GH¢7.62 billion has been allocated to implement the Free SHS programme. Out of this amount, GH¢4.18 billion was sourced from GoG, representing 54.76 percent, while the balance of GH¢ 3.44 billion representing 45.24 percent, came from ABFA.” This answer is captured in the Parliamentary Debates, Official Report, on Wednesday 21st July 2021, Fourth Series Vol.113 No.32, column 040-041.
A few days later, Ken Ofori-Atta presented the Mid-Year Fiscal Policy Review of the 2021 Budget Statement and Economic Policy of the Government of Ghana, to Parliament on Thursday, 29th July, 2021. He repeated what he said in response to my Parliamentary question. In paragraph 284 on pages 49-50, he said: “Mr. Speaker, the Free SHS School Policy has since its inception been financed from the Annual Budget Funding Amount (ABFA) and Government of Ghana (GoG) funding sources. Over the five years, a total amount of GH¢7.62 billion has been allocated to implement the Free SHS Programme. Out of this amount, GH¢4.18 billion was sourced from GoG, representing 54.76 percent, while the balance of GH¢3.44 billion, representing 45.24 percent, came from ABFA.”
Given, that he repeated the response to my question in the Mid-Year Review Budget of 2021; that “GH¢7.62 billion had been spent to implement the Free SHS programme,” and a further breakdown of “GH¢4.18 billion (54.76%) from GOG sources and GH¢3.44 billion (45.24%) from ABFA,” it came as a shock that he strangely reported GH¢5.3 billion as the total investment made to implement the same Free SHS for the same period, from 2017-2021, in the 2022 Mid-Year Review Budget.
For the avoidance of doubt, Ken Ofori-Atta presented the Mid-Year Fiscal Policy Review of the 2022 Budget Statement and Economic Policy of the Government of Ghana to Parliament on Monday, 25th July, 2022. In paragraph 466 on page 90 of the official statement, Ken Ofori-Atta is quoted as follows: “Mr. Speaker, we have invested in the future of our children through the Free SHS where GH¢5.3 billion has been spent to enable 1,261,495 student have access to secondary education.”
The suddenly less and unexplained cost of funding the Free SHS policy was also verbally stated by Ken Ofori-Atta, during his 2022 Mid-Year Budget Review Speech on Monday, 25th July, 2022. The video recording of his speech captures him vocalise the following, under Free SHS Programme. In paragraph 60 on page 17, Ken Ofori-Atta said: “Mr. Speaker, we have placed human capital development at the core of our national transformation efforts since 2017. We have invested GH¢5.3 billion to enable 1,261,495 Ghanaian children access secondary education under the Free SHS programme at the end of 2021 to improve access to education.”
This unexplained reporting of a far less cost of implementing the Free SHS programme in five years as captured in official Parliamentary records, and documents made available by Ken Ofori-Atta himself to Parliament, offends Parliament in every way, shape and form. How can the Minister report GH¢7.62 billion as the total cost of Free SHS in five years, provide a breakdown in nominal (GH¢4.18 billion GOG and GH¢3.44 billion ABFA) and in percentage terms (54.76% GOG and 45.24% ABFA) in reply to my question, repeat same in the 2021 Mid-Year Review Budget, suddenly, without explanation, report a generic GH¢5.3 billion as the cost incurred in implementing the same Free SHS programme in five years in the 2022 Mid-Year Review Budget Statement and as contained in his 2022 Mid-Year Budget Review speech?
Reporting vastly different figures of GH¢7.62 billion and GH¢5.3 billion as cost of the same programme, Free SHS, for the same period, 2017-2021, a difference of GH¢2.32 billion to Parliament, is questionable. If the earlier figures reported in 2021 were in error, the proper thing to do was to withdraw the GH¢7.62 billion reported, explain what occasioned the error, apologise and seek leave of Parliament to amend to the correct figure, since records of the house already captured GH¢7.62 billion a year earlier as cost of Free SHS in five years. This was not, and still has not been done. So, as it stands, Parliamentary records have both GH¢7.62 billion and GH¢5.3 billion as the cost of Free SHS from 2017 to 2021. This can not be allowed to go unchallenged.
Though I have filed questions to the Minister of Finance seeking an explanation to this questionable and contradictory reported cost of Free SHS in five years, it is necessary to share this specific example with Ghanaians to further justify why Ken Ofori-Atta must be censured. Like the other infractions we have presented as charges against Ken Ofori-Atta, it is certain that the different figures, GH¢7.62 billion and GH¢5.3 billion respectively, were deliberate, to deceive Parliament and to conceal the truth. This and other such deliberate dishonesty in reporting to the people through Parliament must attract the most severe sanctions. Indeed, Ken Must Go!
Dr. Clement Abas Apaak
M.P, Builsa South and Deputy Ranking Member On Education Committee of Parliament
Road Tolls in Ghana have been cancelled in November 2021 as part of the policy measures announced by the government under the 2022 Budget.
However, the government has reintroduced it. Finance Minister, Ken Ofori-Atta announced the reintroduction in the 2023 budget presented to Parliament as one of the revenue measures to make money for Ghana’s needs.
In the eyes of Kwaku Sintim-Misa, this move by the government only proves the people in charge are disorganized and clueless of what they are up to.
“So, basically, I thought that the whole thing was muddled with confusion. Number one, it shouldn’t have been canceled at all; number two, they just decided to bring it back. Why are you bringing it back?” he said.
In an interview with GhanaWeb, KSM added that the reason the government is reintroducing road tolls should be adequately explained.
“Are you bringing it back because you made a mistake canceling it in the first place? So just address Ghanaian people and tell us, ‘Listen, Ghanaian people, it was an error canceling this thing, we made a mistake and are trying to reverse it. We’re going to bring it back and when we bring it back we are going to make it more digital, we are going to do this, we are going to do that, to improve it,” KSM said.
KSM fuerher lambasted the government for initially cancelling of the road tolls. “To cancel paying road tolls in Ghana, I thought it was very unfortunate, especially if you’re going to use the road tolls to actually help improve the state of roads, then you need to collect road tolls even if Ghanaians will not understand the importance of road tolls. This is where you can come out and state clearly that we need to improve our road tolls. We need a road coming from Accra to Kumasi, these things don’t just happen,” he said.
“They come from the tolls that we pay. Even if they thought that road tolls were not as effective and it was not collecting as much, then we need to sit down and actually come up with a strategy of how best we can get the road tolls to work. Because there is no question in my mind that they (road tolls) are needed, especially in a country that is economically harder with raising revenue,” KSM emphasized.
A 10,000-acre mixed-use economic area known as the Economic Enclave Project is part of the Ghana CARES program and aims to develop a workable ecosystem for the private sector to engage in commercial farming.
In terms of rice, tomato, maize, soy, vegetables, and poultry, the goal is to greatly increase Ghana’s production capacity.
The EEP complements existing Government agriculture initiatives (e.g. Planting for Food and Jobs and Rearing for Food and Jobs) as a targeted effort to assist the private sector to engage in commercial agriculture.
About 200,000 jobs (105,000 direct and 95,000 indirect jobs) are expected to be created by the EPP for unemployed youth, which would also provide them with a decent source of income, with beneficiaries undergoing mandatory training on good agronomic practices in rice production, group dynamics, and entrepreneurship.
Speaking on behave of the President, the Chief of Staff of Ghana, Akosua Frema Osei-Opare noted that, over the last few years, the Government had been charting a path to a Ghana Beyond Aid, but several overlapping malevolent forces, including the outbreak of COVID-19 pandemic, had viciously interrupted the pursuit of economic transformation.
“It would be unwise to continue to put pressure on the Cedi by importing vast amounts of food items that we can produce locally. It would be unwise to continue to depend on others for our food and other essentials when supply chains have proven unreliable, and rising nationalism can be easily instigated.”
“In fact, it would be unwise to keep supporting employment elsewhere by importing more when our youth continue to actively look for jobs here. It would be unwise not to allow the private enterprise to lead the transformation of our economy.” the President added.
The First Gentleman of the land indicated that the project would help reduce imports, improve Ghana’s food security, promote value-addition and accelerate infrastructural development and enhance market linkages in food growing areas.
Finance Minister, Ken Ofori-Atta, in his speech, described the programme as a watershed moment in economic history and added that the EPP through the Ghana CARES programme would provide a catalytic framework to holistically address the structural challenges in the economy by shifting Ghana from import-driven to a self-sufficient and export-oriented economy.
To this end, the Finance Minister extended Government’s invitation to individuals, private sector actors, organized groups, churches, traditional leaders, and financial institutions who could secure or own 1000 acres and above, to come on board.
“We will provide support such as land development and facilitate access to credit, including the recently approved GH¢500 million from the Development Bank Ghana” he assured.
The Minister added that “This is a real and collective effort to replicate the images of the mass land of cultivated fields we see while flying over other countries that are characterized as the “food baskets” of the world.”
He revealed that the project would also help the country to improve its food security and enable it to eventually optimize the single market opportunities that the African Continental Free Trade Area (AfCFTA) offered.
The Minister for Defence, Mr. Dominic Nitiwul, on his part, said, when the Economic Enclave Project was sustained and extended to other parts of the country, Ghana would not only be in the capacity to produce more but be self-sufficient and even export its produce.
Numo Moses Otutetey Akpakposu, the Father of the Kusanya Stool Land, lamented that farmers in Tsopoli and its surrounding communities often suffered a lot of post-harvest losses because they did not have access to mechanized processing and other facilities.
He was, however, optimistic that these challenges would be a thing of the past with the implementation of the EEP and called on all stakeholders to give it the needed support to improve the lives of farmers, traders, and all actors in the agriculture value chain to earn more income.
The implementation of the EEP is led by Key Millennium Development Authority together with these key partners; Ministry of Food and Agriculture; Ministry of Defence (48 Engineers Regiment – Ghana Armed Forces); Ministry of Energy; Ministry of Roads and Highways; Ministry of Lands and Natural Resources and the Ghana Irrigation Development Authority.
The rest are National Entrepreneurship and Innovation Programme; Ghana Incentive-based Risk-Sharing System for Agricultural Lending; Private Agriculture Value Chain Actors; MasterCard Foundation; and the Youth.
The project is expected to be extended to the Greater Accra, Ashanti, Central, Western North, Savannah, and Oti regions.
Parliament’s Committee on Constitutional and Legal Affairs want the Finance Ministry to as a matter of urgency address all outstanding issues relating to the Office of the Special Prosecutor (OSP) and increase budget allocation for the OSP.
The Committee deems the allocation of GH₵129.5 million to the OSP insufficient for recruitment and the effective running of the office.
