The Minority claims that an additional GHC80 million will be spent on the national cathedral’s construction, bringing the project’s total cost to GHC420 million.
He said the GHC80 million does not constitute a spending priority at this time of economic crisis where the country is a cup in hand begging the IMF for a $3billion fund to support the economy.
“For a government that is unable to print textbooks for basic school pupils several years after introducing new curricular, unable to pay NABCO arrears and that is indebted to contractors and suppliers to the tune of over GHC40 billion, this is most imprudent and unacceptable,” Mr Iddrisu stated.
The project is expected to provide a sacred space and infrastructure for the formal religious activities of the nation, like state funerals and presidential inaugural services.
The government promised the cathedral will be funded by the private sector but so far some GHC420 million of the taxpayers’ money has been pumped into the project.
Although the agreement states that there won’t be any interest (coupon) payments made in the first year, 2023, those payments will start coming in the second year at a rate of 5%.
Yesterday, when the Ghana Debt Exchange (GDX) program was introduced, Minister of Finance Ken Ofori-Atta promised that the scheme wouldn’t have an impact on bondholders’ main investments.
“There will be no haircut on the principal of bonds. Individuals who hold bonds will also not be affected at all,” the minister said, adding that efforts were underway to protect the financial sector from any spillover. principal of bonds. Individuals who hold bonds will also not be affected at all,” the minister said, adding that efforts were underway to protect the financial sector from any spillover.
The exercise would affect approximately GH¢137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, he said at a press conference in Accra to launch the programme.
“This is a key requirement to allow Ghana’s economy to recover as fast as possible from this crisis. This is also a key requirement to secure an International Monetary Fund (IMF) support,” Mr Ofori-Atta said.
Four bonds
The Daily Graphic gathered that all the bonds received would be put together and then distributed, per some guidelines, into the four new bonds due to be issued.
Per the allocation formula, the minister said, 17 per cent of the total debt instruments received for the exchange would be allocated to the short-term bonds, maturing in 2027, and another 17 per cent allocated to the intermediate term bond, maturing in 2029.
The third category of medium-term bonds maturing in 2032 will have 25 per cent of the expected GH¢137 billion existing cedi-denominated bonds, while 41 per cent of the bonds will be swapped for long-term bonds, which will mature in 2037.
For the interest rates, technically known as coupons, on the new bonds, Mr Ofori-Atta said the annual coupon on all of the new bonds would be set at zero in 2023 and five per cent in 2024.
However, from 2025, the bonds would attract 10 per cent annual coupons until they matured in 2037, he said.
“Coupon payments will be semi-annual,” the Finance Minister said, adding: “This means the interest payments due for a particular year will be spread in two equal instalments.”
He said the domestic debt exchange was part of a more comprehensive agenda to restore debt and financial sustainability, adding that the government was also working towards a restructuring of external indebtedness, which would be announced in due course.
Government instruments
By law, some investment fund managers and entities are expected to invest heavily in government instruments, such as bonds and treasury bills.
While some of the bondholders are individuals, many others are institutional investors, such as pension funds, fund managers, universal banks, insurance and reinsurance companies.
Therefore, while the arrangement will not directly affect individual bondholders who are not registered in the Ghana Securities Depository (GSD), individuals who belong to collective investment schemes will be affected.
Mr Ofori-Atta said the government would take the necessary steps to safeguard the financial sector from any spillovers.
“Thanks to well-targeted regulatory measures and the creation of a Financial Stability Fund (FSF), banks, pension funds, insurance companies, fund managers and collective investment schemes will be supported to ensure that they are able to meet their obligations to their clients as they fall due,” he said.
He added that the government had dialogued extensively with regulators across the financial sector to agree to provide regulatory forbearance for all entities whose financial positions were adversely affected by virtue of participating in the exchange.
The Daily Graphic also learnt that the forbearance comprised a set of regulatory measures, incentives and leeway that would enable financial institutions to overcome some challenges.
For banks, that can mean relaxing the norms for restructuring assets, so that less provision is made for non-performing assets.
The Daily Graphic again gathered that financial sector regulators, namely: the Bank of Ghana (BoG), the Securities and Exchange Commission (SEC), the National Insurance Commission (NIC) and the National Pensions Regulatory Authority (NPRA), would, in the coming days, take turns to spell out their specific enhancers to the domestic debt exchange programme.
Mr Ofori-Atta said treasury bills were “completely exempted, and all holders will be paid the full value of their investments on maturity”.
Rallying call
The minister indicated that moving the country out of debt could only be achieved through the active participation of all key economic actors.
“We call upon all domestic debt holders to take their share in ensuring that public debt sustainability is quickly restored by participating in this exchange programme,” he said.
Background
The debt sustainability analysis (DSA) conducted by the government and its multilateral development partners demonstrated that Ghana’s public debt is unsustainable, and that the government might not be able to fully service its debt for some time to come if no action was taken.
Debt servicing is now absorbing more than half of total government revenues and almost 70 per cent of tax revenues.
In addition to debts held by state-owned enterprises, exceeds 100 per cent of Gross Domestic Product (GDP).
“This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt. This is the path towards resetting the economy to a more stable one capable of addressing the development challenges of the country,” Mr Ofori-Atta said.
According to the chamber, the proposal put forth by the Minister of Finance, Ken Ofori-Atta, is inferior to market expectation and will destroy the savings of Ghanaians and further undermine market confidence.
“We have carefully analysed the announcement by the Minister of Finance on the Debt Exchange Programme and are of the opinion that it is injurious to the interest of contributors to pension schemes”, it said in a statement.
“The proposal as put forth by the Minister of Finance is inferior to market expectation and will destroy the savings of Ghanaians and further undermine market confidence. This is why we reject it outright”, it explained.
It assured contributors to pension schemes that the industry has not agreed to the debt exchange programme proposed by the Ministry of Finance.
“As Trustees, we hold a fiduciary responsibility and are enjoined to seek the best interest of contributors at all times”, it stressed.
It further stated that though it recognises that inflation has caused significant harm to pension fund assets this year and that there is an urgent need to reduce the government debt burden and restore macroeconomic stability that should however not be done to the detriment of contributors to pension schemes.
“We share in Government’s call for burden sharing, but that should be done in the spirit of fairness to ensure a win-win outcome to all stakeholders”, the chamber added.
It urged contributors to pension funds and actors in the pensions industry to remain calm “as we seek the best outcome in our negotiations with the Ministry of Finance”.
“We will duly inform members of the outcome of our deliberations”, it concluded.
He further said that the 2023 budget proposal made by Finance Minister Ken Ofori-Atta was targeted toward obtaining an IMF financial bailout.
In a tweet, Dr. Kwakye stated that “the 2023 Budget and the debt exchange offered by the Minister have IMF fingerprints all over it.”
On December 5, 2022, the finance minister stated at a news conference in Accra that all domestic bondholders would swap their existing securities for new ones as part of the debt exchange scheme.
Existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.
The annual coupons on all of these bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.
The government has declared that it will take all necessary steps to protect the financial institutions’ solvency as they participate in Ghana’s domestic debt swap.
On Monday in Accra, Mr. Ofori-Atta made the commitment during the formal introduction of Ghana’s domestic debt swap scheme.
The programme is to alleviate the debt burden in a most transparent, efficient, and expedited manner.
He said in this context, by means of an exchange offer, the Government had been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds.
“It does not embed any principal haircut on Eligible Bonds, as we promised. Let me repeat this fact as plainly as I can, in this debt exchange individual holders of domestic bonds are not affected and will not lose the face value of their investments,” he said.
The Minister said for this reason, the Governor of the Bank of Ghana would follow suit with details of the necessary assistance in due course.
“We have also dialogued extensively with regulators across the Financial Sector including Securities and Exchange Commission, National Insurance Commission and National Pensions Regulatory Authority to agree that regulatory forbearance will be provided to all entities whose financial position is adversely affected by virtue of participating in this exchange,” he added.
He said the debt exchange provided an orderly way to put the economy back on track and these efforts would be complemented by fiscal measures to protect the neediest and most vulnerable in society.
Mr Ofori-Atta said the Government expected overwhelming support to this exchange and the success of this necessary endeavour depended on the public’s cooperation.
He called on the media to support the Government in disseminating the right information to economic actors, saying “we are all in this together and we intend to get out of this together.”
The government, he declared, “is absolutely committed to solving the problems we confront as a nation in continuing our recovery from the pandemic’s impact within our budgetary consolidation and debt sustainability.”
“The future looks promising and the personnel in charge of managing the economy is quite skilled.
This budget, in my opinion, puts us on an unstoppable path toward independence from the government and individual enterprise.
Generations of job seekers and job creators have passed, “He declared.
According to him, the Ghanaian economy is being managed by a team of competent people.
Speaking at a press conference Monday, December 6, 2021, the finance minister stated that the Akufo-Addo-led government is committed to addressing the problems of Ghanaians amidst the economic challenges.
Ken Ofori-Atta noted that the acceptance of the reviewed 2022 budget will set the country on a transformational path.
He said, “Government is very committed to addressing the challenges we face as a nation in sustaining our recovery from the impact of the pandemic within our fiscal consolidation and debt sustainability.”
“We have a very competent team managing the economy and the prospects are bright. I believe this budget sets us on the path of irreversible transformation from dependence on the state to individual enterprise. From generation of job seekers to generation of job creators,” he stated.
