Information Minister Kojo Oppong Nkrumah
Cabinet has just completed its 64th regular meeting and 9th retreat in Peduase to examine the status of the economic turnaround programme and approve a framework for the 2020 Budget.
The meeting and retreat, chaired by President Nana Akufo-Addo, have been focused on examining the results of the government’s efforts at correcting the economic challenges inherited at the start of the administration’s work.
According to Minister of Information Kojo Oppong Nkrumah who briefed journalists on Sunday, 3 November 2019 about the meetings at Peduase, Eastern Region, Cabinet took cognisance of the fact that the annual budget deficit, which accounts for the year-on-year gap between revenue and expenditure, has “closed significantly”.
“In 2016, it was at 9.3% and has now been reduced to 4.7% this year with a legal commitment to ensure that it doesn’t exceed 5%”, he said, adding: “Mr President is resolute in his marching orders to the Finance team to ensure this is observed”.
This comes a few days after former President John Mahama accused Finance Minister Ken Ofori-Atta of making payments outside the Ghana Integrated Financial Management Information System (GIFMIS) so he can hide, what he (Mr Mahama) claims to be the true state of the economy.
The computerised GIFMIS facilitates budget preparation and execution; accounting and financial reporting; cash management, assets management, as well as human resource and payroll management.
Speaking to party leaders and supporters of the main opposition National Democratic Congress (NDC) in the UK on Sunday, 27 October 2019, Mr Mahama, who is the 2020 flag bearer of the party, said the Finance Minister and the Akufo-Addo government are hiding several things so they can paint a fine picture of the economy.
“There are many things that are going on; the economy is painted as being very rosy, various figures are being thrown about just to show that the economy is doing better but there are a lot of things the government is hiding from you.
“They are showing you a better balance sheet because they are misclassifying a lot of things and hiding things from the budget; they are making payments outside the GIFMIS”, he alleged.
The GIFMIS, he explained, “Was introduced, in our time, in order that we shall show transparency in the state of the economy and the implementation of the budget. So, every payment is supposed to go on the GISMIS platform”.
“You should ask the Finance Minister: why is he paying things outside the GIFMIS platform? It’s because he does not want to capture it on the platform because it will distort his deficit figure”, the 2020 flag bearer of the NDC asserted.
“So, he [Mr Ofori-Atta] says his deficit is 3.9 per cent but his deficit is above 7 per cent – 7.3 per cent – if you add all the things he is hiding outside the budget”, Mr Mahama told his audience, adding: “The cost of the financial clearance, GHS20 billion, it’s sitting and breathing; has he captured it in the budget? He hasn’t. We’re waiting for the budget on November 14 to see what he’ll include and what he will exclude and then we’ll see what the deficit is”.
However, Mr Oppong Nkrumah cited a plethora of then-and-now examples to show that the Akufo-Addo government took over a worse-off economy and fixed it through major interventions, programmes and policies.
For instance, on the results of work done so far, Mr Oppong Nkrumah said “Cabinet was pleased to note that inflation, which measures the rate at which prices of goods and services increase, was at 15.3% when President Akufo-Addo took over” but “through a combination of prudent policies in the real sector, prudent fiscal and prudent monetary policies, inflation is now at 7.5%.
“The President has instructed the various agencies who have worked to achieve this to keep on the downward inflationary path so that Ghanaians continue to benefit from relatively lower rate of price increase”, Mr Oppong Nkrumah noted.
Cabinet, he said, again noted that the growth of the Ghanaian economy slowed down to 3.4% by the end of 2016 “but through the various interventions of the government, particularly in agriculture (PFJ, PERD, RFJ), growth has seen a rebound and is projected to remain above 6% by the end of 2019”.
“The President has instructed that resources be made available to continue with the programmes to engineer growth and jobs across various economic sectors”, to “ensure that our economy continues to create more opportunities for the majority of our people”.
Also, the Information Minister said in his briefing that in 2016, “the interest Rate (Int Bank Wgted) was at 25.26. It was reduced to 19.34 in 2017 when Akufo-Addo assumed office and recorded a reduction to 15.20 as of September.
“Mr President has been consistent in urging the central bank to explore ways to push this further down and make the cost of borrowing cheaper for the Ghanaian private sector”.
Additionally, he said gross international reserves constituted 3.5 months of import cover as of December 2016 but “with gains in exports, the Akufo-Addo administration has increased it to 4.1% of import cover as of September despite BoG’s support during some of the trying moments of our currency”.
“All in all, the evidence is that the fundamentals of the economy have been significantly strengthened”, the Ofoase Ayirebi MP said.
According to him, Cabinet was “pleased to note that 16 flagship programmes are being executed despite the fiscal challenges of Ghana”.
“Key among them is the fact that the administration’s Free SHS programme, which is designed to ensure that every Ghanaian child, regardless of family wealth, place of birth or gender, benefits from basic education to the senior high school level, is working smoothly nationwide”.
“Mr President has instructed that no resource should be spared in ensuring that the 1.2 million Ghanaian children benefit fully and are prepared to contribute significantly to Ghana’s future growth”.
The PFJ programme, he noted, has also been “largely successful, translating into increased food production with its attendant reduction in food inflation (which has contributed to the reduction in general inflation). Mr President, again, has been clear that, especially saboteurs in the business of stealing and smuggling inputs like fertiliser have to be dealt with very strongly to deter others”.
The IPEP programmes, he mentioned, “were noted to be progressing nationwide”, adding that the President has also been “keen to whip the responsible agencies to speed up the completion of projects for the benefit of the people. As commencement certificates have already been issued and contractors gradually getting on-site, the whip is out to speed up work for the benefit of the people”.
“In preparing the 2020 budget, the President has given firm directives that the fiscal stability which has been restored must not be compromised. The Fiscal Responsibility Act, which is the new anchor of discipline for the government of Ghana, prohibits any government from incurring a deficit beyond 5% of GDP. President Akufo-Addo has, particularly mentioned that election-year pressures should not and will not cause the treasury to throw away fiscal discipline.
“The need to meet revenue projections is critical in ensuring that our desires as a nation are met. Roads, more jobs, more health infrastructure and keeping the lights on, as has been done since 2017, will depend on the treasury successfully mobilising the needed resources and all stakeholders in the economy contributing their due. Mr President is insistent that everyone be encouraged and aided to pay their fair share in reaching our national goals and we all have to rally around that call”, Mr Nkrumah told journalists.
He said flagship programmes of the government are also to be completed. “This will require completion of their funding and more rigour in the work of the MDAs responsible for them. Mr President has been very clear to ministers that he will not take any slippages on delivery of those programmes”.
Finally, the minister said, “other statutory obligations for the year, especially the election, are to be carried within the national resource envelope”, stressing: “This is a critical feature of the Ghana Beyond Aid agenda which requires us to focus more on generating internal resources to meet our key obligations as a state”.
The President and Cabinet, Mr Oppong Nkrumah observed, “are upbeat about ending the year on a high fiscal and economic performance and delivering a budget for 2020, which will help consolidate the gains made so far for our continued growth and prosperity agenda. Mr President is currently heading to the Volta Region to start, from tomorrow to Tuesday night, his 2-day tour” of that part of Ghana.