Out of the budgeted total amount of ₵129.5 million, ₵68.9million is to be used as compensation and about ₵34million is to be used for goods and services while ₵26 million is budgeted for stationery for the work of the OSP.
According to JoyNews Parliamentary Affairs Correspondent, Kwaku Asante the Office of the Special Prosecutor in a meeting with the Committee complained that the funds allocated are insufficient as it intends to recruit more lawyers and other personnel.
He added that officials of the Finance Ministry are expected to be in the House on Wednesday, to brief Parliament on why such an amount was allocated to the OSP.
Parliament has so far not approved any estimate allocated for any Ministry, Department or Agency in the 2023 Budget.
Meanwhile, the Minority Leader, Haruna Iddrisu, has warned that Ministers of State who absent themselves from Parliament will not have their budgets approved.
The Minority insists the Ministers must be present during the debate.
“I further warn that ministers who want their budgets’ approval must appear in person. If you delegate your deputy we will delegate your money for you some other day after appropriation. If they send emissaries to come for approval of budget estimates, we will send their approval to them the day they are available. So whip, make sure you have your estimates ready,” he said on the floor on Wednesday.
The allocation was the first time money had been specifically set aside for the project; prior payments had been made from the contingency fund.
Ken Ofori-Atta, the minister of finance, claims that more than GH330 million have already been spent from the fund.
The 2023 allocation was made in respect of the Ministry of Tourism (MoT), but the Committee’s said the previous disbursements will need to be justified along with the new allocation for the budgeted sum to be approved.
“What the Committee decided was that we cannot just approve this GH¢80 million, we must know how the other GH¢339 million was spent. What did it constitute?
“The GH¢80 million you want us to approve, how did it find space in the budget line of the Ministry of Tourism when the Minister and the directors could not speak to the questions we were asking? What constitutes the GH¢80 million, they should give us a breakdown,” he stressed.
Whiles efforts to get official records of the cost of the presidential jet travels have serially failed even through Parliament, the issue of the National Cathedral recently got concrete answers, especially from the Minister of Finance.
Ken Ofori-Atta disclosed while appearing before an ad hoc committee of Parliament that monies paid in lieu of the project were drawn from the Contingency Fund.
For the first time, government also included an expenditure item relating to the project in the 2023 budget with an amount of GH¢80 million cedis earmarked for disbursement.
Minority Chief Whip for the National Democratic Congress’ (NDC) Caucus in Parliament, Muntaka Mubarak, has dismissed allegations that suggest the Minority is in bed with the Majority.
He said such claims are unfounded and hurtful.
This follows the loss of the vote on the motion of censure against the Finance Minister, Ken Ofori-Atta.
Since the defeat, the Minority side has received some criticism from a section of the Ghanaian public who say the loss was proof that they have been compromised.
Some have noted that the loss was a “planned, rehearsed and executed maneuver” to create the impression they were working for the greater good of Ghanaians while deflecting attention from their role in the economic mess the country is in.
However, Muntaka Mubarak says that assertion is not true.
According to him, the Minority had done everything possible within its powers to marshal all their forces to vote in favour of a censure against the Finance Minister, however, the unreliability of the so-called ‘Brave 80’ had cost them the win.
“It was a 50:50. You knew they were not very certain, unfortunately the rebels were not in leadership, they were just some few middle-benchers and backbenchers so the courage is not really there… So it’s like at every point in time, you could not tell vividly what they would do,” he said.
He noted that despite the uncertainty on the Majority side, the Minority had managed to bring together every single member of its Caucus to the floor, amidst great sacrifices, to vote against the Finance Minister.
“I had a member in Croatia on that Wednesday, there were two on official assignment in Djibouti, there were two in the US on official assignment, there was one in Sierra Leone on official assignment. I mean I can tell you that about 20 of my members were very far away,” he said.
He noted that such accusations do not take into consideration all of these sacrifices and the fact that the Minority does not have adequate number of seats to upset votes even when they are all present.
“This is where the Minority gets a lot of pain. Anytime this comes we have a lot of pain. A lot of our members who made tremendous sacrifices, I mean the regional caucus leaders, the rankings and the leadership, the sleepless nights.”
“When you hear this it breaks your heart because you see the sad thing is that if those of us in the Minority group were given a number that could do all the things that we had to do, believe me, then when you then blame us we’ll take the blame.
“We have a number that is deficient and a number that constantly, for you to be able to achieve anything you have to reach out to one or two on the other side. And Evans, people are courageous but it’s not going to be easy,” he said.
He added, “Even in the morning there was so much to do on our side, even to select the five [speakers] and there was nothing. I mean you saw the debate, there was nothing that was left that had not been said. There’s no way a group will go and be compromised and come and put up that kind of fight.
“Look at the consistency, look at the heat, look at the attempt to look like it’s like we’re taking the whole day, can we pause and try and continue? No. Evans, we did our best, it’s just that our best was not enough to achieve the set objective,” he told host of PM Express, Evans Mensah.
He added that the agreement will strengthen the cedi relative to the other trading currencies and contribute in reducing the nation’s skyrocketing inflation.
“The eventual conclusion of the programme will assist us in our efforts to restore stability, tackle inflation, and strengthen our currency,” he said.
“That is why the various ingredients of the programme should be supported by all Ghanaians and all stakeholders,” Ken Ofori-Atta added.
Ghana is targeting an amount of $3 billion over a three-year period from the IMF once an agreement on a programme is finalized.
The new amount requested as a loan is double the government’s initial target of $1.5 billion.
The IMF financial bailout is aimed at restoring macroeconomic stability and safeguarding debt sustainability among many others.
The International Monetary Fund (IMF) on Tuesday, December 13, 2022, announced that it has reached a staff-level agreement with Ghana on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about US$3 billion.
The IMF in a press release on December 13 said it had reached an agreement with Ghana for US$3 billion under an Extended Credit Facility (ECF).
Ken Ofori-Atta in his remarks noted; “Since the announcement on 1st July, 2022 to formally engage the IMF for an IMF-supported Programme, there have been three rounds of negotiations with the IMF interspersed with a number of virtual meetings in-between to ensure both the GoG and the IMF teams work around the clock to get the SLA by end Dec 2022.”
“Against the backdrop of Staff Programmes, Ghana is indeed blessed to conclude our SLA within 5 months. This is historic in recent times relative to what we witnessed with Zambia, Chad and Ethiopia,” he added.
Read Ken Ofori-Atta’s remarks below:
1. Appreciation:
i. I will like to first of all thank the almighty God for providing the needed guidance to the GoG and the Fund to get us where we are today.
ii. I will also like thank HE the President for his leadership and direction throughout thi3s period;
iii. Let me also express appreciation to the IMF in general and in particular the IMF MD and management, Stephane Roudet, IMF Mission Chief to Ghana and Leo Medina, and the indomitable spirit of the team for their commitment to Ghana during these challenging times;
iv. In addition, I will like to express appreciation to key stakeholders including Cabinet, Parliament, FBOs, CSOs, and members of Academia, for their invaluable contributions to the preparation of the Post-Covid-19 Programme for Economic Growth (PC-PEG) which has underpinned the IMF Programme negotiations; and
v. Last but not the least I will like to express my sincere appreciation to the staff of MoF and BoG’s leadership under Governor Addison and the trusted Deputies for their hardwork and sacrifices throughout this entire process.
2. Context
i. A lot of work has gone on behind the scenes for almost 6 months when Government formally announced its intention to engage the IMF for an IMF-supported programme, to enable us reach this Staff Level Agreement (SLA) today which paves the way for the IMF’s Management and Executive Board to approve Ghana’s programme request early next year.
ii. Since the announcement on 1st July, 2022 to formally engage the IMF for an IMF-supported Programme, there have been three rounds of negotiations with the IMF interspersed with a number of virtual meetings in-between to ensure both the GoG and the IMF teams work around the clock to get the SLA by end Dec 2022.
iii. Against the backdrop of Staff Programmes, Ghana is indeed blessed to conclude our SLA within 5 months. This is historic in recent times relative to what we witnessed with Zambia, Chad and Ethiopia.
3. The IMF Programme
i. The GoG and the IMF teams have worked tirelessly to agree on key aspects of the IMF Programme at the Staff Level.
ii. Key deliverables over the period include:
a) Preparation of the Post-COVID-19 Programme for Economic Growth (PC-PEG);
b) A Medium-term macroeconomic framework;
c) Debt Sustainability Analysis (DSA) and Debt Management Strategy;
d) Structural reforms to address structural bottlenecks, improve competitiveness and promote efficiency and effectiveness;
e) A Memorandum of Economic and Financial Policies (MEFP); and
f) An Agreement on Prior Actions which are expected to be completed before the Fund goes to the Board.
iii. Ghana stands ready to complete all Prior Actions before the end-March 2023 but more importantly, Ghana is committed to the IMF Programme as a whole.
4. The SLA is only one aspect of the approval process. More is yet to be done to secure IMF Management and Board approval. That notwithstanding:
i. Key fiscal measures, structural reforms, and the medium-term macro-fiscal framework in the 2023 Budget are aligned with the IMF-supported Programme. It is therefore crucial that we receive support from all stakeholders including:
a) Parliament to ensure that the 2023 budget including all revenue measures are passed; and
b) Creditors to ensure a successful debt operation
Truly, the eventual conclusion of the program will assist us in our efforts to restore stability, tackle inflation, and strengthen our currency.
That is why the various ingredients of the program should be supported by all Ghanaians and all stakeholders.
We can only get to the IMF Board if we get sufficient commitment from our creditors in support of the debt operation.
i. The 2023 Budget is anchored on increasing domestic revenue mobilization effort by 1.2 percentage points of GDP. On the expenditure side, the 2023 Budget proposes to reduce expenditures (on commitment basis) by about 2 percentage points of GDP from 2022 to 2023. Primary expenditures are expected to be reduced through a reduction in allocation on the Use of Good and Services and Domestically Financed Captial expenditure on a commitment basis.
ii. These fiscal adjustments alone are not enough to address the country’s economic challenges, hence the ongoing debt restructuring aimed at restoring debt sustainability in the medium-term.
iii. The 2023 Budget contains important social protection measures to support the most vulnerable including measures that seek to gradually increase the number of beneficiary households as well as the value cash transfers under the LEAP.
Other social protection programmes which will be prioritised under the programmes include the NHIS, the Capitation Grant, and the School Feeding Programme.