The budget presentation is in accordance with Article 179 of the 1992 Constitution and section 21 of the Public Financial Management Act, 2016 (Act 921).
The minority has threatened to disapprove the 2023 budget estimates, and debt restructuring until some five conditions are met by government.
According to Haruna Iddrisu, they will not accept the debt restructuring programme announced by the finance minister.
This comes after Finance Minister Ken Ofori-Atta announced that Ghana is embarking on a debt exchange program to ensure that debt levels are brought to sustainable levels.
At a press conference, the minority leader said, “Let me state, without any fear of contradiction, that the form and structure of the debt restructuring plan announced by Ken Ofori-Atta are unacceptable to us, and we simply will not accept it.”
He also raised concerns over why the government failed to announce the exchange programme in the budget statement presented to parliament.
According to Haruna Iddrisu the minority are aware that “the Akufo-Addo/Bawumia government have become desperate and is compelled after reckless mismanagement of the economy to achieve fiscal consolidation.”
Below is a listicle of the conditions the minority has demanded before the budget estimates for 2023 will be approved;
1. The resignation of the entire Economic Management Team and in particular Alhaji Bawumia from his position as Chair of that obviously moribund body. 2. The immediate resignation or dismissal of the Finance Minister, Ken Ofori-Atta 3. Immediate reduction in the number of Ministers and political appointees at the Office of the President by half. 4. Removal of all non-essential expenditure in the 2023 budget including the GHC 80 million allocated to the National Cathedral
5. Reinstatement of the GHC100 exemption threshold for e-levy payment.
Following the above, the minority in parliament reiterated that the country’s ailing economy characterized by unsustainable debt, inflation, and unprecedented credit rating downgrades, among others.
Haruna Iddrisu explained the economic situation is so bad that Ghana is currently ranked side by side with Sri Lanka, which is considered the worst economy in the world and has defaulted on its debt.
Speaking at the press conference, he said “as it’s now trite knowledge, the Ghanaian economy has been terribly mismanaged in the last five to six years by the Akufo-Addo/Bawumia administration leading to our request for a 17th IMF program to renew confidence and policy credibility on our failing economy despite haughty initial denials.
“The severely ailing economy has been characterized by unsustainable debt, very high inflation, unprecedented and disastrous depreciation of the cedi, high budget deficits and unprecedented credit rating downgrades.
“The economic situation is so bad that we are currently ranked side by side with Sri Lanka, which is considered the worst economy in the world and has defaulted on its debt.”
Speaking to the graduating class of 2022 at the 13th Accra Business School graduation ceremony, the former leader claimed that the private sector is currently in a very bad situation as a result of the government’s poor management and carelessness during the previous five years.
“The local private sector’s predicament is expected to get worse as a result of the Government’s impending debt operation.
The government’s unilateral offer to pay no interest in 2023 and a suppressed interest rate of between 5 and 10% will worsen the situation for the private sector, though specifics are unknown at this time.
“A worst-case scenario is the contemplated compulsory extension of maturities on Government bonds and the haircut investors will have to take if they decide to cash out because they can’t wait that long. People have lost value on their investments and could potentially lose even more,” the former President said.
In line with the programme, domestic bondholders are billed to exchange their instruments for new ones, Finance Minister Ken Ofori-Atta said in a televised announcement 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.
“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,” said the Finance Minister.
Meanwhile, the Finance Minister stressed “There will be NO haircut on the principal of bonds, adding Individual holders of bonds will not be affected.
Also, Treasury Bills were exempted from the haircut as holders will be paid the full value of their investments on maturity.
However, the external debt restructuring parameters will be presented in due course, Mr Ofori-Atta said.
According to the association, the reduction will allow the government to meet its revenue target as many have evaded the use of Mobile Money to cash due to the high charges.
Speaking to Citi News, the General Secretary of the Association, Evans Otumfour said;
“Government must conduct research to find out why people are not patronizing MoMo. It is obvious that the rate is one of the major hindrances to government achieving its revenue. So government must reduce the rate so that a lot of people will not be impacted. There are over 17 million MoMo users, so if government pegs the rate at 0.1 or 0.5 percent, it will still meet its revenue target. If not, people will look for alternatives like the use of cash.”
On November 24, the Finance Minister, Ken Ofori-Atta, announced that government will remove the GH¢100 daily threshold on the Electronic Transfer Levy (E-levy) and reduce the headline rate from 1.5 percent to 1 per cent.
During the presentation of the 2023 Budget Statement and Economic policy to parliament, he said; “We will review the E-Levy Act and, more specifically, reduce the headline rate from 1.5 per cent to 1 percent of the transaction value as well remove the daily threshold.”
The E-levy review, among other reforms and interventions, according to the Finance Minister, forms part of revenue measures aimed at restoring macroeconomic stability and accelerating economic transformation.
“Government has consistently indicated its intention to improve the revenue collection effort by leveraging technology to enhance tax administration, identify and register taxable persons, and strengthen tax compliance.”
“Government has received several proposals for a review of the Electronic Transfer Levy and is working closely with all stakeholders to evaluate the levy’s impact in order to decide on the following line of action – which will include a revision of the various exclusions.
“As a first step, however, the headline rate will be reduced to 1 per cent of the transaction value alongside the removal of the daily threshold,” he said.
Even if the government is not using the term “haircut” to describe losses that would be incurred by bondholders, the former chairman of the Parliamentary Finance Committee asserts that the measures will ultimately result in losses for investors.
The future value if I have one million cedis in bonds due to maturity in 2026 and you apply these four methods of distribution, it is not the same, he said when asked about the problem of losses on principle of such bonds.
“So may be government is not calling it a haircut but I am saying that my one million or whatever investment will not be the same when I realise it in 15 years,” he stressed.
“All these bonds have interest on them, so that you are paid coupons… the average rate of all of these bonds in the system is about 22%.
“So, if you consolidate all of them into the four types…. If you look at the fact that the average interest rate on existing bonds in the system is about 22% and we are coming down to 10%, then that will be a haircut stricto senso,” he submitted on Citi FM’s Eyewitness News, December 5.
“The Fin Min said treasury bills are protected (full redemption) but other local debt instruments (e.g. fixed dep., bank debt holdings) are to to be exchanged for 4 instruments with different maturity dates & coupon payments. So there are implicit haircuts!”
Ofori-Atta announces Domestic Debt Exchange:
The Minister of Finance announced a number of measures under government’s Domestic Debt Exchange (DDE) programme late Sunday.
He stated in a four-minute address that the announcement was in line with government’s Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.
The Minister laid out among others the exchange of existing domestic bonds with four new ones as well as their maturity dates and terms of coupon payments.
He also addressed the overarching goal of the government relative to its engagements with the International Monetary Fund as well as measures to minimize impact of domestic bond exchange on different stakeholders.
“The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups,” he said before outlining three main measures:
• 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.
• Individual holders of bonds will not be affected.
Bright Simons, the vice president of IMANI Africa, claimed that the government was simply defaulting on its financial obligations by engaging in the debt restructuring plan proposed by Finance Minister Ken Ofori-Atta.
Simons said that the Ghanaian government would not pay its debtors for the first time in almost 40 years in a series of tweets published on Sunday, December 12, 2022.
The government last fell behind on its bills in 1972, the vice president of IMANI noted.
“The act is complete. Unanimously, Ghana declared a default initially since 1982.
However, it is the first time since the 1972 commercial loan default in several like-for-like aspects.
“The question on everyone’s mind is: would things be smooth or rough with the other steps ahead?” parts of the series of tweets read.
He stated in a 4-minute address that the announcement was in line with government’s Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.
The Minister laid out among others the exchange of existing domestic bonds with four new ones as well as their maturity dates and terms of coupon payments.
He also addressed the overarching goal of the government relative to its engagements with the International Monetary Fund as well as measures to minimize impact of domestic bond exchange on different stakeholders.
“The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups,” he said before outlining three main measures:
• 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.
• Individual holders of bonds will not be affected.
The recently launched domestic debt exchange program (DEP), according to finance minister Ken Ofori-Atta, would be a crucial tool for recalibrating the current interest rate regime and bringing the country’s debt levels back to more manageable levels.
In order to exchange roughly GH137 billion in domestic notes and bonds, including E.S.L.A. and Daakye bonds, for a package of new bonds to be issued by the Treasury, he called on holders of domestic debt.
At the commencement of the Ghana Domestic Debt Exchange Program on Monday, December 5, 2022, the finance minister made this statement during a press conference.
Currently, the Debt Sustainability Analysis (DSA) demonstrates that the country’s debt servicing absorbs more than half of total government revenues and almost 70 percent of tax revenues. Additionally, the total public debt stock, including that of State-Owned Enterprises among others, exceeds 100 percent of gross domestic product (GDP).
“The extent to which our interest charges consume some 70 percent and sometimes 100 percent of our revenues is something that is not sustainable, and this is really therefore a recalibration of the whole interest rate regime so that we move into a sustainable level.
“This demonstrates unequivocally that Ghana’s public debt is unsustainable, and that government may not be able to fully service its debt down the road if no action is taken,” he admitted.
Government’s key objective for this programme, Mr. Ofori-Atta added, is to alleviate the debt burden in a “most transparent, efficient and expedited manner” by means of an Exchange offer while minimising impacts of the domestic debt exchange on investors holding government bonds.
