Finance Minister Ken Ofori-Atta has demonstrated that the Akufo-Addo government made great strides and remarkable progress in the years before the COVID-19 and Russia-Ukraine war reserved the progress.
He explained that the onset of the pandemic and later Russia-Ukraine war the gains from over three years of fiscal rectitude were reversed as result of efforts to ensure lives and livelihoods were protected.
Addressing the Parliamentary Ad-hoc Committee on the Censure Motion against him, Ofori-Atta pointed out that the Akufo-Addo administration inherited a bad economy but improved all the indicators.
At the close of 2016, an assessment of the Economy revealed a limited fiscal space with fiscal deficit of 6.5%, a distressed financial sector recording 17.3% non-performing loan ratio, a derailed IMF-ECF programmem, reduced economic output (GDP growth-3.4%).
Also, inflation was 15.4% at the end of 2016; Monetary Policy rate (interest rate) was 25.5% at the end of December 2016, Limited capital expenditure to Ministries, Departments and Agencies (MDAs), and ‘Dumsor’ which had decimated local industry and strongly impeded national productivity;
Ofori-Atta said the government doubled economic growth in its first three years, and Ghana’s growth in 2019 was touted as one of the highest globally.
He stated that inflation came down significantly from 15.4% to 7.9% at the end of 2019 and remained in single digits till the pandemic hit in March 2020;
Also, fiscal deficit which was about 6.5% was brought down to under 5 percent by the end of 2019.
Exchange rate depreciation reduced significantly to under 5 percent in 2017 and averaging 8.7 percent between 2017 and 2019.
He said the government reduced interest rates in line with declining inflation expectations while Monetary Policy Rate declined from 25.5% at the end of December 2016 to 16% at the end of 2019.
He added that the average lending rate for the same period declined from 31.70% to 23.7%;
Ofori-Atta stated that government directly spent GH¢25 billion to save the banking and SDI sector, protecting the near collapse of the financial sector; saving close to 5,400 direct jobs and 12,000 indirect jobs and ensured that 4.6 million depositors were protected.
We Kept the Lights On
According to him, government also implemented comprehensive reforms across the energy sector and kept the lights on to-date.
The Finance Minister noted that on the back of good economic management, Ghana successfully completed and exited the International Monetary Fund (IMF) Extended Credit Facility (ECF) bailout programme in April 2019.
To ensure irreversibility of the macroeconomic gains, he said government has introduced a number of measures including passage of the Fiscal Responsibility Act, 2018 (Act 982) to cap the fiscal deficit at 5% of Gross Domestic Products (GDP) and ensure maintenance of positive primary balance.
Ofori-Atta pointed to the passage of the Public Financial Management Regulations, 2019 (LI 2378) to strengthen regulation of the Public Financial Management System, establishment of the two Social Partnership Programmes with Labour and Faith-Based Organisations, among others which shows strong momentum and optimism towards Ghana Beyond Aid agenda at the end of 2019.