5. Concluding Remarks:
iv. We are optimistic that the 2023 Budget adjustment strikes the right balance between determination and pragmatism.
v. Already, the economy is responding positively to the news of GoG and the IMF reaching an SLA and we are eager to leverage this momentum to the very moment when the IMF Executive Board approves the Programme request. We are already seeing significant improvements in the exchange rate with the Ghana cedi recovering against major currencies.
vi. We hope that Ghanaians will continue to support all efforts to restore macroeconomic stability and promote robust and inclusive growth.
vii. We are confident as a resilient people, and we shall rally to support this great enterprise, to restore macroeconomic stability and promote robust and inclusive growth. The world is looking at us, and I know we can do it.
viii. To God indeed be the glory for the great thing he hath done within 5 months. I am certain that God who began the good work will continue until it is finally finished – Greater things He will do. For we shall gather the harvest with joy.
ix. These indeed are both times for a Joseph recovery and a Nehemiah rebuilding
x. Let us continue with courage, the spirit of love for each other and self-discipline to go through this together.
On the other side, the local currency, the Cedi, declined against the major trading currencies, which caused enterprises to struggle or, in some cases, fail as they tried to stay in business.
The government took certain steps to strengthen the Cedi so that it could compete with other major trading currencies, particularly the US dollar, but these actions were only temporary because the Cedi continued to fluctuate.
Transport fares have also witnessed an upward adjustment which have subsequently led to an increase in the price of goods and services, the business community have also bemoaned the high import duty and other taxes.
But in all things, believers of the gospel – the bible – will say the creator of all things deserves praise as he makes a way when there seems to be no way.
Inasmuch as government had earlier said it wouldn’t go to the IMF for help though there were signals that the economy had become weak and many things had to be fixed, it made a U-turn to seek help.
With several consultations, back and forth, the Bretton Woods institution has reached a staff-level agreement with Ghana for a $3-billion extended credit facility.
At a press conference in Accra on Tuesday, December 13, 2022, the Minister of Finance, Ken Ofori-Atta, attributed this success chalked in the IMF deal to God Almighty.
He said, “Indeed, to God be the glory, for these great things He has done within five months…I am certain that He who began a good work will continue until it is finally finished.”
“Greater things I believe He will do and let us all gather the harvest with joy. These indeed are both times for a Joseph recovery and also a Nehemiah rebuilding,” the finance minister stated.
The International Monetary Fund (IMF) on Tuesday, December 13, 2022, announced that it has reached a staff-level agreement with Ghana on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about US$3 billion.
According to the IMF, the authorities’ strong reform programme is aimed at restoring macroeconomic stability of Ghana’s economy.
An IMF team led by its Mission Chief for Ghana, Stéphane Roudet, said Ghanaian authorities have launched a comprehensive debt operation by way of restoring the country’s public debt sustainability.
Speaker of the House Alban Bagbin has come under criticism from Minority Chief Whip Mohammed-Mubarak Muntaka (Member of Parliament, Asawase), who has called his former boss a tyrant.
Muntaka, whose most recent exchange with Bagbin on the floor of Parliament was in connection with the procedure of the censure motion against Minister of Finance, Ken Ofori-Atta, stressed that it was a hard thing to say about Bagbin but he felt obliged so to do.
“I am sorry to say this, when you want to turn the Chamber of Parliament into a palace, then you become a tyrant,” when pushed about whether Bagbin was a tyrant, he responded: “He is becoming a tyrant.”
He stressed that Bagbin had increasingly become intolerant and was seeing people who disagreed with him as being disrespectful.
“You are not a chief, you are supposed to be a Speaker of Parliament and a Speaker listens to both sides patiently even where there is a disagreement and that is the essence of democracy to sometimes even agree to disagree but where you personalised it as if a disagreement is a disrespect to you .. then I am sorry you are becoming a bad Speaker,” he added.
He added that even though Bagbin was his favourite of all speakers he has worked under, Speaker Mike Oquaye Snr, Bagbin’s predecessor was far better at building consensus during his time.
Muntaka’s comments ties in to recent submission by former Special Prosecutor Martin Amidu who also slammed Bagbin over his directions on the same censure motion.
Amidu’s views were contained in an epistle titled; ‘Games in Parliament – The Speaker and the Minority’s Motion of Censure.’
It read in part: “Mr. Alban Sumana Kingsford Bagbin needs to be told to stop talking down on Ghanaians as though he is a village chief and we, his subjects.
“No humble, learned, erudite, and experienced person will ever seek to silence his critics in a constitutional democracy by telling them that: ‘In all humility, please note that there is deep thought in whatever I do. Don’t underrate my knowledge, skills, experience, and expertise in Parliamentary practice and procedure.’
“It is for the public or one’s professional peer group, to determine one’s level of knowledge, skills, experience, and expertise and not for one to subjectively assert them and trumpet his competences to the world,” the statement added.
The Ministry of Finance, together with the International Monetary Fund (IMF) and the Bank of Ghana held a joint press conference today.
The three bodies informed Ghanaians of a staff-level agreement reached by the government and the Fund.
Ghana and the IMF have reached a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.
According to the Fund, the government’s strong reform programme aimed at restoring macroeconomic stability and debt sustainability while protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive recovery, was key in this decision.
Franklin Cudjoe, the chief executive of the IMANI Centre for Policy and Education, criticized the government for allocating GH240 million as “waste of money” and unnecessary for the collection of the electronic transfer levy.
“I believe that the GH 241 million budgeted for this e-levy is unnecessary.
It contradicts the purpose behind this tax.
I’m shocked by this judgment because there is a fictitious business set up to handle the collection, he stated.
Chief Executive of the IMANI Centre for Policy and Education, Franklin Cudjoe, has slammed the government’s allocation of over GH¢240 million for the collection of the proposed 1.75 percent electronic transactions.
Speaking on Citi TV’s ‘The Big Issue’ on Saturday December 11, 2021, Franklin Cudjoe said that Ghana Revenue Authority and KelniGvG can do the collection of the levy on behalf of the government instead of establishing a new entity for collection.
“We tend to spend too much in this country to collect some of these taxes. And I think the government is compounding the problems of the e-levy just when some of us were beginning to understand some of the reasons given,” he said.
“I think this GH¢241 million allocation for this e-levy is needless. It flies in the face of the motive for this tax. So, I’m appalled at this decision when in actual fact there is some supposed entity in place to do the collection,” Citi Newsroom quoted.
Ken Ofori-Atta announced a new 1.75% levy on all electronic transactions covering mobile money transactions, remittances and other electronic transactions in the 2022 budget.
The Minority caucus in parliament have however kicked against the introduction of the E-levy as they believe it will worsen the plight of Ghanaians.
Aside from being against the introduction of the E-levy, they have however discovered that the government is allocating over GH¢240 million for E-Transaction Levy Services.
The Minority have since demanded full disclosure of the proposed e-levy.
Whenever the subject of the economy came up, the opposition National Democratic Congress (NDC), which is theoretically in charge of the EMT, promptly enlisted Vice President Dr. Mahamudu Bawumia, the member of parliament for Suame stated it was curious.
He cited how, despite economic challenges under the John Atta-Mills administration, then-Vice President John Dramani Mahama was not ‘attacked’ as head of EMT in order to make the argument that the president bears primary responsibility for the economy.
“When the Minority Group discusses the current economic challenges, they chuck along the Vice President as chair on Economic Management Team of cabinet. President Mills after 2011 had GDP growth rate drop from 14.4% in 2010 to 9.5% in 2011. Into 2012, GDP swung down again, the Vice President (then John Mahama) was chair of EMT but nobody roped him in.
“The reason is that the Finance Minister manages the economy for and on behalf of the president not the Vice President. In the cabinet set up, in the committee system, the Vice President is not the chairman of the Economic Committee. Vice Presidents have never been.
The MP who also doubles as the Minister of Parliamentary Affairs made the submissions on Tuesday, December 6, 2022 during his final submissions on the 2023 Budget Statement and Economic Policy of Government debate in Parliament.
Ghana is currently facing economic headwinds with a domestic debt programme facing opposition from stakeholders – largely from institutional bondholders.
Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund (IMF) facility to support the failing economy.
Minister of Finance Ken Ofori-Atta on December 6 announced that government was restructuring bonds held by institutional investors, putting them into four groups stretching 15 years. With interest also spread in four tranches in four years.
The Domestic Debt Exchange programme as it is called has faced some stiff opposition from major professional groups and workers union in the country.
“According to data from NIC, insurance firms invested approximately GH1.5 billion in deposits with regulated banks and money market mutual funds,” the group’s president, Seth Kobla Akwasi, told reporters during a press conference on Friday, December 9, 2022.
“Considering the fact that these banks and fund management companies have also invested in government of Ghana securities, the debt exchange will further compound the investment base of the insurance industry, since 40% of our investments are directly exposed to government of Ghana securities an additional 10% exposure from the licensed banks and fund managers will further worsen our situation”, he said.
He added: “In uncertain times like this, entities must protect their assets through insurance, which is a key risk management tool. Anything short of an exemption will have far-reaching consequences for the insurance industry and the important role they play in protecting assets and liabilities of this country. This will also discourage the citizenry from taking up life and annuity policies”.
“In the absence of the foregoing, the insurance and reinsurance companies will be happy to cede all our claims to the financial stabilisation fund.”
GIA is the latest in a long streak of unions and groups to kick against the government’s debt exchange programme.
In a statement issued on Wednesday, 7 December 2022, GSIA said: “We, at the GSIA understand the difficult crossroads at which our nation currently finds itself and the difficult choices that need to be made to set us on the path to debt sustainability. However, we are unable to accept the bond exchange program announced by the Minister of Finance in its present form”.
“It is our intention to engage the MoF on our concerns and reservations. We, therefore, urge the investing public to continue to have confidence in us as we pursue this process. In this vein, we entreat clients of our member firms to allow us to engage and then communicate the outcomes to enable them take the best decision on their investments.”
GSIA was established to be the voice of the securities industry and to work in partnership with the regulator to ensure the protection of investors.
It is made up of firms regulated under the Securities Industry Act 2016 (Act 929) as amended (Investment Dealers, Investment Advisors, Fund Managers, Registrars and Custodians) with associate membership provision for other financial institutions and the Ghana Stock Exchange.
The association was incorporated as a company limited by guarantee on 11 December 2003.
It is a non-profit membership organisation with self-regulatory functions, to maintain prudent business practices among members and to ensure investor protection.
It was founded by 10 firms: Boulders Advisors Limited, Capital Alliance Limited, CDH Securities Limited, Databank Brokerage Limited, Databank Asset Management Services Limited, Gold Coast Securities Limited, HFC Investment Services Limited, NTHC Limited, SEM Capital Management Limited and Strategic African Securities Limited.
Recently, Mr Ofori-Atta said Treasury Bills have been exempted from the government’s debt restructuring programme.
Also, individual bondholders will not experience a haircut.
The government is currently negotiating a programme with the International Monetary Fund for a $3-billion credit facility programme, thus, necessitating the debt restructuring exercise.