Elaborating on modalities, the finance minister said under the arrangement government proposes to exchange existing domestic bonds as of December 1, 2022 for four new bonds maturing in 2027, 2029, 2032 and 2037. These new instruments will pay no interest in 2023, 5 percent interest in 2024 and subsequently 10 percent interest per annum until maturity.
“The predetermined allocation ratios are: 17 percent for short-term bonds, 17 percent for intermediate bonds, 25 percent for medium-term bonds and 41 percent for long-term bonds,” he added.
This, when completed, will afford government some fiscal space to operate as it envisages reducing, particularly, the domestic interest cost in 2023 – which is estimated at GH¢31.29billion out of the total GH¢52.55billion.
Citing instances of such domestic debt operations in the last 10 years, Mr. Ofori-Atta noted that Jamaica resorted to such operations in the past, notably in 2010 and 2013: “…in both cases, it chose to trust the sense of responsibility of the Jamaican people and proceeded through a voluntary approach. This approach was highly successful, as more than 99 percent of domestic bondholders participated in the exchange”.
No Principal Haircut
The minister emphasised that the arrangement does not embed any principal haircut on eligible bonds, as promised.
“Let me repeat this fact as plainly as I can: in this debt exchange, individual holders of domestic bonds are not affected and will not lose the face value of their investments. So let us remove any doubt and discard any speculation that government is about to cut your retirement savings or the notional value of your investments. That is not the case,” he said.
In effect, Treasury bills are completely exempted, and all holders are expected to 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.
“This domestic debt exchange is part of a more comprehensive agenda to restore debt and financial sustainability. This is a key requirement to allow Ghana’s economy to recover as fast as possible from this crisis. This is also a key requirement to secure any IMF support. We are also working toward a restructuring of our external indebtedness, which we will announce in due course,” Mr. Ofori-Atta said.
Financial Stability
To bring the metrics within prudential confines, particularly in view of securing a bailout from the International Monetary Fund (IMF) for the 17th time, Mr. Ofori-Atta during the 2023 budget presentation confirmed there will be a restructuring of outstanding facilities under a Debt Exchange Programme.
During a televised broadcast 10 days after the budget presentation – on the eve of the DEP’s formal launch – the finance minister provided preliminary details of its broad application.
To mitigate the plan’s sizeable impact on financial institutions – banks, pension funds, insurance companies, fund managers and collective investment schemes (CISs) – government announced the establishment of a Financial Stability Fund (FSF) in collaboration with development partners to provide liquidity support to ensure they are able to meet their obligations to clients.
Additionally, during the broadcast Mr. Ofori-Atta stated that his outfit is working with the financial sector’s various regulators to “put in place appropriate measures and safeguards to minimise the potential impact on the financial sector and ensure financial stability is preserved”.
Already, the Bank of Ghana (BoG) has expressed a willingness to support regulated entities, especially banks which have a high level of exposure to Treasury securities, to remain liquid and solvent.
On December 6, 2022, pressure organization Arise Ghana is anticipated to stage a demonstration against the nation’s economic woes.
The organization claims that the demonstration will go on until the 2023 budget discussion is finished and Parliament approves the motion of censure against Finance Minister Ken Ofori-Atta.
The Ghana Police Service requested an injunction against the event on the grounds that the location constitutes a threat to national security. The organization had planned to picket from November 15 to November 17, 2022, in Revolution Square directly across from the Jubilee House.
The Police maintained that there were valid reasons to believe that assembling at Revolution Square would jeopardize public safety and infringe on other people’s rights and freedoms, according to assessments by the National Security and Police Security Intelligence.
Leading protester Bernard Mornah told Citi News that the demonstration will begin at 8:00 am and go until 2:00 pm.
“We are embarking on picketing around Parliament and around the yet-to-be-constructed National Cathedral. We have informed the police about it. So, as for Tuesday, it has been agreed that nothing will stop us because of the cordial discussions with the police,” he explained.
The Minority in Parliament say they are shocked by the President’s World Cup trip to Qatar despite the country’s economic difficulties.
Addressing the press on Monday, the Minority Leader, Haruna Iddrisu indicated that the move by the President was not prudent.
According to the NDC lawmaker, the decision by some other government appointees to travel to Qatar while discussions on the 2023 Budget was ongoing was also not ideal.
“We’re particularly stunned that the President himself joined even as he’s managing a major economic crisis. As if a better performance of the Black Stars contributed to addressing this economic mess”, he remarked.
In a related development, a ranking member on the Finance Committee of Parliament, Dr Cassiel Ato Forson, had earlier critcised government officials who went to Qatar to watch the ongoing FIFA World Cup tournament.
The football competition began ten days ago, and so far it has seen many interesting spectacles, including some high profile national officials gracing the stadiums to support their countries.
But in the case of Ghana, Dr Forson said it is not prudent for Ghanaian MPs and Ministers to be having fun in Qatar amidst the present economic crisis.
According to him, the act does not augur well for the country, especially when the inputs of such persons are needed in the discussion of the 2023 budget.
In a tweet last Wednesday, he added a photo of the MP for Ablekuma West, Ursula Owusu-Ekuful, who was in a pose at a stadium in Qatar, together with ex-footballer Patrick Kluivert.
Dr. Forson tweeted, “At a time of serious economic crisis, Cabinet Ministers and MPs should not abandon the important business of budget consideration to go and watch football in Qatar!”.
“The optics are bad! We need to show we are serious about resolving the crisis!”, he added.
On Thursday November 24, the embattled Finance Minister, Ken Ofori-Atta presented 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%.
These developments subsequently triggered some resentments from the Minority who are calling on government to revise its notes.
It is in the light of these concerns that the Minority has expressed disappointment with the President’s trip as well as that of other appointees.
Meanwhile the Minority in Parliament says it will not accept government’s proposed debt restructuring programme as announced.
According to the Caucus, the policy is unacceptable and cannot be allowed to proceed.
The Minority Leader, Haruna Iddrisu, said this at a press conference on Monday, December 5.
He said his side will use every legitimate means to oppose the move.
Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has averred that government’s announcement of a debt exchange programme was influenced by the International Monetary Fund (IMF).
He further asserted that the 2023 budget statement presented by the Finance Minister, Ken Ofori-Atta was also geared towards securing a financial bailout from the IMF.
Dr Kwakye in a tweet said, “IMF’s fingerprints are all over the 2023 Budget and the debt exchange presented by the Minister.”
The finance minister, at a press conference in Accra on Monday, December 5, 2022, said under the debt exchange programme all domestic bondholders will exchange their instruments for new ones.
Existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.
The annual coupons on all of these bonds will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.
Meanwhile, Ghana is targeting an amount of $3 billion over a three-year period from the IMF once an agreement on a programme is reached.
The new amount requested as a loan is double the government’s initial target of $1.5 billion.
The IMF programme is aimed at restoring macroeconomic stability and safeguarding debt sustainability among many others.
IMF’s fingerprints are all over the 2023 Budget and the debt exchange presented by the Minister.
Private legal practitioner and member of the opposition National Democratic Congress, Godwin Edudzi Tamakloe has questioned the basis of the continued stay in office of the Minister for Finance, Ken Ofori-Atta.
According to Edudzi, the minister for finance should find a reason to leave his job based on the current state of the economy
“You are the same minister of finance who told the whole world that you will never go to the IMF, principle and consistency. Now you have run the system so badly…. So then you go back for your own voice and on principle, you have to say I will let go.
“You took over an economy that was so strong at the time that you were able to borrow US$11 billion in Eurobonds on the strength of the economy that you took over. Today, six years down the line, the same economy cannot borrow GHC1 from the Eurobond Market. So on principle, you tell yourself that thank you Mr President for the confidence you reposed in me but I am leaving the scene,” he told Kwame Nkrumah Tikese on Okay FM’s Ade Akye Abia morning show.
Referencing the government’s decision to close down some banks during the 2017 banking sector cleanup exercise, Edudzi emphasised that Mr Ofori-Atta should resign on the same principle.
“You see, his continues presence in the financial system is hurting people. Ken Ofori-Atta and Governor Addison decided to collapse banks when he came into office. What was the reason for cleaning up the banking sector? They said it was due to mismanaging and that the banks were on the verge of insolvency. Is this country not insolvent? So if you; Ken Ofori-Atta, governor Addison, Nana Addo and Dr Bawumia can collapse banks on the strength that those banks have been mismanaged why are you still in office?” he questioned.
Ghana is currently plunged into serious economic distress with the nation’s debt shooting through the roof.
The minister for finance has announced a debt sustainability program aimed at controlling the country’s debt.
There is a public frenzy about Ghana’s current economic status with several concerns being shared about the impact of the announcement.
The Government of Ghana and the Government of Germany have concluded bilateral negotiations on development cooperation in Berlin from 28th to 29th November 2022.
Ghana’s delegation was led by Ken Ofori-Atta, Minister for Finance; and included Osei Bonsu Amoah, MP and Deputy Minister for Local Government & Rural Development; Andrew Egyapa Mercer, MP and Deputy Minister for Energy; Gifty Twum Ampofo, MP and Deputy Minister for Education; and Ghana’s Ambassador to Germany, Ambassador Mrs. Gina Ama Blay.
The two-day negotiation was hosted by the German Federal Ministry for Economic Cooperation and Development (BMZ) with the support of allied agencies such as the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) and KFW Development Bank.
