Ken Ofori-Atta is the Minister of Finance
GhanaWeb Feature: Like parents would defend their children, the president of Ghana, Nana Addo Dankwa Akufo-Addo, has shown several times that it will not be easy for him to throw any of his appointees under the bus. In fact, not even the many, relentless calls by the citizenry for him to have one or two of his appointees sacked, mostly based on bad policies or their underperformance – in their estimation- has seen any real action from him. Especially for the Minister of Finance and Economic Planning, Ken Ofori-Atta, the president has more than once indicated that he is not going to have him sacked. While his reasons have been many, the most recent excuse given by President Nana Akufo-Addo on why he does not believe his appointee who handles the country’s finances should be booted out of office, is that he has rather done “excellently.” The recent sacking of the British-born Ghanaian, Kwasi Kwarteng, as the United Kingdom’s Chancellor of the Exchequer (Minister of Finance), after only 6 weeks at post has heightened calls on Ghana’s president to also show commitment by sacking Ofori-Atta. But then again, President Nana Addo Dankwa Akufo-Addo insists that Ken Ofori-Atta is not the one to blame because contrary to general assertions, the man is rather doing an “excellent” job. “I came to office in 2017 under a stringent IMF programme. This same man was able to manage the affairs of our economy in such a way that in the first four years of my first term, we were one of the fastest-growing economies in the world, with an average growth rate of 7% a year from the beginnings of an IMF programme. “An economy that allowed us to initiate the programme Planting for Food and Jobs. So somebody who has been able to do that and the current economic difficulties are not his fault. So how do I do that (sack him)? What will be the basis? What will be the rationale?” “If we were to say he didn’t do well in the first term, then I shouldn’t have repeated him for my second term? So, for me, their performance in my first term was excellent. Let me use that word. Excellent,” he said in an interview. But how excellently has the Minister of Finance done? In this article, GhanaWeb presents readers with some economic indicators that, based on the president’s assessment, make up for the great job that his finance minister has done in the last 6 years at post. Monetary policy rate: At present, the Monetary Policy Committee of the Bank of Ghana has hiked the monetary policy rate by 250 basis points from 22 percent to 24.5 percent. The move, according to the central bank, is expected to stem the inflation which has been soaring in recent months due to the depreciation of the cedi, upward adjustments in tariffs, and Ghana’s wait to access an IMF-supported programme. "On the fiscal situation, while expenditures have been broadly on target, revenue performance has been below expectations, complicating fiscal policy implementation." "Financing the budget so far has been predominately done by the banking sector with the central bank absorbing a larger share. Persistent uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to the financing of the budget resulting in the monetization of the budget deficit by the central bank," he explained. While it is true that upon assumption of office, the monetary policy rate was at 25.5 percent in November 2016, and until November 2021, had been reduced to the region of between 13.5 and 17.0 percent, rates in 2022 have seen a sharp rise. The following figures are made available on the Bank of Ghana website: 31 Jan 2022 - 14.5% 21 Mar 2022 - 17.0% 23 May 2022 - 19.0% 25 Jul 2022 - 19.0% 06 Oct 2022 - 24.5% Inflation Rate: Consumer inflation increased in September 2022 to 37.2 percent – inching closer to the 40 percent mark last seen in the early 2000s. The annual inflation rate accelerated for the 16th straight month by 3.3 percentage points from 33.9 percent in August 2022, the highest reading since June of 2001 when inflation recorded 36.8 percent. This makes it the highest rate recorded in 243 months, equivalent to 21 years, three months. According to the Ghana Statistical Service (GSS), more than 90 percent of the items measured recorded an increase in price during the period. Five divisions recorded inflation rates higher than the national average of 37.2 percent. The increase in price pressures continues to be fuelled by elevated petroleum and transport costs, as well as higher food costs and a weakening local currency. The Statistical Services observed a wide disparity across the 13 divisions: with housing, water electricity, gas and other fuels leading with 68.8%, followed by furnishings, household equipment and routine household maintenance at 51.5 percent; Transport logged 46.8 percent while personal care, social protection and miscellaneous goods and services logged 42.6 percent; and Food and Non-Alcoholic Beverages 37.8 percent. Ghana cedi as the