“Under the programme, domestic bondholders will be asked to exchange their instruments for new ones”, Mr Ofori-Atta announced Sunday evening (4 December 2022), adding: “Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037”.
Also, “the annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity. Coupon payments will be semi-annual”.
Some of the investments made by the banks whose names have been omitted are in government securities, mainly bonds, issued by the government of Ghana.
According to myjoyonline.com, these institutions could experience losses if the debt exchange programme, which aims to exchange bonds worth approximately GH137 billion, is effective.
According to the November 2022 Ghana Fixed Income Market report, eight banks—four foreign and four domestic—controlled around 83.91 percent of the debt market.
The myjoyonline.com report also said despite the knowledge of a possible debt restructuring, the banks traded a significant volume of bonds and bills on the bond market in the month of November 2022.
Meanwhile, rating agencies have downgraded four Ghanaian banks this year. The downgrades came after Ghana’s creditworthiness status was downgraded consistently throughout 2022.
“The downgrade of the banks follows the downgrade of Ghana’s Long-Term IDRs as the banks’ standalone credit profiles are closely linked to that of the sovereign (Ghana),” one of the rating agencies said.
Also, six leading investment banks that control about 89.13% of the debt instrument market may be affected by a restructuring.
During the announcement of the debt program by the finance minister on December 5, 2022, he stated that a financial Stability Fund would be created to offer liquidity support to banks during the exchange program.
According to him, the fund will provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes to ensure that they can meet their obligations to their clients.
Speaking at a press conference to launch Ghana’s debt restructuring, the finance minister said the Governor of the Bank of Ghana will follow suit with details of the necessary assistance in due course.
“We have also dialogued extensively with regulators across the financial sector, including the Securities and Exchange Commission (SEC), National Insurance Commission (NIC), and National Pensions Regulatory Authority (NPRA) to agree that regulatory forbearance will be provided to all entities whose financial position is adversely affected by virtue of participating in this exchange,” Ken Ofori-Atta explained.
“Inviting holders of domestic debt to voluntarily exchange approximately GH137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic,” according to Ken Ofori-Atta, was the stated purpose of the announcement.
“So let us remove any doubt and discard any speculation that the Government is about to cut your retirement savings or the notional value of your investments. That is not the case. As already announced, Treasury Bills are completely exempted, and all holders will be paid the full value of their investments on maturity. There will be NO haircut on the principal of bonds. Individuals who hold bonds will also not be affected at all.
Also, various associations and creditors have asked the government not to touch their investments.
“We, at the GSIA understand the difficult crossroads at which our nation currently finds itself and the difficult choices that need to be made to set us on the path to debt sustainability. However, we are unable to accept the bond exchange program announced by the Minister of Finance in its present form,” GSIA added in the statement issued on December 7, 2022.
Here are some of the groups
Mineworkers Union
Trades Union Congress
Ghana Medical Association
Chamber of Corporate Trustees
Ghana Securities Industry Association
Health Services Workers’ Union
Ghana National Association of Teachers
National Association of Graduate
Ghana Registered Nurses and Midwives Association
The finance minister also explained the debt swap as follows.
“Our domestic debt operation involves an exchange for new Ghana bonds with a coupon that steps up to 10% as soon as 2025 (with a first interest payment in 2024) and longer average maturity. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.
“Predetermined allocation ratios are as follows: 17% for the short bonds, 17% for the intermediate bond, 25% for the medium-term bond, and 41% for the long-term bond. The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity. Coupon payments will be semi-annual. For emphasis, this domestic debt exchange programme will not affect individual bondholders,” he stated.
Despite the government’s repeated promises to domestic bondholders and the investor community that a debt restructuring was unlikely, it was ultimately necessary to maintain debt sustainability.
The Ghanaian finance minister confirmed that the country’s debt to GDP ratio has surpassed 100%.
He declared that Ghana’s government is extending an invitation to domestic bondholders to exchange existing obligations for new ones with new maturities.
Reuters on December 9 said: “Ghana has begun restructuring its debt by rolling out a plan to swap $10.5 billion in local bonds with new ones, seeking IMF help and by preparing a proposal to restructure its foreign debt as the West African country struggles with its worst economic crisis in a generation.”
It also highlighted how “big” Ghana’s debt levels were and how the country plans on restructructuring to be able to obtain financial support from the International Monetary Fund.
The international news portal used an image from the #FixThecountry demonstration where Ghanaians hit the streets to demand for better living conditions.
Bloomberg said “Ghana asked local bondholders to accept losses on interest payments as it restructures its debt to qualify for a loan from the International Monetary Fund.
The West African country will replace existing local-currency debt with four new bonds maturing in 2027, 2029, 2032, and 2037, Finance Minister Ken Ofori-Atta said.”
Africanews in its headline said, “Ghana to swap local debt in fight to regain economic stability.”
It went further to say that “Ghana asked investors to exchange around $9 billion in domestic debt for new bonds on Monday (Dec.5) to ease a crunch in payments as the government negotiates an IMF bailout during its worst economic crisis in decades.
Bloomberg highlighted the country’s deteriorating debt position.
It said: “Ghana has the world’s worst-performing currency, inflation at 40% and its debt is junk. As it struggles to get to grips with a rapidly deteriorating situation, it’s now asking bondholders to accept losses on their investments.
“The government aims to start talks with investors before the end of the month. It’s hired Lazard Ltd., Global Sovereign Advisory, and Hogan Lovells US LLP as advisers, Reuters reported earlier this month. Some bondholders have tapped Rothschild & Co and Orrick, Herrington & Sutcliffe LLP as advisers, the Wall Street Journal reported,” the report stated.
The NPP claims that the Minority’s actions on the floor of Parliament on December 7, 2022, were a result of the NDC’s local politics.
This depiction of the Minority’s conduct was made by Mr. Richard Ahiagbah, the NPP’s director of communications, during a Saturday news analysis segment of Joy FM’s News File programme in Accra.
He noted that the NDC‘s action was a needless political exercise.
According to him, the Majority was right in walking out of the process to vote on the censure motion.
He commended the Majority for their boycott of the vote on the censure motion by the Minority.
This, he said, was because the president has had an agreement with the Majority for the finance minister to present the budget, go through the appropriations and negotiate with the International Monetary Fund (IMF) for a bailout.
He explained with these agreements in mind, the president was not going to sack the finance minister.
The president per the constitution has the power to let a minister who has been censured stay or go, he also noted.
He said the NDC was just on a wild goose chase, adding that the NDC reduced the motion to personality wrangling.
He again assured that the president was committed to solving the economic woes of the country.
He called on the NDC to apologise to the vast majority of Ghanaians for taking them through a needless exercise
The Ministry’s official Twitter account posted a picture from the Bloomberg report illustrating the cedi’s gains.
The graph that shows the Ghana cedi’s 10% point weekly gain against the US dollar as the largest weekly advance.
“World Beater: Amid a debt crisis, Ghana’s cedi rallies,” the picture’s caption read.
The Vietnam dong, Chilean peso, Costa Rican colon, and Chinese yuan are all behind the cedi.
The dollar rose to as high as US$1 to over 15 cedis months back. The local currency has rallied to retake some grounds. The dollar at the close of week was going for a little above 12 cedis.
Some analysts have attributed the gains to the passage of the 2023 budget by Parliament and the announcement of a domestic debt exchange programme by Finance Minister Ken Ofori-Atta.
Ghana is currently facing economic headwinds with a domestic debt programme facing opposition from stakeholders – largely from institutional bondholders.
Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund (IMF) facility to support the failing economy.
Minister of Finance Ken Ofori-Atta on December 6 announced that government was restructuring bonds held by institutional investors, putting them into four groups stretching 15 years. With interest also spread in four tranches in four years.
Ghana’s currency took the title of the world’s best performer against the dollar this week amid optimism the debt-distressed country is moving closer to unlocking an International Monetary Fund bailout.
The cedi has rallied 10% in the past five days, the biggest advance among about 150 currencies tracked by Bloomberg. That’s a turnaround for an exchange rate that had lost half of its value this year and occupied the bottom slot in the charts.
Editor of ABC News, Gordon Asare-Bediako, has said that the Finance Minister, Ken Ofori-Atta should advise himself and step down if the people want him out.
According to him, the situation shouldn’t have gotten this far. “Because for 98 Members of Parliament, in fact more, to write and publicly declare that they don’t want you any longer as a Finance Minister, he should advise himself, it shouldn’t have come to this level”, he stated
He added that Mr. Ofori-Atta has allowed himself to be subjected to public ridicule.
Speaking on Prime Morning, on Friday, Mr. Asare-Bediako stated that this act can affect the party in the 2024 national elections because the public has decided and there’s a huge clarion call to do a reshuffle which they’re expecting the President to listen and take an action on.
“Nobody wants a president who has an adamant posturing and it’s not good for the party”, he said.
Mr. Asare-Bediako continued that, the President may admire the loyalty and competence of the Finance Minister, but it gets to a point when you listen to the voice of the people and prioritize their interest ahead of yours.
The Editor believes that stakeholders will respond and there will be stability in the system if the Finance Minister is changed.
“So to me, the President will do himself a lot of good by making Ofori-Atta go after the Appropriation bill has been passed”, he mentioned.
Although the bond market has recently experienced a modest uptick, distressed debt in emerging nations continues to be a severe weakness in the world economythat is gearing up for a downturn.
Governments in developing countries need to refinance $215 billion of debt coming due in the next two years.
But many can no longer borrow. Among those most exposed to distressed debt are asset managers such as Allianz SE, BlackRock Inc and Fidelity Investments.
“We expect the borrowing conditions for emerging markets to stay difficult and rates to remain high,” said Guillermo Osses, head of emerging-market debt strategies at hedge fund manager Man GLG, which has run the best performing EM fund this year.
“Around 15 countries have sovereign bonds trading at distressed levels, and there is no option for them to refinance the current level of debts at these rates. They will have to either go to
the IMF, devalue their currencies or restructure the debt.”
Along with dozens of other developing countries Ghana benefited from a debt-relief initiative run by the IMF and World Bank in the early 2000s, which wiped about $4 billion off its debt stock by 2006. That shift from mostly concessional funding before 2007 to largely commercial borrowing afterwards was transformational for Ghana, says Bright Simons, an analyst at the Accra-based think tank Imani Centre for Policy and Education.
“This new source of funding was completely different from what we’d experienced in the past — this money was going directly to the budget like a steroid injection straight into
the bloodstream,” said Simons.
The cathedral “is the perfect example of the spending spree: Ghana behaving like a fabulously
rich sultanate in the Gulf rather than a developing country just attaining frontier market status.” Erasing the ‘stigma of default’ Ghana spent years pitching itself as a business-friendly country that offered political stability, and a place for foreign investors to make outsized returns that they would easily be able to repatriate.