At the end of the negotiations, the Government of Germany made new and additional grant commitments of EUR 82 million towards critical sectors of Ghana’s economy including renewable energy development, financial sector strengthening, education and skills development (TVET), digital transformation, governance, food security, female empowerment, and MSME support.
The Minister for Finance in his closing statement thanked Dr. Bärbel Kofler, Parliamentary State Secretary of the German Federal Ministry of Economic Cooperation and Development. He also described the grants as timely, given Ghana’s ongoing negotiations with the International Monetary Fund (IMF or the Fund).
In highlighting the significance of Development Bank Ghana (DBG), Mr Ofori-Atta stated that, “the support given us to set up what will be a real game changer in Ghana’s financial architecture, the Development Bank Ghana, is very commendable.”
He indicated that DBG has been positioned to play a countercyclical role in ensuring access to long term and affordable capital in challenging economic times, similar to KFW’s role during the post war reconstruction of Germany.
He assured that DBG would adhere to the highest corporate governance principles in order to ensure optimum shareholder value.
Speaking on behalf of Dr. Bärbel Kofler, Mr. Christoph Rauf, the Director for Africa at BMZ revealed that Ghana will continue to enjoy a “privilege partner” status with Germany, culminating in the development of a Special Partnership Arrangement with Ghana.
He also stated that Germany was committed to supporting Ghana’s arrangements with the IMF.
The next inter-governmental negotiations will take place in Accra in June 2023.
The government has stated that due to Ghana’s high debts it has become imperative for them to swap some bonds for new ones in the short, medium, and long term.
At a press conference to announce the beginning of the program on December 5, 2022, he said: “As I announced in the evening of yesterday, Sunday, 4th December 2022, we are gathered here today to invite holders of domestic debt to voluntarily exchange approximately GH¢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.”
The finance minister also acknowledged that Ghana’s debt has reached unsustainable levels and has exceeded the country’s GDP. Therefore, a debt exchange program is a step to restore the economy back to sustainable levels.
“This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt,” he added.
He further associated the country’s problems with the global economic crisis that countries are currently facing.
“The reasons are quite clear. The covid-19 pandemic, rising global food prices, rising crude oil & energy prices; and the Russia-Ukraine war adversely affected Ghana’s macroeconomy, with spillovers to the financial sector. The combination of adverse external shocks has exposed Ghana to a surge in inflation, a large exchange rate depreciation, and stress on the financing of the budget, which taken together have put our public debt on an unsustainable path,” he said.
Finance Minister, Ken Ofori-Atta, has noted that government’s introduction of debt exchange programme in the 2023 budget read in parliament will help revive the ailing economy from the shocks of the global pandemic – coronavirus – and Russia-Ukraine war.
According to him, the bouncing back of the local economy will help create jobs, protect the income of depositors, as well as, restore hope in Ghanaians.
The finance minister stressed that the domestic debt exchange programme “is an orderly way to put our economy back on track in order to create jobs, protect income and restore hope to the Ghanaian people.”
“The government expects overwhelming support for this exchange programme,” he stated.
Ken Ofori-Atta explained that the debt exchange programme was necessary to address the country’s debt servicing challenges.
He noted that almost 70% of government’s revenue was used to service debts.
This, he said, cripples government despite moves to put the local economy on a sound footing.
To help resolve this challenge, government has rolled out a debt restructuring programme to restore its capacity to service its high-rising debt.
“The extent to which our interest charges consume some 70% and sometimes 100% of our revenues is something that is not sustainable and it is really a recalibration therefore of the whole interest rate regime so that we move into a sustainable orbit,” Ken Ofori-Atta said.
“Debt servicing is consuming almost all of government’s revenue and also 70 per cent of tax revenue…which is why we are announcing this [debt restricting programme] to restore our capacity to service debt.
Several Ghanaians have thronged their various financial institutions to withdraw their savings and investments to avoid losing both their principal and interests.
This panic withdrawal is based on reports that some customers of Databank and Ecobank have lost hundreds of cedis on their investments which has to an extreme affected their principal [initial deposit].
Reacting to this at a press conference in Accra on Monday, December 5, the Minister of Finance, Ken Ofori-Atta, has said there was no need for customers to withdraw their monies from banks and savings and loan institutions.
Financial stability fund has been established by government to ensure that depositors’ funds are secured.
“There is no need to rush for your money because certain forbearances will also be given to these institutions to help so in essence, this is an opportunity to have a pretty orderly exit through this and use that period also to build up an export driven economy to get our macro statistics in order.” Ken Ofori-Atta said.
It would be recalled that on November 23, 2022, some customers of Databank said they were unable to access their funds and investments.
Taking to microblogging site – Twitter – to lament, they noted that there had been random deductions on their monies in the past few weeks.
Some Ghanaians explained that the act was not deliberate but an instruction from the Securities and Exchange Commission for banks to use the mark-to-market approach.
This market-to-market approach enables customers get the market value of their returns and it cuts across all financial institutions in the country.
Meanwhile, government has outdoored a debt restructuring programme to help stabilize the economy which has taken a nose dive.
Finance Minister, Ken Ofori-Atta has said government is setting up a Financial Stability Fund (FSF) with development partners as part of a domestic debt restructuring programme.
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 are able to meet their obligations to their clients.
“We have also dialogued extensively with regulators across the Financial Sector including 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.
“This debt exchange provides an orderly way to put our economy back on track. These efforts will be complemented by fiscal measures to protect the neediest and most vulnerable in society,” he added.
Government intends to undertake a Domestic Debt Exchange programme which it believes will restore confidence in the economy and address associated economic challenges.
The Minister of Finance, Ken Ofori Atta, has admitted that the launched Debt Exchange Programme is part of a key requirement for the government to get an economic deal from the International Monetary Fund.
According to him, the government has no choice but to undertake the debt restructuring programme to put the debt level on a sustainable path.
An IMF mission team is presently in the country to continue discussions with the authorities on the country’s post-COVIDprogramme for economic growth and associated policies and reforms that could be supported by a new IMF lending arrangement.
The Finance Minister however reiterated that no individual bondholder will lose their funds in the proposed programme.
Addressing Journalists to launch the domestic debt operations, he, assured the financial sector players of government’s support to minimise the impact of the programme on their activities.
The Minister hinted that the Governor of the Bank of Ghana, Dr. Ernest Addison, and other heads of regulators will be tasked to engage stakeholders on the debt management programme.
Ghana is seeking an economic programme from the IMF to address its balance of payment and other financing challenges.
As part of the deal, the government has embarked on a debt sustainability analysis which indicates that the country’s debt level which exceeded 100% of Gross Domestic Product is unsustainable, hence the need for such an action.
There are already calls on the government to provide a road map to avoid the negative impact on the financial sector and other sectors of the economy.
The Financial Minister pointed out that the World Bank and other development partners are on board to support the government in this regard.
The Minority in Parliament says it will not accept government’s proposed debt restructuring programme as announced.
According to the Caucus, the policy is unacceptable and cannot be allowed to proceed.
The Minority Leader, Haruna Iddrisu, said this at a press conference on Monday, December 5.
He said his side will use every legitimate means to oppose the move.
“Let me state without any fear of contradiction that the form and structure of the debt restructuring announced by Finance Minister Ken Ofori-Atta this morning are unacceptable to us and we simply will not accept it.”
The Tamale South lawmaker also questioned why the 2023 budget was silent on this policy.
“I want to ask how come this debt restructuring was not included in the 2023 budget,” the outspoken politician added.
Finance Minister, Ken Ofori-Atta on Sunday, December 4, announced the government’s domestic debt exchange programme.
These measures include some exemptions and external debt restructuring parameters that will be implemented.
Per his release, treasury bills and individual bondholders will not be affected by this exercise.
However, domestic bondholders will be compelled to exchange their instruments for new ones.
“Existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2017, 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% in 2025 until maturity.
“Coupon payments will be semi-annual,” the Minister said.
Meanwhile, Mr Ken Ofori-Atta assured us that there will be no haircuts on the principal of bonds.
Ghana is starting a debt exchange scheme, according to Finance Minister Ken Ofori-Atta, to ensure that debt levels are reduced to manageable levels.
The Minister stated that this is being done to ensure that the nation takes action to ensure the restoration of macroeconomic stability in an update on the economy.
The debt sustainability analysis (DSA), according to him, “demonstrated without a doubt that Ghana’s public debt is unsustainable, and the Government may not be able to completely discharge its debt in the future if no action is taken.”
“Indeed, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues, while our total public debt stock, including that of State-Owned Enterprises and all, exceeds 100% of our GDP. This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt,” he added.
The group stated in a news release on December 1, 2022, that the government’s share of the nation’s capital expenditures has been declining year after year.
According to the report, government funding made up 1.8 percent of the 2023 budget while development partners were responsible for 92.22 percent of the overall allocations.
According to the firm’s latest verdict on Ghana from an earlier Caa2 rating to Ca rating which is a further junk territory, it expects that the debt restructuring programme will impact both local and foreign currency holders.
Meanwhile, the finance minister Ken Ofori-Atta has also come under a lot of backlash and pressure from both within and outside his party, the New Patriotic Party (NPP), to either resign or be sacked by President Nana Addo Dankwa Akufo-Addo over his handling of the economy.
Finance Minister, Ken Ofori-Atta, has advised against the possible mad rush for investment from financial institutions.
It is reported that some investors are withdrawing their investment after government announced its debt operation programme yesternight, December 4.