worst performing currency: The Ghana cedi has been reported as currently the world's worst-performing currency against the US dollar. The currency has continually depreciated against the dollar in the last couple of months, Bloomberg reports have indicated. This has been attributed to the situation where "wait-and-see investors continued to squeeze foreign capital to the west African country before its deal with the International Monetary Fund." Bloomberg noted that the cedi lost about 45.1% to the US dollar this year to sell at GH¢11.2625 per dollar. This makes the cedi's depreciation the worst among 148 currencies tracked by Bloomberg, overtaking Sri Lanka's rupee whose depreciation has been 44.7%. The woes of the cedi, however, have no stated end in sight, but Ghana is currently engaging the IMF on financial bailout and assistance. Fuel prices: At the fuel pumps in 2022, Ghanaians are having to pay more than they have ever paid for before. The prices of petroleum products have been soaring since the start of 2022, with petrol currently selling at GH¢11.55 per litre, while Diesel is selling at GH¢14.50 per litre across various pumps in the country. Public transport fares have also been affected by this, with all other forms of products and food items eventually being affected. E-Levy and its inability to rake in targeted revenue: After its implementation on May 1, 2022, the Minister of Finance, Ken Ofori-Atta, disclosed that the proceeds from the Electronic Transfer Levy (E-Levy) were woefully below projected numbers. He said, the levy, as at July 2022, was only bringing in about 10% of the projected GH¢600 million monthly. He put the shortage down to leakages and exemptions. “We expected to raise some GH¢600 million a month or so and we are barely 10% of that given the leakages and the exemptions that we have given. “So, that will be investigated and we should be able to plug those holes and that will be helpful,” he stressed. It must be stated that the government, led by the minister, had given all indications that the passing of the E-Levy would solve a chunk of the challenges that the country was facing in the aftermath of the Coronavirus pandemic. In the mid-year budget review, the Minister of Finance, Ken Ofori-Atta, however, announced that the E-Levy target had been reviewed from the initial GH¢6.9billion to GH¢611 million.’ It is however unclear what the current revenues for the E-Levy are. Watch the latest episode of The Lowdown below:
GhanaWeb Feature: Like parents would defend their children, the president of Ghana, Nana Addo Dankwa Akufo-Addo, has shown several times that it will not be easy for him to throw any of his appointees under the bus. In fact, not even the many, relentless calls by the citizenry for him to have one or two of his appointees sacked, mostly based on bad policies or their underperformance – in their estimation- has seen any real action from him. Especially for the Minister of Finance and Economic Planning, Ken Ofori-Atta, the president has more than once indicated that he is not going to have him sacked. While his reasons have been many, the most recent excuse given by President Nana Akufo-Addo on why he does not believe his appointee who handles the country’s finances should be booted out of office, is that he has rather done “excellently.” The recent sacking of the British-born Ghanaian, Kwasi Kwarteng, as the United Kingdom’s Chancellor of the Exchequer (Minister of Finance), after only 6 weeks at post has heightened calls on Ghana’s president to also show commitment by sacking Ofori-Atta. But then again, President Nana Addo Dankwa Akufo-Addo insists that Ken Ofori-Atta is not the one to blame because contrary to general assertions, the man is rather doing an “excellent” job. “I came to office in 2017 under a stringent IMF programme. This same man was able to manage the affairs of our economy in such a way that in the first four years of my first term, we were one of the fastest-growing economies in the world, with an average growth rate of 7% a year from the beginnings of an IMF programme. “An economy that allowed us to initiate the programme Planting for Food and Jobs. So somebody who has been able to do that and the current economic difficulties are not his fault. So how do I do that (sack him)? What will be the basis? What will be the rationale?” “If we were to say he didn’t do well in the first term, then I shouldn’t have repeated him for my second term? So, for me, their performance in my first term was excellent. Let me use that word. Excellent,” he said in an interview. But how excellently has the Minister of Finance done? In this article, GhanaWeb presents readers with some economic indicators that, based on the president’s assessment, make up for the great job that his finance minister has done in the last 6 years at post. Monetary policy rate: At present, the Monetary Policy Committee of the Bank of Ghana has hiked the monetary policy rate by 250 