Foreign Direct Investment soared to nearly $4 billion in 2019, regularly outstripping neighboring
Nigeria, which has an economy over five times larger.
But, as Simons notes, Ghana’s FDI-stock-to-GDP ratio of nearly 80% — compared with a continental average of around 25% — makes it “highly vulnerable to global shifts in sentiment.”
Those shifts have caused domestic problems for President Nana Akufo-Addo. Store closures and street protests over the cost-of-living crisis have sprung up around the country.
And the majority of his own ruling party has called for the resignation of Ken Ofori-Atta, the finance minister, who faces a censure motion from parliament over his management of the economy, including spending on the cathedral.
The beginning of commercial oil production in 2010 helped shape Ghana’s economic ascent, but stresses in the system have become more apparent. Crude production figures have never matched government projections — it sits at under 200,000 barrels per day, less than half of earlier predictions — and investment in the sector has slowed in recent years.
Along with the impact of the pandemic and the Ukraine war on the economy the government and opposition largely blame each other’s overspending for the crisis that the country finds itself in. Some current ministers point to a slew of lucrative take- or-pay power contracts awarded by the previous government between 2013 and 2015.
Designed to solve a short-term electricity crisis, the deals resulted in private producers setting up plants that can supply 4,600 megawatts, nearly double national peak demand of 2,700 megawatts — leaving the country paying $500 million a year for power it does not use and cannot store.
Debt owed to fuel suppliers and the power companies could reach $12.5 billion by 2023.
Times are difficult, but as representatives of the people, it would be wise to learn from the Executive branch of government, which has been suffering a 30% wage cut since early this year, according to the Leader, who is also the MP for Suame.
“Mr. Speaker, perhaps as Members of Parliament, just as the Executive has done, maybe we could also, even though these are difficult period for all of us…
“We could also utilize the opportunity and also show some example by sacrificing anything between 10 and 15% of our salaries to demonstrate to fellow Ghanaians that we are with them in these difficult moments,” he suggested.
He also proposed that with the funds, Parliament could use the youth to build toilets at designated points monthly.
Ghana is currently facing economic headwinds with a domestic debt programme facing opposition from stakeholders – largely from institutional bondholders.
Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund (IMF) facility to support the failing economy.
Minister of Finance Ken Ofori-Atta on December 6 announced that government was restructuring bonds held by institutional investors, putting them into four groups stretching 15 years. With interest also spread in four tranches in four years.
The Domestic Debt Exchange programme as it is called has faced some stiff opposition from major professional groups and workers union in the country.
However, he argues that the domestic debt exchange program launched by Minister of Finance Ken Ofori-Atta was an unjustified, unilateral procedure that would cause institutional investors to suffer disproportionate losses (bondholders).
On December 7, 2022, Adongo said it was time for impacted organizations to resist how the government was attempting to reorganize their investments while speaking at a press conference for the Minority Caucus in Parliament.
“We agree that Ghana needs restructuring but not an illegal, unilateral and arrogant misappropriation of people’s resources. This is the time to call on those activist investment lawyers, those vigilante lawyers to step up and claim their place in the fight to rescue this country,” he stressed.
Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund (IMF) facility to support the failing economy.
“The Ace Ankomahs of today are called upon to rise up and protect our country, unless their mouths are already full, this is the time to make their names. Ken will not be allowed to arrogate unto himself powers he doesn’t have to shred people’s contract,” Adongo added.
Ofori-Atta on December 6 announced that government was restructuring bonds held by institutional investors, putting them into four groups stretching 15 years. With interest also spread in four tranches in four years.
Speaker of Ghana Parliament, Alban Bagbin has disclosed that it is his wish to live longer in order to see things as he had once been told.
In his closing remarks after the censure vote to remove Finance Minister Ken Ofori-Atta had been lost by the Minority because the number of Members of Parliament (MPs) did not meet the two-thirds vote requirement, he narrated a story told him by a senior statesman.
According to him, it is his prayer to live long in order to see things though he was not specific on which on the particular things he was talking about.
He narrated: “One senior statesman, I actually refer to him as an elder statesman told me a story that when they were in school, a gentleman used to visit them and whiles walking on the streets he would be repeating one statement and I quote ‘if we don’t die early we will see things’
“I have been praying to God to allow me not to die early so that I can see things. I am not yet old but I have started seeing things,” he said.
It would be recalled that the Minority caucus filed a motion of censure against the Finance Minister, accusing him of mismanagement of the economy, financial recklessness, conflict of interest, gross mismanagement of the economy.
An eight-member ad-hoc committee set up by the Speaker to probe the motion brought against the Finance Minister presented its report to Parliament on November 25, 2022 but it was debated and voted upon yesterday, December 8.
The Majority staged a walk out rubbishing the allegations levelled against the Finance Minister causing the vote to be lost.
Member of Parliament for North Tongu, Samuel Okudzeto Ablakwa, has stated that the country will forever recognize the Finance Minister Ken Ofori Atta, as the first to face a censure vote despite failed attempts in parliament to remove him from office
His comment comes few minutes after the majority’s failure to participate in summing up to the number of votes required to impeach the minister.
Nonetheless, Mr Ablakwa is “exceedingly proud that NDC MPs chose to align with suffering Ghanaians but not the disastrous & destructive Ken Ofori-Atta.”
Adding that “No matter the outcome, history will eternally remember that Ken was the first Minister to face a censure vote,” he wrote on twitter.
The vote of censure against the Finance Minister, Ken Ofori-Atta, failed after less than 183 Members of Parliament voted to oust the embattled Minister.
136 National Democratic Congress MPs voted on Thursday to demand removal of Mr Ofori-Atta but NPP New Patriotic Party MPs staged a walkout and decided not to support the motion of their colleagues from the opposition side of the House.
Members of the Majority caucus of Parliament staged a walkout as Parliament voted to decide the fate of the Finance Minister, Ken Ofori-Atta after the debate on the report of the censure motion.
The Majority Leader, Osei Kyei-Mensah-Mensah, who led the walkout said his side cannot be part of a process that was baseless and politically motivated.
The Ad-hoc committee which was established and mandated to probe allegations in a censure motion filed against the Finance Minister, Ken ofori-Atta, has exonerated the Finance Minister, KenOfori-Atta of any wrongdoing.
According to a Co-chair of the Committee, K.T Hammond, the committee did not adduce any evidence that suggest that Mr Ofori-Atta is guilty of the claims leveled against him.
He made this known on the floor of Parliament on Thursday, December 8, 2022, when the House sat to debate on the report presented by the Committee.
“The committee was not able to come out with any findings,” he said.
This claim however contradicted that of his co-chair, Dominic Ayine’s.
Making his case on the floor of Parliament, Dr. Dominic Ayine, who was also a co-chair of the ad-hoc committee insisted that they had “unassailable evidence” but were compelled to build consensus on the motion.
“In terms of substantive content, we could not make definite findings of facts and recommendations on the censure motion. I had thought that the mandate of the committee was a fact finding committee and therefore we could make findings of fact [but] that was vehemently opposed by the Majority, and because of that you’ll notice that in terms of its substantive content, the report does not have real findings of fact definite findings of fact as well as recommendations,” Dr Ayine contended.
This follows a censure motion that was filed by the Minority in Parliament On October 25, 2022, against Ken Ofori-Atta.
Some Members of the Majority caucus, numbering about 80, also made a case against the Minister, calling for his dismissal from office due to the economic hardships.
The committee presented the report to the House and the debate on the report commenced yesterday, December 8, 2022.
Making his case in Parliament on Thursday, Dr Ayine maintained that the committee obtained “unassailable evidence” of misconduct on the part of Finance Minister, Ken Ofori-Atta.
He explained that on ground one – which is the funding of the National Cathedral – it was very clear that the minister exceeded what was appropriated.
“In other words he engaged in expenditure in excess of appropriation. That’s because according to the Minister (in the report) he took money from other government obligations and it was a contingency vote. Now if you look at the other obligations and the vote that this house passed on government obligations for that fiscal year, it was very clear that the Minister by his own evidence that he submitted to us exceeded appropriation,” he said.
He also mentioned that the Minister spent GHC 339 million on the Cathedral and that was far in excess of the envelope of resources that we appropriated for other government obligations.
Also speaking on the report of misreporting of data to Parliament, he said the committee found out that “the Minister misreported matters to Parliament.”
The Minority in Parliament has failed to remove Finance Minister, Ken Ofori-Atta, from office despite casting a secret ballot voting.
Speaker of Parliament, Alban Bagbin, has indicated that the secret voting exercise executed by a one-sided Parliament to ensure a vote of censure against Ken Ofori-Atta is wasted.
The Minority in Parliament went ahead to cast their secret ballot on Thursday, after the Majority staged a walk-out.
The Majority led by Osei Kyei-Mensah-Bonsu walked out of the chamber during a heated debate after they pointed out that the censure motion is unfair. The said 80 NPP MPs who are against a Finance Ministry headed by Ken Ofori-Atta were among the legislators who walked out.
Despite their absence, the Minority went ahead with the secret balloting.
After voting, Speaker told the House that the voting exercise is “loss” because it fails to uphold Article 82 (1) of the 1992 constitution which states that “1. Parliament may, by a resolution supported by the votes of not less than two-thirds of all the members of Parliament, pass a vote of censure on a Minister of State.”
In Parliament were 136 MPs on the Minority side. 136 votes supported the censure of the Finance Minister.
However, per the law, Parliament needs at least 184 MPs out of the 274 MPs, which is two-thirds of the MPs to pass a vote of censure on a Minister of State.
A one sided Parliament is casting their ballot to decide whether the Finance Minister, Ken Ofori-Atta, should be removed from post or not.
On Thursday, the House commenced debate on the censure motion filed against Mr Ofori-Atta by the Minority.
It was a heated debate, as the Minority insisted that the Finance Minister is unfit to steer the affairs of the economy. The Majority argued otherwise.
Mr Ofori-Atta, who was also in Parliament, likened his censure motion to a crucifixion, arguing that he has done no wrong.
Displeased by the position of the Minority MPs, the NPP MPs staged a walkout, including the 80 MPs who are said to be against Mr Ofori-Atta still being in office.
However, Speaker Alban Bagbin has permitted the House to engage in a secret ballot.
Article 82 of the 1992 constitution states that “1. Parliament may, by a resolution supported by the votes of not less than two-thirds of all the members of Parliament, pass a vote of censure on a Minister of State.
2. A motion for the resolution referred to in clause (1) of this article shall not be moved in Parliament unless a. seven days’ notice has been given of the motion; and b. the notice for the motion has been signed by not less than one-third of all the members of Parliament;
3. The motion shall be debated in Parliament within fourteen days after the receipt by the Speaker of the notice for the motion.