The existing domestic bonds will be exchanged for a set of four new bonds and those as of December 1, 2022, that are due for payment will not be paid until at least five years from now.
Mr Ofori-Atta revealed that the new set of four bonds matures in 2027, 2029, 2032 and 2037.
The announcement has sparked some concerns, but according to Mr Ofori-Atta, investors should remain calm.
He revealed that “this may be one of the most effective collaboration of the regulators – the issue of liquidity, so there is no need to rush for your money because certain forbearance will also be given to these institutions to help.”
The collaborators which include Bank of Ghana, Securities & Exchange Commission, National Insurance Commission and the National Pensions Regulatory Commission will ensure that the impact of the debt operation on the financial institution is minimised.
Meanwhile, the Finance Minister has urged their media to truly participate with the collaborators and rally citizens to support the government.
“We ask for your support in this and we as government are also committed to fiscal rectitude in ensuring that next year, even though it is going to be difficult, it is a year in which we will cross,” he added.
Following a seven-year closure to allow for a significant refurbishment of the domestic airport located in the middle belt, the facility was finally reopened on Wednesday, August 3, 2022.
Phase 1 of the restoration exercise involved extending the Sunyani Airport’s runway from 1,280 meters to 1,400 meters.
The airport can currently accept medium-sized jet flights thanks to the 1,280–1,400 meter extension of the runway.
“In line with Government’s policy to improve air connectivity, boost trade and tourism, the Ministry rehabilitated, commissioned, and operationalised the Sunyani Airport.
The construction of Phase II of the Airport will commence in 2023. The scope of work will include extension of the existing runway, and the existing terminal building will undergo expansion and remodeling,” he said.
The domestic airline, PassionAir, has operated the Accra-Sunyani route since the official inauguration this year. Given the very good load on the route, PassionAir now operates six weekly flights on the Accra-Sunyani-Accra route in response to increased demand.
The airline operates Bombardier Dash 8 Q400 and Bombardier Dash 8 Q300 planes that can transport 78 and 50 passengers respectively.
Brief background of Sunyani Airport
The Sunyani Airport was originally constructed as an Airstrip and later upgraded into an airport in 1969. The airport currently has a total runway length of 1,520 meters made up of 1,400 meters paved and 60 meters unpaved Runway End Safety Area (RESA) at both ends.
It had the capacity to handle and process 100 passengers per hour. Since the commencement of commercial operations, the airport has not had any major renovation works, resulting in the poor state of the airport including cracks and potholes on the runway.
In 2015, the Ghana Airports Company Limited (GACL) and Ghana Civil Aviation Authority (GCAA) shut down the airport as a precautionary measure to forestall
any disaster. Prior to shutting it down, it was serviced by now defunct domestic airline operator, Starbow.
The rehabilitation and expansion of the airport was carried out in phases. A contract was awarded in 2018 for the rehabilitation of the existing runway, minimal renovation of the terminal building, construction of some airport internal roads and other auxiliary facilities.
Rehabilitation works are almost complete and the airport is to be opened to traffic in the next few months.
The choice of whether to build a single airport to service both regions or one in each region has gone through several stages.
Ankaful was previously suggested as a potential site for an airport serving the Central Region.
Due to its extensive history and UNESCO World Heritage castles located along the coast, the Central region is a popular tourist destination in the nation but is only reachable by road.
Connecting with the regional capital, Cape Coast, from Accra is hampered by heavy vehicular traffic. It takes about two (2) hours to connect from Accra on a typical weekend when many people usually travel for tourism and social events.
Cape Coast played a crucial role in the success of the Year of Return held in Ghana in 2019. Indeed a total of US$1.9 billion was generated into the economy through activities related to the “Year of Return.”
The Western Region is also one of the country’s most endowed areas and the oil hub. The region also hosts a lot of foreign companies operating in the mining, manufacturing and other sectors.
Presenting the 2023 Budget to Parliament, Finance Minister, Ken Ofori-Atta, gave the clearest indication that one airport will be constructed to serve both regions.
“Mr. Speaker, Phase II of Kumasi Airport Expansion Project is fully completed while Phase III is 89.33 percent complete. Additionally, a draft feasibility report on the Central/Western Region Airport was submitted and is being subjected to stakeholder engagement,” he said.
Commenting on the proposed airport, Sean Mendis, a commercial aviation expert, told AviationGhana exclusively that: “In general though, investment in aviation infrastructure is always a positive thing provided projects also are maintained well. Ghana already has a very robust culture of domestic air travel, and one of the highest number of per capita domestic travellers in sub-Saharan Africa.”
He added that the need for maintenance should be factored into the cost of the projects. “Airports are not build and forget projects unfortunately. They have to be maintained and operated at a professional standard to continue to be operational, so any investment needs to budget for that as well.”
Economic benefits of airports
A study by the International Air Transport Association (IATA) shows that the economic benefits of aviation investment are still large, and provide a strong justification for investment in the aviation industry.
The study found that for developing economies, the annual economic rates of return range from 16% to 28%.
“Developing countries face capital costs, especially for new aircraft, that are similar to those faced by developed countries. As such, though the boost to GDP is higher in proportional terms for developing economies, the capital costs are still high. Nevertheless, the available economic return is still large and provides a strong justification for investment in the aviation industry,” he said.
“There are significant and positive benefits generated by investment in aviation infrastructure and services, particularly in developing economies. By increasing a country’s connections to the global air transport network, investment in aviation can boost its long-term productivity and economic growth.”
“Greater aviation connectivity – and the improvements in productivity and GDP growth it can provide – can also help to boost a country’s competitiveness. By way of illustration, the World Economic Forum (WEF) has developed a Global Competitiveness Index for the travel and tourism sector.”
The WEF’s index incorporates many of the factors necessary to develop connectivity and create wider economic benefits in terms of productivity and economic growth.
There is a clear positive relationship between a country’s connectivity and its performance in the WEF index.
The Government of Ghana expects overwhelming support for the debt exchange programme that has been introduced in the 2023 budget, the Finance Minister Ken Ofori-Atta has said.
In his view, the programme is the surest way of restoring the Ghanaian economy back on track to create jobs and protect income of the people.
Launching the programme in Accra on Monday December 5, he said the government expects an overwhelming support for the programme.
He said after citing best practices in countries such as Greece, that the debt exchange programme “is an orderly way to put our economy back on track in order to create jobs, protect income and restore hope to the Ghanaian people.”
“the govt expects overwhelming support for this exchange programme,” he stressed.
He further dismissed speculations that there is going to be haircuts following the programme.
“There will be no haircuts,” he said.
He further justified the introduction of the debt exchange programme.
He stated that it has become necessary because of the enormous challenges with debt servicing.
He revealed that debt servicing is consuming “almost of government’s revenue and also 70 per cent of tax revenue.”
“Which is why we are announcing this to restore our capacity to service debt,” he stressed.
Under the debt exchange programme, he said, ” domestic bond holders will be asked to exchange their instruments for new ones.”
He added “Existing domestic bonds as of 1st December will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”
The annual coupons on all of these bonds will be set at 0 % in 2023, 5% in 2024 and 10% from 2025 until maturity.
“Coupon payments will be semi annual ‘ he stressed.
This occurred on November 24, 2022, roughly a week after he presented the 2023 budget statement to the legislature.
It is anticipated that the government’s projected debt restructuring program’s specifics would be revealed by Finance Minister Ken Ofori-Atta.
Before the presentation, Moody’s Investor Services issued a warning that the government’s anticipated debt restructuring program is likely to cause private creditors and investors to suffer significant losses on their investments.
According to the firm’s latest verdict on Ghana from an earlier Caa2 rating to Ca rating which is a further junk territory, it expects that the debt restructuring programme will impact both local and foreign currency holders.
Meanwhile, the finance minister Ken Ofori-Atta has also come under a lot of backlash and pressure from both within and outside his party, the New Patriotic Party (NPP), to either resign or be sacked by President Nana Addo Dankwa Akufo-Addo over his handling of the economy.
As Ghana restructures its debt in order to be eligible for a loan from the International Monetary Fund, it is requesting that local bondholders endure interest payment losses.
In the video that was broadcast late Sunday on the Ministry of Information’s page, he stated that the yearly coupon on all of the new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity.
Semi-annual coupon payments will be made.
“There will be no haircut on the principals of bonds,” he said on the local-debt restructuring. “External debt restructuring parameters will be presented in due course,” Ofori-Atta said.
Ghana is negotiating a $3 billion program with the IMF after being shut out of international debt markets amid a selloff of its dollar bonds that lifted yields to distressed levels. The cedi is the world’s worst-performing currency against the dollar this year, raising the cost of servicing loans.
While the world’s second-biggest cocoa producer has no dollar debt maturing until July 2023, it faces 43.5 billion cedis ($3.1 billion) in domestically-sold local-currency bonds maturing through the end of June, according to data compiled by Bloomberg. On top of that, it has $663 million coupon payments on dollar debt.
The Bank of Ghana and other financial regulators will ensure that impact is “minimized,” Ofori-Atta said. He said that the government is also putting together a financial stability fund with development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes.
Treasury bills will be excluded from the local-debt restructuring to protect small investors and individuals, according to Ofori-Atta.
Ken Ofori-Atta outlines Domestic Debt Exchange programme
Today, December 4, 2022, he discussed several actions in relation to, among other things, Treasury Bills, other domestic bonds, etc., during a press briefing.
“T-bills are secure.