basis points from 22 percent to 24.5 percent. The move, according to the central bank, is expected to stem the inflation which has been soaring in recent months due to the depreciation of the cedi, upward adjustments in tariffs, and Ghana’s wait to access an IMF-supported programme. "On the fiscal situation, while expenditures have been broadly on target, revenue performance has been below expectations, complicating fiscal policy implementation." "Financing the budget so far has been predominately done by the banking sector with the central bank absorbing a larger share. Persistent uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to the financing of the budget resulting in the monetization of the budget deficit by the central bank," he explained. While it is true that upon assumption of office, the monetary policy rate was at 25.5 percent in November 2016, and until November 2021, had been reduced to the region of between 13.5 and 17.0 percent, rates in 2022 have seen a sharp rise. The following figures are made available on the Bank of Ghana website: 31 Jan 2022 - 14.5% 21 Mar 2022 - 17.0% 23 May 2022 - 19.0% 25 Jul 2022 - 19.0% 06 Oct 2022 - 24.5% Inflation Rate: Consumer inflation increased in September 2022 to 37.2 percent – inching closer to the 40 percent mark last seen in the early 2000s. The annual inflation rate accelerated for the 16th straight month by 3.3 percentage points from 33.9 percent in August 2022, the highest reading since June of 2001 when inflation recorded 36.8 percent. This makes it the highest rate recorded in 243 months, equivalent to 21 years, three months. According to the Ghana Statistical Service (GSS), more than 90 percent of the items measured recorded an increase in price during the period. Five divisions recorded inflation rates higher than the national average of 37.2 percent. The increase in price pressures continues to be fuelled by elevated petroleum and transport costs, as well as higher food costs and a weakening local currency. The Statistical Services observed a wide disparity across the 13 divisions: with housing, water electricity, gas and other fuels leading with 68.8%, followed by furnishings, household equipment and routine household maintenance at 51.5 percent; Transport logged 46.8 percent while personal care, social protection and miscellaneous goods and services logged 42.6 percent; and Food and Non-Alcoholic Beverages 37.8 percent. Ghana cedi as the worst performing currency: The Ghana cedi has been reported as currently the world's worst-performing currency against the US dollar. The currency has continually depreciated against the dollar in the last couple of months, Bloomberg reports have indicated. This has been attributed to the situation where "wait-and-see investors continued to squeeze foreign capital to the west African country before its deal with the International Monetary Fund." Bloomberg noted that the cedi lost about 45.1% to the US dollar this year to sell at GH¢11.2625 per dollar. This makes the cedi's depreciation the worst among 148 currencies tracked by Bloomberg, overtaking Sri Lanka's rupee whose depreciation has been 44.7%. The woes of the cedi, however, have no stated end in sight, but Ghana is currently engaging the IMF on financial bailout and assistance. Fuel prices: At the fuel pumps in 2022, Ghanaians are having to pay more than they have ever paid for before. The prices of petroleum products have been soaring since the start of 2022, with petrol currently selling at GH¢11.55 per litre, while Diesel is selling at GH¢14.50 per litre across various pumps in the country. Public transport fares have also been affected by this, with all other forms of products and food items eventually being affected. E-Levy and its inability to rake in targeted revenue: After its implementation on May 1, 2022, the Minister of Finance, Ken Ofori-Atta, disclosed that the proceeds from the Electronic Transfer Levy (E-Levy) were woefully below projected numbers. He said, the levy, as at July 2022, was only bringing in about 10% of the projected GH¢600 million monthly. He put the shortage down to leakages and exemptions. “We expected to raise some GH¢600 million a month or so and we are barely 10% of that given the leakages and the exemptions that we have given. “So, that will be investigated and we should be able to plug those holes and that will be helpful,” he stressed. It must be stated that the government, led by the minister, had given all indications that the passing of the E-Levy would solve a chunk of the challenges that the country was facing in the aftermath of the Coronavirus pandemic. In the mid-year budget review, the Minister of Finance, Ken Ofori-Atta, however, announced that the E-Levy target had been reviewed from the initial GH¢6.9billion to GH¢611 million.’ It is however unclear what the current revenues for the E-Levy are. Watch the latest episode of The Lowdown below:
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