4. A Minister of State in respect of whom a vote of censure is debated under clause (3) of this article is entitled, during the debate, to be heard in his defence.
5. Where a vote of censure is passed against a Minister under this article the President may, unless the Minister resigns his office, revoke his appointment as a
Minister.
6. For the avoidance of doubt this article applies to a Deputy Minister as it applies to a Minister of State.”
Member of Parliament representing Bolgatanga, Isaac Adongo, has questioned why the Finance Minister, Ken Ofori-Atta, is still so committed to serving the nation despite the pressures mounted on him.
He asked the minister why he feels he is the only person who can do the job when it is clear that the very people who put him at post no longer want him there.
The National Democratic Congress (NDC) MP made this in his submission on the floor of parliament when it debated the report of an ad hoc committee that looked into a vote censure that was before the Minister of Finance, by the Minority.
In his comments, Isaac Adongo explained that the job that has been handed to people like the minister is for them to make better the lives of Ghanaians, and not for them to use it as an opportunity to enrich themselves.
He described the performance of Ken Ofori-Atta as a failure.
“We need to ensure that Ghanaians take us seriously and that when we have jobs, it is not to grow our businesses; it is to serve the people, that Ghana becomes the winner.
“Mr. Speaker, if anybody continues under this (sic) that the finance minister should continue to remain in government, then we might as well dissolve parliament and dissolve government, because we are failing the people who voted for us and we are failing the people that we’re supposed to serve,” he said.
Isaac Adongo further called on the Minister of Finance to do the honourable thing by saying goodbye to the job.
He explained that this would be the best thing for him to do since he knows he has under-delivered in the mandate handed over to him.
“You cannot be serving yourselves. You must serve the nation and you have failed. It’s time to say, Ghana, you gave me an opportunity to serve you, I’ve served you to the best of my ability; my ability is not good enough, bring in somebody else to do the work,” he added.
Before resuming his seat, the Bolga MP questioned the minister, who was also in the Chamber, on whether it is mandatory that he serves Ghanaians.
“Why are you still sitting there? We gave you the job, we say we don’t want you again. Is it force; is it force to serve us? So please, the finance minister should do the honourable thing and leave government,” he said.
Parliament is currently debating the report of the committee, with a determination expected to be made on whether Ken Ofori-Atta will be voted out as minister or not.
The motion of censure was brought by the Minority Caucus against the Finance Minister, who they charged with economic incompetence, financial irresponsibility, conflict of interest, and egregious economic mismanagement.
The discussion will revolve on whether the House should vote to remove Mr Ofori-Atta from office or not. It was originally scheduled to take place on Wednesday but was moved to today.
On November 25, 2022, the eight-person ad hoc committee that Speaker of the House Alban Bagbin appointed to look into the motion moved against the Finance Minister delivered its findings to the House.
Dr. Iddrisu asserts that the government may find it difficult to make on-time payments in the future months as a result of the economic crisis.
He stated that as a result, Ghanaians, particularly those working in the public sector, must exercise caution when making purchases over the holiday season.
He stated that people need to save the little they have for the near future because it is highly possible that the financial difficulties in the country might worsen.
“I am therefore cautioning you to be mindful of your spending this Christmas and New Year season. Do not be a spendthrift during the holidays as times may become harder next year.
“The government’s hope is on the $3 billion IMF loan facility which doesn’t seem feasible at the moment until the government debt restructuring program is able to bring down the country’s debt to GDP ratio to the range of 25% to 55%. Currently, the total public debt of the country is more than 460 billion cedis, and more than 76% debt to GDP ratio,” he said in a zoom lecture on the state of the economy.
Dr. Sa-ad Iddrisu also urged public workers not to put their hopes on attracting salary increments in the coming year, or on the payment of arrears because the government does not have the financial muscles to make such commitments.
“The more you come to the realization that the NPP government has mismanaged the economy, the better it will be for you to cut back on your individual spending as citizens during this yuletide, so as to have some savings to fall back on when payment of salaries starts to delay,” Dr. Iddrisu concluded.
Every time the government budget and economic strategy are presented to Parliament, Bawumia always goes with the minister of finance.
Without Bawumia present, Ken Ofori-Atta presented the budget for this year on November 24.
Some NDC (National Democratic Congress) members began to speculate that Bawumia didn’t want to be identified with the document as a result of his absence.
Kyei-Mensah-Bonsu explaining the absence on December 6, 2022 during his final address on the budget debate explained that by law, the president causes to be prepared and laid before parliament the budget with a month to end of year.
“The president causes the budget to be prepared, he doesn’t do the preparation himself and again, the president causes it to be laid in the House, he doesn’t do it himself,” he submitted.
On Bawumia’s absence, he explained that the Vice President was as at November 24 acting as the president because Nana Addo Dankwa Akufo-Addo was outside of the country and had duly transferred presidential powers.
“Mr. Speaker, in the lead up to the presentation, the president was outside this country, the vice president had assumed the office of the president as the acting president and he couldn’t therefore have accompanied the Finance Minister to this chamber.”
He then took a swipe at the Minority stating: “Mr. Speaker, this really is fundamental and I thought our colleagues will appreciate this. But as usual, they wouldn’t understand and they would inflict their own ignorance on Ghanaians.”
After his address, the budget dubbed ‘Nkabom budget’ was passed by a voice vote whiles MPs continue to debate the nitty gritty as related to estimates for the various Ministries, Departments and Agencies.
Appropriation is expected to be passed before the end of year as that would help government’s efforts at securing an International Monetary Fund support programme. The IMF conditionality has led to an increasingly unpopular domestic debt restructuring programme.
Pressure group, OccupyGhana, has outlined some ten measures which can potentially put the country’s economy on track should they be implemented by government.
According to the group, government cannot continue to blame the Covid-19 pandemic and the Russia-Ukraine war for its current situation since the country’s “debt was unsustainable even before these external factors kicked in and compounded an already precarious situation.”
In a statement sighted by JoyNews, OccupyGhana argued that the recent debt restructuring programme announced by government through the Finance Minister, Ken Ofori-Atta is not in the best interest of Ghanaians or investors, hence the ten recommendations listed.
First, the pressure group is reiterating earlier calls for the President to cut down on the size of his government.
This, they claim, will send “a powerful message in these tough and painful times that the Government is serious about its commitment to do better while requesting sacrifices from the general public.”
Again, OccupyGhana is urging the President, Nana Akufo-Addo to start paying his income tax. They believe the President paying his income taxes will compel other citizens to do same.
“We should remove the tax exemption granted to the President under article 68(5) of the Constitution. While the actual savings from this might not be much, it is hugely significant and relevantly symbolic. The President must lead by example,” the group stressed.
While asking the President to revise all tax exemptions given out, OccupyGhana is also calling for the scrapping of ex-gratia payments to all Article 71 Officeholders.
Find the rest of the recommendations below:
GHANA’S CURRENT ECONOMIC SITUATION – OUR FURTHER THOUGHTS AND PROPOSALS
OccupyGhana has noted, with considerable concern, the Finance Minister’s announcements on restructuring portfolio investments. While IMF support depends on the proposed ‘haircuts,’ they are extremely painful to the many Ghanaians who have participated in these investments. Simply, under this Government’s watch, Ghana has become broke under circumstances that were avoidable and are inexcusable and unpardonable.
As we stated in our Press Release dated 28 October 2022 (Our ref: OG/2022/050) and titled GHANA’S CURRENT ECONOMIC SITUATION – OUR THOUGHTS AND PROPOSALS, the nation would not be in this situation but for the Government’s failed, risky economic strategy that borrowed heavily from the international market to fund expenditure, pay maturing debt, support the cedi and possibly control the effect of the depreciation on inflation. This risky strategy effectively relied on good fortune and extremely astute economic management, both of which failed. Thus, although the Government would seek to blame the pandemic and the Russia-Ukraine war for this disaster, it cannot evade or avoid the fact that our debt was unsustainable even before these external factors kicked in and compounded an already precarious situation.
TWO BROAD COMMENTS
We have two broad comments on the announcements that request Ghanaians to forego legitimately earned funds to help the Government out of the disaster it has created.
First, we consider the Finance Minister’s announcements as nothing more than an offer from the Government to institutional portfolio investors to accept new terms that vary the terms under which the latter acquired the Government’s securities. We think that the Government has no power under the law and the Constitution to unilaterally impose fresh terms on portfolio investors; negotiation and the mutual consent of all parties will be required.
Second, notwithstanding the claims that individual investors are insulated from the proposed ‘haircuts,’ the millions of Ghanaians whose funds (pension or otherwise) have been invested by institutional fund managers in Government securities, will be the ultimate losers in this new offer. That is because those fund managers will simply pass the cuts on to their clients and customers.
There is simply no way to understate the terrible consequences that this state of affairs has caused and will cause to Ghanaians. That is why we believe that any offer to the citizens, who are already hit with the multiple effects of inflation and cedi depreciation, to essentially bail the Government out of its self-afflicted disaster, must come with an acceptance of failures and a firm commitment to do better.
TEN RECOMMENDATIONS
We therefore recommend 10 things that the government may act upon.
First, reduce number of Government appointees by at least fifty percent. This may be achieved by consolidating several ministries and slashing the number of political appointees (ministerial and otherwise), such as all deputies and the like, and entrusting public servant-technocrats with the responsibility of supporting substantive heads. This will send a powerful message in these tough and painful times that the Government is serious about its commitment to do better while requesting sacrifices from the general public.
Second, let the President pay income taxes too. We should remove the tax exemption granted to the President under article 68(5) of the Constitution. While the actual savings from this might not be much, it is hugely significant and relevantly symbolic. The President must lead by example. When he pays his taxes, then he can demand that the rest of us pay taxes too.
Third, it is time to rationalise the so-called ‘article 71 benefits.’ Ghana needs to end the three-decade-old grand conspiracy among the political class that milks Ghana under the false argument that article 71 authorises so-called ‘ex-gratia payments.’ We must eradicate the multiple claims of ex-gratia; the multiple claims over different administrative/government terms do not make sense and are difficult to sustain. We must also immediately end the false scheme by which successive governments deliberately delay the setting up of the emoluments committee till the end of their terms, so that salaries and emoluments are agreed upon and calculated literally at the ‘midnight’ of the outgoing government, considered and adopted in secrecy to precious little debate, and then applied retrospectively. Ghanaians only get to find out the huge pay-outs to the executive and legislators after-the-fact. We demand that the committees are established at the start of each government so that we know what and how much the political actors are entitled to when they assume office. The current government must establish the committees NOW.