The Ghanaian government has completely exempted Treasury Bills from any debt sustainability scheme.
At maturity, you will receive your entire value “said the finance minister.
Under DDE, he explained that domestic debt holders will be asked to exchange their instruments with new ones. Existing domestic bonds as of Dec. 1 will be exchanged with four new bonds maturing in 2027, 2029, 2032 and 2037.
“Government’s commitment in line with International Monetary Fund negotiations is to restore macroeconomic stability in the shortest possible time and enable investors to realise benefit of the DDE,” he added.
Government, he added, was working hard to minimize the impact of debt exchange of investors holding government bonds particularly small investors, individuals and other vulnerable groups.
The following measures were thus 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.
• Individual holders of bonds will not be affected.
Treasury bills and individual bond holders will not be subject to investment haircuts, according to the government, as the nation intends to implement a domestic debt exchange program.
Ken Ofori-Atta indicated that domestic bond holders will be required to swap their securities for new ones under the program in a video message published on December 4, 2022.
He also said there will no haircuts on the principal bonds of investors under the domestic debt restructuring programme.
“Existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2017, 2029, 2032 and 2037,” he noted.
“The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% in 2025 until maturity. Coupon payments will be semi-annual,” Ken Ofori-Atta explained.
The Finance Minister in the 4-minute address said the move was in line with government’s Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.
Ken Ofori-Atta outlines Domestic Debt Exchange programme
In a 4-minute speech, he claimed that the declaration was consistent with the government’s Debt Sustainability Analysis, which was included in the 2023 budget he had earlier on November 24 presented to Parliament.
Among other things, the Minister outlined the replacement of four domestic bonds with existing ones, along with details on their maturities and coupon payment schedules.
In the Budget Statement presented to Parliament on November 24th, I announced that government will undertake a debt operation programme.
The broad contours of the Debt Sustainability Analysis has been concluded and I am here this evening to provide some details on Ghana’s Domestic Debt Exchange which will be launched tomorrow. External debt restructuring parameters will be presented in due course.
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.
Our commitment to Ghanaians and the investor community, in line with negotiations with the IMF, is to restore macroeconomic stability in the shortest possible time and enable investors to realize the benefits of this Debt Exchange.
The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups.
In line with this:
• 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.
• Individual holders of bonds will not be affected.
The Government recognizes that our financial institutions hold a substantial proportion of these bonds. As such, the potential impact of this exchange on
the financial sector has been assessed by their respective regulators.
Working together, these regulators have put in place appropriate measures and safeguards to minimize the potential impact on the financial sector and
to ensure that financial stability is preserved.
Specifically:
– The Bank of Ghana, the Securities & Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority will ensure that the impact of the debt operation on your financial institution is minimized, using all regulatory tools available to them.
– A Financial Stability Fund (FSF) is being established by Government with the help of development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes to ensure that they are able to meet their obligations to their clients as they fall due.
These are difficult times and we count on the support of all Ghanaians and the investor community to make the exercise successful.
We are confident that these measures will contribute to restoring macroeconomic stability. With your understanding and support and that of the entire investor community, we shall overcome our current difficulties, and with the help of God, put our economy back on the path of renewed and robust growth.
As 1st Samuel 30:19 says, nothing was missing, small or great. I say to you, nothing will be lost, nothing will be missing, and nothing will be broken. We will, together, recover all.
Finance Minister, Ken Ofori-Atta, has announced that existing domestic bonds will be exchanged for a set of four new bonds.
Bonds as of December 1, 2022, that are due for payment will not be paid until at least five years from now.
This is because the new set of four bonds matures in 2027, 2029, 2032 and 2037, the Finance Minister said when he addressed Ghanaians on December 4, 2022.
The interest on these bonds differs as bonds in 2024 will attract an annual coupon of 5%, and that of 2025 will provide 10% interest until maturity.
“Coupon payments will be semi-annual,” the Finance Minister revealed.
Bonds in 2023 will however attract no interest.
According to Mr Ofori-Atta, the adjustment made is as a result of a debt operation programme Ghana would be taking as part of its arrangement with the International Monetary Fund (IMF).
“The broad contours of the Debt Sustainability Analysis has been concluded and I am here this evening to provide some details on Ghana’s Domestic Exchange which will be launched tomorrow,” he said.
He assured that government worked hard to minimize the impact of the domestic debt exchange on investors holding government bonds.
Following government’s intervention, he announced that Treasury Bills would be exempted in the country’s domestic debt exchange and will be paid the full value of their investments on maturity.
“There will be no haircut on the principal of bonds” and “Individual holders of bonds will not be affected,” the Minister added.
On October 30, President Akufo-Addo while addressing Ghanaians on the state of the economy pledged that there would be no haircut on investment.
Mr Ofori-Atta explained that haircut has been taken off the table since “government recognises that our financial institutions hold a substantial proportion of these bonds.”
Meanwhile, the Bank of Ghana, Securities & Exchange Commission, National Insurance Commission and the National Pensions Regulatory Commission will ensure that the impact of the debt operation on the financial institution is minimised.
On the other hand, government is establishing a Financial Stability Fund (FSF) to help provide liquidity support to banks, pension funds, and insurance companies, among others to ensure they are able to meet their obligations to their clients.
Reacting to the news, Vice President of policy think tank IMANI Africa, Bright Simons, stated that Ghana has unilaterally announced a default.
“First time since 1982. In certain like-for-like respects though it is the first since the 1972 commercial loan default,” he tweeted.
He, however, questioned whether the way forward for Ghana with regard to addressing its debt would be a smooth or rough ride.
The old terminal building at the recently inaugurated Sunyani Airport is to be remodeled and expanded to accommodate the expected increase in passenger throughput.
The facility was officially inaugurated on Wednesday, August 3, 2022, after a seven-year closure to allow for an extensive renovation of the domestic airport sited in the middle belt.
The runway of the Sunyani Airport, under phase 1 of the rehabilitation exercise, was extended from 1,280 meters to 1,400 meters.
The extension of the runway from 1,280 meters to 1,400 meters now makes it possible for the airport to accommodate medium-sized jet planes.
Finance Minister, Ken Ofori-Atta, presenting the 2023 budget said a new terminal building is in the offing.
“In line with Government’s policy to improve air connectivity, boost trade and tourism, the Ministry rehabilitated, commissioned, and operationalised the Sunyani Airport.
The construction of Phase II of the Airport will commence in 2023. The scope of work will include extension of the existing runway, and the existing terminal building will undergo expansion and remodeling,” he said.
The domestic airline, PassionAir, has operated the Accra-Sunyani route since the official inauguration this year. Given the very good load on the route, PassionAir now operates six weekly flights on the Accra-Sunyani-Accra route in response to increased demand.
The airline operates Bombardier Dash 8 Q400 and Bombardier Dash 8 Q300 planes that can transport 78 and 50 passengers respectively.
Brief background of Sunyani Airport
The Sunyani Airport was originally constructed as an Airstrip and later upgraded into an airport in 1969. The airport currently has a total runway length of 1,520 meters made up of 1,400 meters paved and 60 meters unpaved Runway End Safety Area (RESA) at both ends.
It had the capacity to handle and process 100 passengers per hour. Since the commencement of commercial operations, the airport has not had any major renovation works, resulting in the poor state of the airport including cracks and potholes on the runway.
In 2015, the Ghana Airports Company Limited (GACL) and Ghana Civil Aviation Authority (GCAA) shut down the airport as a precautionary measure to forestall
any disaster. Prior to shutting it down, it was serviced by now defunct domestic airline operator, Starbow.
The rehabilitation and expansion of the airport was carried out in phases. A contract was awarded in 2018 for the rehabilitation of the existing runway, minimal renovation of the terminal building, construction of some airport internal roads and other auxiliary facilities.
Rehabilitation works are almost complete and the airport is to be opened to traffic in the next few months.
The MP stated in a tweet that one benefit of the Black Stars’ loss to Uruguay in their final World Cup group match in Qatar in 2022 is that the authorities who disregarded their responsibilities will return home.
Parts of the MP’s tweet said, “Now can our government officials come back home to their real duties.”
The minority caucus in parliament expressed concern on Tuesday about the absence of members from the Majority side of the House.
Though no official reason was given for the mass absence of the majority members, GhanaWeb checks show that some of the majority Members of Parliament (MPs) were out of the jurisdiction.
At least three of them were spotted in Qatar, where the 2022 FIFA World Cup is ongoing.
One of the MPs who has been in Qatar for the past two weeks is Mustapha Ussif of Yagaba-Kubori, who doubles as Minister of Youth and Sports.
Minister of Communications and Digitalisation, who doubles as the Member of Parliament for Ablekuma West Constituency, Ursula Owusu-Ekuful, was also spotted in Qatar, according to social media posts.
Minister of Energy and Manhyia South MP, Dr. Matthew Opoku Prempeh is also in Qatar cheering on the Black Stars.
Patrick Yaw Boamah, Okaikwei Central MP is also in Qatar, where he has been sharing photos of himself on the streets and at the stadium supporting Otto Addo and his charges.
The Black Stars were eliminated from the 2022 FIFA World Cup after losing by 2-0 to Uruguay in their final match of the group stages.
Giorgian de Arrascaeta’s two goals for Uruguay were not enough to get them through to the next round of the tournament as South Korea beat Portugal 2-1.
The Black Stars had a slow start in the game as Uruguay was on fire from the blast of the whistle.
However, Ghana’s first chance in the game which fell to Jordan Ayew nearly saw him score but Sergio Rochet pulled a good save which saw Kudus go in for a rebound.
According to the member, the government will be able to raise enough money with the help of the reintroduction to protect the country from the current economic downturn.
“I applaud the Roads Minister’s move to reinstate tolls on the roads.
Only 10% of our road networks are classified as economic roads and can be tolled as well. The remaining 90% are seen as social roads which cannot be tolled. Meaning 90% of vehicles in our roads just use the roads without contributing a penny for its maintenance,” he said.
” I welcome Government’s decision to reintroduce the toll collection but I will rather propose a vehicle use tax that will cover every vehicle or road user to ensure that all vehicle owners contribute to the pot for road maintenance. it’s either the Government put tollbooths on every tarred roads in the country to ensure that all road users pay for it use or Government should consider introducing an annual or half year road use taxes to ensure that every vehicle owner contributes to the pot for road maintenance,” Kennedy Osei Nyarko told Accra-based Original FM91.9
On November 17, 2021, government announced that motorists who ply tolled roads across the country will no longer be required to pay tolls.
The government will reintroduce the collection of road toll on selected roads in the country next year.
The reintroduction of the road toll is one of the revenue measures contained in the 2023 budget presented to Parliament by the Finance Minister, Ken Ofori-Atta last week.
“The fiscal policy measures to underpin the 2023 Budget for consideration and approval by Parliament include the reintroduction of tolls on selected public roads and highways with a renewed focus on leveraging technology in the collection to address the inefficiencies characterized by the previous toll collection regime,” paragraph 462 of the 2023 Budget statement reads.
The Budget Statement and Economic Policy for 2023 has disclosed that the government will keep investing in the four previously chosen priority areas for allocations under the Annual Budget Funding Amount (ABFA) for the following three years, 2023-2025.
This is in accordance with the rules of the Petroleum Money Management Act (PRMA) 2011 (Act 815) as amended, which mandates that when submitting a program of activities for the use of petroleum revenue, the finance minister choose no more than four of the 12 designated priority areas.
After the initial prioritization, the priority areas are to be reviewed every three years with the consent of parliament.
He said in cognisance of factors such as the president’s Coordinated Programme of Economic and Social Development Policies (2017-2024), government priorities and recent developments in the world economy, the proposed areas of consideration for the 2023-2025 period are as follows: Agriculture including Fisheries; Physical Infrastructure and Service Delivery in Education and Health; Roads, Rail and Other Critical Infrastructure; and Industrialisation.
“This is in line with repeated recommendations by the Public Interest and Accountability Committee (PIAC) for the ABFA to be invested in legacy projects, and avoid the practice of thinly-spreading petroleum revenue investments across several projects,” said the Technical Manager of PIAC, Mark Obeng-Adu Agyemang.
The allocation of 2023-2025 ABFA resources is therefore guided by the principle of implementing few but impactful projects, it was added.
To this end, projects such as the Accra-Tema Motorway Extension and Pwalugu multi-purpose dam will be supported with ABFA resources.
It also emerged that US$380million has been set aside for Equity and Viability Gap Funding under ABFA Funding, for disbursement to the Ghana Infrastructure and Investment Fund (GIIF)-Special Purpose Vehicle (SPV). This is meant to de-risk the Accra-Tema Motorway Extension PPP Project and make it attractive to lenders and equity investors.
However, the ‘CSO Budget Forum’, among other recommendations for the oil and gas sector, wanted the 2023 budget to consider prioritising investment in clean and renewable energy as part of selecting new priority areas for ABFA spending.
It said, given the dynamics of transitioning to clean energy globally, government must begin to diversify into clean energy by investing in renewable energy development.
The renewable energy development, according to the Forum, is meant to ensure a robust post-oil energy supply to the economy.
He claims that the country can take advantage of the turn of circumstances in order to prevent more losses.
He urged the financial managers of the economy to keep an eye out for vulture investors, or those who are drawn to high-risk bonds.
“Let me give you some positive signals of the ratings. We have been talking that it’s going to affect Ghana but there are some positive signals. There are some investors we call; vulture investors, who are interested in distressed bonds.
“So, if I were the finance minister by now, I will be coming to the US to look out for Vulture investors. They will be prepared to give money to the Ghana government and wait for a long period. When they do that, the returns are abnormal. They are not afraid of risk,” Prof. Peprah was quoted by myjoyonline.com.
“That is probably what I was expecting the finance minister to be traveling around and talking to people. He did that in the first year when he came into government. The Templeton fund that came in, Templeton is a vulture investor.
“The first 3 billion he gave, he profited 20% and we have paid for three years. So, he may have to go and look for vultures who can give us money for a longer period alongside what IMF is giving to us.”
Rating agency Moody’s downgraded Ghana’s long-term issuer ratings to Ca from Caa2 or further junk status. Moody’s said this was due to Ghana’s high debt unsustainability and the proposed debt restructuring programme announced by the finance minister in the 2023 budget.
“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022.
“Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability,” a statement on its website said.
The government’s decision to reintroduce road tolls in 2023 has been welcomed by the minority in Parliament.
The government canceled the collection of tolls on public roads in November 2021, following an announcement by the finance minister during his presentation of the 2022 budget.
A year after the announcement, the Minister for Finance, Ken Ofori-Atta, during the presentation of the 2023 Budget Statement and Economic Policy on November 24, 2022, announced the return of road tolls on selected roads as part of the government’s revenue mobilisation measures.
Contributing to a debate on the budget in parliament on Wednesday, the Minority Spokesperson on Roads and Transport, Governs Kwame Abgodza, welcomed the reintroduction of tolls while describing their initial cancellation as populist.
“We welcome the decision by the Roads Minister to bring back road tolls. We take no pride in saying we told you so. Mr. Speaker, it was populist, unnecessary, and they were there shouting, we are going to do it because we have e-levy… today they have brought a law here that they want to bring back road toll.”
The minority, however, asked for revenues accrued from road tolls to be directed solely towards the maintenance of roads.
“If you bring the road toll back, all the accruals must go into road maintenance. Otherwise, we are not going to support you, that is why we say de-cap the road fund,” Governs Kwame Agbodza said on the floor of Parliament.
The minority in 2021 bemoaned the cancellation of road tolls, describing it as a policy that will lead to a massive loss in government revenue.
There were calls from several critics who called for government officials to be charged for causing financial loss to the state over the decision to suspend road tolls.
“Whoever took the decision to stop the road toll has caused financial loss to the state, whatever has been lost, he must be surcharged for it. …It wasn’t a prudent decision to take off the road toll,” an economist at the University of Ghana, Lor Mensah, said in an interview.
Meanwhile, Kwasi Amoako Atta, Minister of Roads and Highways, told parliament in March this year that the suspension of tolls caused no financial loss to the state.
“Mr Speaker, there are, in total, 38 toll booths across the country. There has been no loss of revenue to the Ministry of Roads and Highways since the cessation of the collection of the road tolls,” he told the House.
The amount collected is roughly two times what was recovered between 2019 and 2021.
This was included in the budget statement read aloud in front of Parliament on November,24 in Accra in 2022.
Finance Minister, Ken Ofori-Atta reading the statement said as at th end of September 2022 out of the total amount retrieved GH¢11.14 million were directlybrecovery into the Consolidated Fund while GH¢16.41 million were indirectly recovery to other institutions.
According to official figures available, EOCO in 2019 recovered GH¢4,301,262.79, GH¢4,365,129.69 in 2020, and GH¢6,142,984.01 in 2021.
EOCO, between December 2011 and September 2022 also investigated 490 cases.
Out of the total investigated cases, the Office has secured a court conviction, while five cases had been dismissed and 19 casee were currently under under trail at various courts. T
To increase awareness and educate the public, the Office carried out 55 sensitisation programmes on cybercrimes, and an additional 55 sensitisation programmes on gaming.
It also embarked on three outreach programmes on human trafficking and irregular migration.
Projections
In the budget statement, the House heard that EOCO in 2023 anticipates investigating 450 cases, out of which over 50 cases would be prosecuted. On publica education and awareness creation, the Office intends to carry out 60 sensitisation programmes on cybercrimes, 55 on gaming, and five outreaches.
On the development, the Executive Director of EOCO, Commander of Police (COP) Maame Yaa Tiwaa Addo-Danquah, said her organisation was committed to improve on its recovery rate and retrieve more funds for the state.
In the coming years, she said was positive the Office would retrieved twice the amount recovered and reported in the 2021 budget statement.
She commended the management team and all officers of EOCO who continue to work hard with dedication.
Since assuming office COP Addo-Danquah and her management team have intensified the collaborative work with other state agencies to fight orgainsed crime.
This has been seen in the increased courtesy calls on heads of sister institutions and closed door discussions between leadership of EOCO and such organisations.
A prominent lecturer at the Accra Technical University’s (ATU) Faculty of Business has urged the government to be transparent about the benefits and savings that will result from the restriction on the use of V8 and V6 vehicles in government operations.
The government’s plan to reduce spending, which is outlined in the 2023 budget statement that Finance Minister Ken Ofori-Atta delivered to parliament on Thursday, November 24, 2022, is not yet known to have a financial impact.
“Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to 1% of the transaction value as well as removal of the daily threshold,” Finance Minister, Ken Ofori-Atta said.