Fourth, revise all tax exemptions, especially those granted to incomes and gains from portfolio investments. The Government must as a matter of urgency, amend section 7(1)(p) to (v) of the Income Tax Act, 2015 (Act 896) to remove all or some of the exemptions on incomes and gains from portfolio investments. These are not normal times, and we propose imposing a specific, time-bound withholding income tax regime on such earnings. Ghana may consider re-granting the exemptions when we have recovered.
Fifth, intensify and institutionalise GRA’s invigilation activities. In addition, the legal sanctions for under-reporting and tax evasion must be drastically applied.
Sixth, explain the source of funding of the proposed Financial Stability Fund (FSF). Extreme transparency of the proposed programme and its implementation is required. If the Government is broke and requires an IMF bailout, where will the monies for the FSF come from?
Seventh, pursue the Auditor-General’s Disallowances and Surcharges. The Government must show some seriousness in pursuing those the Auditor-General has found to have caused loss to Ghana. To the best of our knowledge, the Government is doing nothing to enforce the Auditor-General’s disallowances and surcharges. The President issued a terribly belated instruction to heads of institutions to provide to him the names of all persons identified to have caused losses to the state in the Auditor-General’s Reports. The President’s deadline has come and gone with no communication or indication on whether the names were indeed supplied to the President, and what the President is going to do with them.
Eighth, end Galamsey. The Government has to address the Galamsey menace as a matter of urgency, as our natural resources are plundered and ecosystem destroyed. The much-publicised Kumasi meetings do not appear to have borne fruit. We have written to the President at least 9 times in the past six weeks, in addition to several other previous statements on this, challenging the Government to properly regulate artisanal mining in a way that benefits the nation. They have all been ignored. Our current efforts will come to nothing if this canker is allowed to overcome any future economic recovery.
Ninth, slash all non-critical government expenditure. Implement a ruthless focus on prioritising government projects and expenditure, and ensure a strict relationship to GDP growth going forward. And, the Government must provide monthly reports on the how much money all announced cost-saving measures have delivered. We specifically recommend the suspension of all fees and allowances paid to persons appointed by the Government to serve on various boards. We also recommend suspending all expenditure on the proposed National Cathedral. Whatever arguments there might have been to support spending now non-existent money on the proposed National Cathedral, have been eroded by the dire straits that the nation faces. Our current situation makes the continued commitment in the budget to spend GHS80M on the cathedral, look like a vanity project. We lose nothing by suspending expenditure on that project until the economy recovers.
Tenth, rationalise the President’s Flagship programmes. This includes the Free SHS scheme. Every Ghanaian who can pay fees should pay. Limit the scheme to only those who can prove that they are not capable of paying fees.
In conclusion, a Government that is pleading with Ghanaians to bail it out of a self-afflicted disaster, must ‘bear fruits worthy of repentance.’
Today, December 8, 2022, Members of Parliament (MPs) will start debating the resolution of censure against the troubled Finance Minister, Ken Ofori-Atta.
The motion of censure was brought by the Minority Caucus against the Finance Minister, who they charged with economic incompetence, financial irresponsibility, conflict of interest, and egregious economic mismanagement.
The discussion will revolve on whether the House should vote to remove Mr Ofori-Atta from office or not. It was originally scheduled to take place on Wednesday but was moved to today.
On November 25, 2022, the eight-person ad hoc committee that Speaker of the House Alban Bagbin appointed to look into the motion moved against the Finance Minister delivered its findings to the House.
The Parliamentary Minority submitted a motion for censure against Ken Ofori-Atta on October 25, 2022.
The New Patriotic Party (NPP) MPs were urged by the Parliamentary Minority caucus to work with their allies to depose Mr. Ofori-Atta.
K. T. Hammond, an MP for the Adansi Asokwa seat of the New Patriotic Party (NPP), and Dr. Dominic Ayine, an MP for Bolgatanga East of the National Democratic Congress (NDC), co-chaired the ad hoc committee.
He asserts that the US$3 billion in assistance Ghana is requesting from the International Monetary Fund (IMF) will be significantly outweighed by investor capital destroyed by the local debt restructuring program outlined by Minister of Finance Ken Ofori-Atta.
“We cannot ruin more than US$100 billion of Ghanaian resources in the quest for US$3 billion from the IMF; that will not happen.
And I want to issue a caution that the Bank of Ghana is not their friend, warning investors, banks, pension funds, and fund managers, he remarked on December 7 during a news conference in Parliament.
He stated further that the Minority in Parliament was urging stakeholders to rise up and seek to reclaim their positions and their investments.
“We agree that Ghana needs restructuring but not an illegal, unilateral and arrogant misappropriation of people’s resources. This is the time to call on those activist investment lawyers, those vigilante lawyers to step up and claim their place in the fight to rescue this country,” he stressed.
Ghana is currently facing economic headwinds with a domestic debt programme facing opposition from stakeholders – largely from institutional bondholders.
Government is hoping to close a deal on debt restructuring at home in order to be able to access an International Monetary Fund, IMF, facility to support the failing economy.
S&P Global downgraded Ghana’s long-term local currency bondsto “selective default” and cut the country’s foreign currency debt to “CC” from “CCC-plus,” with default a “virtual certainty,” the ratings agency said in a Tuesday statement.
S&P said Ghana’s proposed local debt swap is a “distressed exchange offer,” earning those bonds the “selective default” rating, while the foreign currency bonds downgrade responds to the government’s announced plans to restructure that debt.
Ghana’s parliament on Tuesday narrowly approved the proposed 2023 budget, overcoming resistance from opposition lawmakers over the inclusion of the debt exchange and a higher value-added tax.
Finance expert, Joe Jackson, has asked the government of Ghana bondholders to accept the conditions of the debt exchange programme recently announced by the Minister for Finance, Ken Ofori-Atta.
The Government of Ghana on Sunday, December 4, 2022, announced a Debt Restructuring Programme asking institutional bondholders to voluntarily exchange their existing bonds for new ones.
The new agreement among other things, will replace existing local-currency debt with four new bonds maturing in 2027, 2029, 2032 and 2037; Finance Minister Ken Ofori-Atta said.
This has seen government entreat local bondholders to accept losses on interest payments set at 0% in 2023, 5% in 2024 and 10% from 2025.
Speaking on Ghana Tonight, Joe Jackson while noting that the exercise will have more impact on small investors asked the investors to accept the programme no matter how bad may be.
“At this moment, individuals who were wealthy enough to buy bonds in their own names are not being touched, Treasury Bills are not being touched. It is corporates that are being touched,” he said.
Describing the situation as unfortunate, Joe Jackson added that, “the smaller investor who is not rich enough to buy bonds in his name is now indirectly, being affected because that investor joined a corporate investment scheme, and the scheme being a corporate entity has been affected by the haircut.
“At this moment, you have got to accept it and move on however bitter the pill is, however unfair the pill is, however angry we feel about the pill,” he said.
The financial analyst however entreated the government to ensure cuts in its expenditure to help the current situation.
“The government must also cut expenditure , this is about cutting expenditure too. At the moment, I don’t think the government has cut enough expenditure. Next year’s budget we are still borrowing GHS61billion.
“That doesn’t make sense to me, that is not a nation in austerity. The government must cut expenditure, they must show that they are willing to bear the pain,” he stated.
Meanwhile, various institutional bondholders have flatly rejected the government’s debt exchange programme.
As part of negotiations with the International Monetary Fund (IMF), the government has disclosed the specifics of a domestic debt exchange that will take place after the Debt Sustainability Analysis is finished .
Domestic bondholders are expected to exchange their current instruments for new ones in accordance with the scheme, Finance Minister Ken Ofori-Atta stated in a televised statement on Sunday.
According to him, existing domestic bonds as of 1st December 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032, 2037.
Commenting on the development on Starr Today with Joshua Kojo Mensah, Mr. Gatsi indicated that the gloomy picture the conditions are showing is not the fault of the IMF.
“So I believe that the government is on the move to ensure that they comply with the pre-condition given by the IMF. We have not displayed the amount of money we borrowed. The IMF was aware of our engagement with the HIPC initiative and most African countries have not shown from the benefit they got from the HIPC initiative. There are no cogent reasons for external debt holders to be providing debt forgiveness etc.
“So I believe from that perspective they are trying to teach us a great lesson and by now all of us will be angry. When the government has overborrowed and not using the funds very well, we will all be alive to answer,” the Dean of the Cape Coast University Business School stated.
However, an economist, Mensah Tukornu has said the government has lied to Ghanaians about the E.S.L.A and Daakye bonds it acquired.
“We don’t have an honest government. This is very sad. People are going to die as a result of this announcement. I am telling you the facts. Because this is the same way this same government spent about 25 billion Ghana cedis to wipe away or to rationalize between seven to nine billion they have alleged to have caused by banks,” Mr. Tukornu stated.
With the economy now looking to the IMF for help, Ken Ofori-Atta has recently come under great pressure from the President to quit or be removed from his position.
The Finance Minister’s dismissal has been openly demanded by lawmakers in the ruling New Patriotic Party.
On the other hand, the minority caucus in parliament has also submitted a motion of censure against Ken Ofori-Atta on seven different grounds.
While it remains unclear whether Ken Ofori-Atta will remain in office or be removed in the near future, Senyo Hosi in a Twitter post on December 7, 2022, said the finance minister has had more chances to transform the Ghanaian economy than any of his predecessors in the 4th Republic.
“Lest we forget, Ken Ofori-Atta is Ghana’s longest-serving Finance Minister under the 4th Republic. He has had the best opportunity to transform the Ghanaian economy than any of his 4th republic predecessors. Transformation, he has achieved, but in the reverse direction. #KenTheTransformer” Senyo Hosi wrote.
On Tuesday, December 6, Kumah said on Joy FM that individuals who reject the measure face terrible repercussions and that even if they challenge the government, the likelihood is that they will still experience harsher results.
When asked if the administration was optimistic about the exchange’s acceptability, he replied: “At first, some would express doubts, but when you explain the gravity of the issue, where we are, and how we can all get out better, most of them agree…
On the issue of institutions that refuse to sign on, he cautioned; “then you don’t get the carrots, the benefits, the buffers that are provided. You are on your own, it means that you are open to default in terms of if the markets are unable to redeem (the bonds).”
When the question of government being sued by institutions was raised, he responded by saying that if the system is broken or in the case of an economic crash, there will be little to nothing to sue for.
Government might have overborrowed – Kumah admits
“We are not a perfect institution. We can make mistakes, and our decisions are allowed to be criticised,” he said on the Joy FM Super Morning Show in response to public criticism over management of the economy.
Kumah, who is also Member of Parliament for Ejisu, added that the current state of the economy was also due to after effects of the COVID-19 pandemic, even though there has been some improvements since then.