He was however pleased with the new development believing this will ensure all Ghanaians are included in the payment of the levy aimed at providing infrastructure development.
Making his submissions on Peace FM’s “Kokrokoo” programme, Dr. Asah Asante said “now that they have reduced it to 1 percent, I support them like a witch”.
A prominent lecturer at the Accra Technical University’s (ATU) Faculty of Business has urged the government to be transparent about the benefits and savings that will result from the restriction on the use of V8 and V6 vehicles in government operations.
The government’s plan to reduce spending, which is outlined in the 2023 budget statement that Finance Minister Ken Ofori-Atta delivered to parliament on Thursday, November 24, 2022, is not yet known to have a financial impact.
Mr Daniel Osabutey called on the finance minister to be categorical in telling Ghanaians the savings as a “nation we will be making on the ban on the use of V8s and V6s vehicles.”
Mr Osabutey raised this concern on the Ghana Yensom morning show hosted by Emmanuel Quarshie (The Hitman) on Accra 100.5 FM on Tuesday, November 29, 2022.
The businessman-turned-politician claimed that the 2.5% hike in VAT will make matters worse for Ghanaians, who are already struggling during these trying times.
His opinion is that the government has not shown any consideration for the difficult circumstances Ghanaians are facing as it makes matters worse by raising taxes.
Speaking on Angel FM’s Anopa Bofo Morning Show, Odike said “you must develop a tax regime that would alleviate the pains of Ghanaians…anytime they bring a budget, they heap taxes unto Ghanaians…that VAT is bogus so by January it will only worsen the plight of Ghanaians…”
He explained that “when we talk of VAT that is what drives [everything up] it is an indirect tax and everyone pays it whether employed or not …when you buy fuel, pay the electricity bill, eat at a restaurant you pay VAT… the more you shop, the more you pay taxes to the government.”
“How can you admit that there are difficulties and still push regressive taxes unto citizens…is this government sensitive to the plight of Ghanaians?”, he questioned.
Akwasi Addae Odike’s comments comes after the Finance Minister, Ken Ofori-Atta delivered the 2023 budget on the floor of parliament titled ‘Nkabomu budget’ on November 24, 2022.
Ghanaians are expected to pay more for goods and services effective January 2023 following the upward review of the Value Added Tax (VAT) as announced by the Finance Minister.
Reading the 2023 budget to Parliament, Mr Ken Ofori Atta indicated that the government increased the VAT by 2.5 per cent which brings the tax to a total of 15 per cent.
According to him, the move is to help the government generate revenue to aid the construction of roads and other projects the government has in the pipeline.
But Ghanaians and businesses have expressed dissatisfaction in the increase in VAT citing the harsh economic conditions the nation is facing.
Beginning the next year, the government will begin using abandoned toll booths along important roadways in the nation as part of its strategy to generate cash.
The 2023 Budget statement’s paragraph 462 states that “the fiscal policy measures to support the 2023 Budget for consideration and approval by Parliament include the reintroduction of tolls on selected public roads and highways with a renewed focus on leveraging technology in the collection to address the inefficiencies characterized by the prior toll collection regime.”
Tolling was removed in the 2022 budget as the government moved to introduce the Electronic Transaction Levy (E-Levy) which revenue generation measure was dogged by controversies from its passage to its implementation.
The Minority’s ranking member on Transport in Parliament, Governs Kwame Agbodza, has welcomed the reintroduction of tolls but with a condition that monies raised will be strictly used for purposes of maintaining the roads.
“We welcome the decision by the Roads Minister to bring back road tolls. We take no pride in saying we told you so.
Mr. Speaker, it was populist, unnecessary and they were there shouting we are going to do it because we have e-levy…today they have brought a law here that they want to bring back road toll,” he said on the floor of the House.
Adei bemoaned the way in which Ofori-Atta’s character had lately been called into question by portions of Parliament, highlighting how unfair it was to the extent that it aimed to cast doubt on his hard-won integrity.
“Our leaders [Members of Parliament] must exercise extreme caution when they want to call into question the individual’s moral character and virtually paint him as a robber.
Weighing in on the Minority’s vote of censure motion that in part accused the Minister of engaging in a conflict of interest relative to Ghana’s bond issuance on the international markets, he said:
“The charges on conflict of interest and the fact that he was supposed to have stashed some 100 million dollars elsewhere which impugn on his integrity. I have known Mr. Ofori-Atta for almost 23 years, I can say that he is a friend, a businessman of high integrity and therefore, for me, those two charges were very troubling.
“I believe that the NPP came into power over-committing themselves, there is over-borrowing and you know, you might disagree with policy and of course, there were internal and external factors, but I do not think that it is fair to impugn on the integrity of Ken Ofori-Atta. I know him personally as a Christian, as a businessman and as a politician,” he added.
Aside from the Minority’s vote of censure, which report is to be debated in Parliament, Ofori-Atta is also under pressure from a group of NPP MPs who are calling for him to be dismissed.
President Akufo-Addo is set to decide on their request which he promised will be looked into after the passage of the 2023 Budget and appropriation of same and conclusion of negotiations with the International Monetary Fund (IMF), relative to support the fund will give to Ghana to support the current budget.
On Thursday, November 24, 2022, when the finance minister, Ken Ofori-Atta, presented the 2023 budget to parliament, he made the aforementioned remarks.
He claimed that in creating the budget with the unequal funding for the two groups, the government had shown a lack of good judgment.
In a tweet of November 29, 2022; he said: “Profound apology: I got my numbers wrong on the issue of the budget allocation to the Council of State. The statement went viral and I apologize to everyone on this issue.”
He alleged that the government ignored key ministries with the capability of pursuing the nation’s economic recovery by starving them of funding while allocating significant funds to some agencies with questionable usefulness.
“I’ll be honest just this evening I got what I thought was a reliable version of the tables and I started looking through, some of the numbers just don’t make sense to me. Why is there 80 billion still there for the Cathedral? Forgive me, I don’t know. Why is there a contingency vote of 1.4 billion?
“The office of government machinery, I don’t care where you came from, why is it at 1.4 billion? Guess what? Ministry of Food and Agric, do you know how much we’re giving them? 1.2billion. Do you know how much we’re spending on free SHS? 2.9 billion. The Council of State is receiving more money than the Food and Agric Ministry,” he said on Joy News PM Express.
“The point is this, we want reassurance, we want to believe that this government can even carry the rest of the country with the austerity budget it has to impose. We want to believe somebody is trying to bridge the trust gap between the government and the public. That can be done when you trim down and all of us feel that you’re taking the pain as much as we have to take the pain,” he said.
The government of Ghana is hoping to rescue the country’s challenging economy through several policies outlined in the 2023 budget.
In opposition to the application of the Electronic Transfer Levy, it was predicted that Qwikloan, a credit facility that enables users to get loans electronically, would cease operations.
“We introduced Quick loan, perhaps Ghana’s most popular financial product, four years ago today, along with our partners MTN and Jump.
We have given out more over GH7 billion to more than 4.2 million people in the four years that Quickloan has been operating.
It’s interesting that the Quickloan anniversary falls as the e-Levy debate continues to flare, “CEO of Afb Ghana, Arnold Parker, said.
The Chief Executive Officer of Afb Ghana, operators of Qwikloan services on MTN has hinted that it would cease to exist in a year if the proposed electronic transaction levy (e-levy) is implemented in its current form.
The 1.75% tax on electronic financial transactions was proposed in the 2022 budget statement presented before Parliament by the Finance Minister, Ken Ofori-Atta, on Wednesday, November 17, 2021.
The Minister explained that the tax measure was to raise revenue to support job creation initiatives, construction of road infrastructure, cybersecurity, and digital infrastructure.
However, this proposal has been widely kicked against by Ghanaians.
The minority group in Parliament rejected the 2022 budget as a result of the proposed e-Levy and other concerns raised in the budget.
MTN Ghana in partnership with Afb GHANA launched the “Qwikloan” service in 2017 to provide convenience to customers in times of need to enhance their business.
The service, dubbed, “Qwikloan” is fast, easy, and convenient which enables customers to access loans using their MTN mobile money platform.
Qwikloan is a 30-day loan. It has flexible payment terms with an interest of 6.9% but a default payment of 12.5% interest charges. It does not need a bank account and guarantor to access it.
However, a Facebook post on November 30, 2021, by the CEO of Afb Ghana Arnold Parker to celebrate four years anniversary, forewarned that the service will fold up should the government go ahead with the e-levy in its current shape.
“Four years ago today, together with our partners MTN and Jump, we launched what has arguably become Ghana’s most utilized financial product -Quick loan. In the 4 years that Quickloan has been in existence, we have disbursed over Ghc7 billion to well over 4.2 million people. Interesting that the Quickloan anniversary comes at a time when heated discussion on the e-Levy rages on,” Arnold Parker stated.
He continued “If I plug in the proposed e-Levy rate into our financials, Quickloan would cease to exist within a year. Yet it is a product like Qwikloan, which has been a lifesaver for millions in their times of need, that has the potential to transform this economy”.
Arnold Parker has in an earlier post advised against free things by the government.
“Let’s turn our attention to building our economy now. A country that’s supposed to have a GDP of $600 billion should not be ok when its GDP is $60 billion. For many decades now we have operated way below our potential and robbed millions of our kith and Skin a decent life. The more free things we promise the people, the more businesses we must allow to flourish to find the freebies. It is time to build and grow Ghanaian businesses.