The government has come in for backlash after it announced a domestic debt exchange for institutional bondholders as part of measures to secure an International Monetary Fund, IMF, programme before the end of the year.
The debt exchange has received stiff fightback especially from a number of institutions including the Trades Union Congress (TUC) and the Ghana Medical Association (GMA) who are insisting that the debt exchange should not affect pensions.
The deputy minister in the same interview also spoke about how excessive borrowing could have triggered the current economic crisis.
According to him, the government could have considered other alternatives to financing its projects and programmes aside from borrowing.
“Maybe the levels of borrowing have been too much and that could be one of the areas. Maybe we should have looked at more alternatives for financing our various programmes but of course, every nation is built on debt, it is what you do with it and what happens [that matters].
“I know we are where we are because, if you borrowed in 2017, 2018 and 2019, US$3 billion of investment each year and you were expecting the returns after 2020 and Covid-19 struck, and brought your economy to almost zero, it means that you are already in a very difficult situation.
“So, this is the reality of what happened, it’s not like we borrowed and did things that didn’t benefit the country,” he added.
Minister of Finance, Ken Ofori-Atta, on December announced a number of measures under the government’s Domestic Debt Exchange (DDE) programme.
He said the announcement was in line with the government’s Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.
The primary defense is that government shouldn’t ever intervene in pensions, the majority of which are held in institutional bonds.
All debts have been divided into four categories as part of a restructuring exercise that has been made necessary by recent economic headwinds, according to an announcement made by Minister of Finance Ken Ofori-Atta on December 5.
Whiles individual bondholders and investors in Treasury Bills were exempt from the exchange, the Minister outlined the main modalities as follows:
“Under the Programme, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds as of 1st December, 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037.
“The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity. Coupon payments will be semi-annual.”
Since the announcement, the following bodies have kicked against the programme.
National Association of Graduate Teachers (NAGRAT)
Speaking to the press in Accra on Monday (December 5) the President of NAGRAT, Angel Carbonu, said that if the government proceeds with its plan, his union and other labour unions in the country will lay down their tools.
“We enter into a contractual agreement that I am buying bonds at ‘X’ per cent. So, I have informed the beneficiaries that I have bought bonds on your behalf at this rate. All of a sudden, government who is the party on the other side of the agreement comes to say, for me, this is what I can pay, take or leave it.
“This will not be accepted, my union NAGRAT, the teacher unions do not accept this. We are members of the forum made up of the public sector unions and we want to assure our members that we will resist this move by the government,” he said.
The Ghana Registered Nurses and Midwives Association (GRNMA)
The GRNMA through a press statement registered their dismay and disappointment at the proposed Debt Exchange programme.
The Association explained the basis for its rejection stating that “Pension funds are a collection of contributions of individuals. By design they are meant to protect the vulnerable during retirement.
“Thus any treatment of “individuals” as stated by the Minister of Finance must be indeed extended to all individuals as with pension funds including our GRNMA Fund, a Provident Fund for over 101,000 contributors who are nurses and midwives within the nursing and midwifery fraternity;
“Pension funds, particularly Tier 3 schemes, were encouraged to hold their investments for a minimum of 10 years. Since its inception in 2012, most schemes have just met the 10 years or will be 10 years next year.
“Debt exchange for pension funds will mean that workers will not have access to Tier 3 funds after waiting for 5 – 15 years. This is simply unacceptable! To the National Pension Regulatory Authority’s (NPRA) regulations, all Pension Schemes have most of their assets in GOG securities,” the statement read in part.
Ghana Medical Association (GMA)
The GMA in a statement on December 6 said the debt restructuring programme will have a negative impact on its members’ pensions funds and healthcare delivery in the country.
“The GMA is also concerned about the negative effect of the debt exchange programme on Private Health facilities, private health insurance and mutual schemes that have invested heavily with Government of Ghana bonds.
“This we believe will impact negatively on patient care, medication supply and claims management,” the statement said.
Trades Union Congress (TUC)
“We have taken special note of the statement by the Minister for Finance that the Debt Exchange Programme is voluntary. The TUC will scrupulously analyse the propriety or otherwise of the participation of pension funds of its members in the programme.
“We are assuring workers, that the TUC and its Affiliate unions will do everything in our power to ensure that our members are fully protected and that not even a pesewa of pension funds is lost in the Debt Restructuring Programme,” the TUC said in a statement issued on December 5, hours after the Minister’s announcement.
“We have carefully analyzed the announcement by the Minister of Finance on the Debt Exchange Program and are of the opinion that it is injurious to the interest of contributors to pension schemes,” the Chamber said in a December 6, 2022 statement.
Government’s proposed debt restructuring programme has been greeted with heavy criticism.
The Chamber of Corporate Trustees of Ghana has rejected the Domestic Debt Exchange Programme which was geared towards restoring the nation’s capacity to service its debt.
Finance Minister, Ken Ofori-Atta indicated on December 5, that the objective was “to invite holders of domestic debt to voluntarily exchange approximately ¢137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.”
But the Chamber of Corporate Trustees begs to differ.
In a press release on Tuesday, the Chamber believes the structure will do more harm than good to investors under its umbrella.
Their fear is borne out of the President’s initial position that there would be no haircuts, a position which has changed a few weeks on.
“On 30th October, 2022, The President of Ghana Nana Addo Dankwa Akuffo Addo addressed the nation and assured all Ghanaians that “there would be no haircuts on pension funds”. A few weeks after this announcement, we are all witnessing, rather surprisingly, a major U-turn from that position.”
The Chamber further insists that the Domestic Debt Exchange programme will not auger well for pension contributors.
“We have carefully analyzed the announcement by the Minister of Finance on the Debt Exchange Program and are of the opinion that it is injurious to the interest of contributors to pension schemes,” the statement read.
On the back of this, they explained that “the Pensions Chamber would like to assure contributors to pension schemes that the industry has not agreed to the debt exchange programme proposed by the
Ministry of Finance.”
The statement was signed by the Chamber’s Executive Secretary, Thomas Kwesi Esso.
Furthermore, the group says though it acknowledges the negative effect of inflation on the pension fund assets, the need to reduce government’s debt burden “should however not be done to the detriment of contributors to pension schemes.”
The government of Ghana has allotted some GH¢80 million to be disbursed towards the construction of the national cathedral in the 2023 budget statement and economic policy laid before parliament by the Finance Minister, Ken Ofori-Atta.
Government’s expenditure projection for the years 2024, 2025 and 2026 also reveals that an additional 64 million, 75.5 million and 108 million Ghana cedis totaling 247.5 million Ghana cedis would be spent on the construction of the cathedral between 2024 and 2026.
In a panel discussion on Peace FM’s morning show ‘Kokrokoo’, the PPP Chairman asked government to “suspend all non-essential projects like the National Cathedral. We are in an economic crisis, yet you want to push money into the construction of this project; does it make sense?”
Editor of the Custodian Newspaper, Awudu Mahama, has criticized Ministers who travelled to Qatar for the World Cup, rather than staying in the country to review the 2023 budget.
According to him, these ministers should have been in the country taking notes and addressing specific sector budgetary issues raised by Finance Minister Ken Ofori-Atta.
“I have serious issues with ministers who went to the World Cup. After the budget has been read, we expect every minister to come and take notes on their sectors as addressed in the budget. But instead of being there to take notes and review the budget, these ministers go to the World Cup, especially at a time where Ghanaians are agitated and the economy is in bad shape,” he told Samuel Eshun during the Editors’ Take Discussion on the Happy Morning Show.
Awudu Mahama was peeved these Ministers ignored the tension within the majority caucus to go watch the World Cup. “I wasn’t happy when ministers after the budget was read went to the World Cup, especially with the tension amongst the majority caucus. So, if a minister, you stay away from the budget, do you expect the MP who is already agitated to take your actions lightly?”
On Thursday, November 24, the embattled Finance Minister Ken Ofori-Atta presented the government’s economic programme to Parliament for the 2023 fiscal year.
Amongst the highlights of the budget were the revision of the E-levy from the current 1.5% to 1%, plus an increment of the VAT rate from 12.5% to 15%.
After the budget presentation, some ministers and MPs travelled to watch the tournament rather than deliberate the 2023 budget.
The recent declaration by the finance minister, Ken Ofori-Atta, on the measures the government would take to reduce the impact of the country’s domestic debt market on investors is welcome news for investors, according to financial expert Christian Tachie-Djan.
Mr. Tachie-Djan stated that given the period of rumor and confusion in the nation, Ken Ofori-announcement Atta’s was timely.
In an interview on the Happy Morning Show with Samuel Eshun, he noted, “There are a lot of means countries go about these ‘Haircuts’ so we were actually in limbo and weren’t sure how the government was going to do it, how it was going to play out at the end of the day. So there were speculations and panic within the investor community. I think because of the heighten speculations that we were getting on the airwaves, people were just coming up with anything desperate to the Ghanaian public so it was expedient that the Finance Minister before the start of the new week, put out a statement so that some calm will be restored in the financial landscape.”
“2017 we went through some serious house cleaning exercise as far as the finance landscape is concerned that allowed some banks to be closed while others were merged with existing ones. So it was important that we allowed our finance sector to relay very solid. So yesterday what we got from the Finance Minister I think the investor community should be happy with it,” he added.
“It did not come out with the external creditors, how these things are going to play out but at least we know that our domestic creditors are safe. Because there are a lot of circulations that people were thinking even those with fixed deposits in the banks will also be affected, treasury bills were going to be affected, bonds and all that and we weren’t really sure what was going to happen. So that statement from the Finance Minister I think it has put to rest some of these speculations and I think this is one of the best news the investor community is going to get,” he mentioned.
According to economist Menson Torkunoo, local bondholders who will be hit hardest by the government’s domestic debt swap program may pass out from shock as a result of the size of the losses on their investments.
Finance Minister Ken Ofori-Atta announced on television on Sunday that domestic bondholders must replace their current instruments for new ones in accordance with the scheme.
According to him, existing domestic bonds as of 1st December 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.
“We don’t have an honest government. This is very sad. I tell you honestly people are going to die as a result of this announcement. I am telling you the facts. Because this is the same way this same government spent about 25 billion Ghana cedis to wipe away or to rationalize between seven to nine billion they have alleged to have caused by banks,” he stated.
Mr. Tukornu underscored the situation where the nation’s economy is heading to ground zero has never happened in the history of the country.
The economist added that he cannot fathom the dire situation could warrant “bonds holders, especially domestic ones, to sacrifice their hard-earned investment to enable the government to recover. It has never happened before. In my few years as a Ghanaian who has a little bit of the economy. I am really sad.”
