Economy will rebound by 2021, grow by 4.7% – MoF Chief Economics Officer

The Chief Economics Officer of the Ministry of Finance, Dr Alhassan Iddrisu, has said he is optimistic Ghana’s COVID-19-ravaged economy will rebound in 2021.

In his view, the programmes and policies presented to Parliament by the Minister of Finance, Ken Ofori-Atta in the mid-year budget review, will spur growth of, at least, 4.7 per cent next year.

From then on, he projects steady growth.

In a virtual conference about the mid-year budget review, Dr Iddrisu said: “In spite of the heavy COVID-19 impact on 2020, which is seeing growth actually come down, the policies and programmes and interventions put in place, in our view, will lead to a recovery in 2021”.

The ministry, he noted, sees “growth picking up to 4.7% in 2021 and increasing to 5.8% in 2022 and 5.4% in 2023 and the same 5.4% in 2024.”

The non-oil sector growth, he noted, will hit 6 per cent by 2024.

“The growth is not just coming from oil. Non-oil growth is also picking up from the revised 1.6% in 2020 to 4.2% in 2021 and this is expected to crease to 5.1% in 2022 and 4.9% in 2023 and increase further to 6% in 2024”, he said.

The government revised the country’s GDP projection for 2020 from 6.8% to 0.9% in the mid-year budget owing to the effects of the pandemic.

Also, Mr Ofori-Atta projected Ghana’s fiscal deficit to hit 11.4% as a result of a GH¢13.6 billion revenue shortfall occasion by the COVID-19 pandemic and its accompanying global economic downturn.

“Mr. Speaker, Ghana has been hit with a double shock: a health pandemic and a global economic recession. These have resulted in revenue shortfall of GH¢13.6 billion and unanticipated but necessary expenditures of approximately GH¢11.7 billion”, he told Parliament on Thursday, 23 July 2020.

“This will result in a projected fiscal deficit of 11.4% of GDP. This is above the 5% limit as stated in the Fiscal Responsibility Act, 2018 (Act 982). Mr Speaker, Ghana is not unique in this regard. The pandemic has caused other countries including the 26 countries in the EU, Brazil, Jamaica, Costa Rica, etc. to suspend their fiscal rules in 2020 in light of their sharply increased fiscal deficits”.

“Mr. Speaker, given our history of fiscal rectitude, it is with great difficulty that we are having to suspend our fiscal rule due to exogenous factors. We intend to return to compliance with the FRA in the shortest possible time”.

Mr Ofori-Atta said: “Mr. Speaker, to ensure that we do not only survive this pandemic but recover and thrive, this Government is rolling out a three-and-a-half-year recovery and revitalisation programme”.

“The Coronavirus Alleviation & Revitalisation of Enterprises Support (CARES) programme allows us to recreate our economy and set it on a course that we yearn for. It will involve an investment of GHH¢100 billion from 2021 to 2023, of which GH¢70 billion will come from the private sector”.

“Mr Speaker, I consider the CARES programme truly ground-breaking as it requires radical reforms in government, particularly in revenue generation and a radical improvement in doing business for the private sector. It also adopts a whole-of-government implementation approach and fosters closer collaboration with the private sector to give a sustainable future to Ghanaians, as captured earlier”.

The Finance Minister added: “Mr. Speaker, as you can see, every aspect of the lives of Ghanaians would be dramatically impacted with the implementation of this program; ranging from what we eat, to where we live, to where we work”.

“Mr Speaker, Government will vigorously promote the consumption of locally produced goods and services in order to support local businesses and generate employment. To this end, MDAs and MMDAs will be required to prioritise the procurement of local goods and services and our Public Procurement Authority and Central Tender Review Committee shall be so instructed. The aim is to generate local demand and consumption with the full force of government’s procurement capacity to ensure that most of government procurement will be sourced locally”, he told the House.

He said: “We are in extraordinary times which calls for extraordinary leadership. Accordingly, on behalf of the President of the Republic, I have presented to you an extraordinary Mid-Year Fiscal Policy Review that seeks to reorganise our public finances to protect lives, secure incomes, revitalise businesses and focus our energies on driving the economy back on track to building a Ghana Beyond Aid. It involves a recognition that the 43 solutions to Ghana’s problems lie with Ghanaians and that, with inspiring leadership, Ghanaians can find a way to address their own challenges”.

Mr Ofori-Atta reiterated the President’s plan for the next three-and-a-half years as follow:

(i) An unprecedented GH¢100 billion Ghana Cares Obaatanpa Programme to transform and modernise our society

(ii) For the next 6 months: - a. Reduce CST from 9% to 5% b. Establish a GH¢2 billion Guarantee Facility to support all sectors of business and job retention c. Establish an Unemployment Insurance Scheme d. Create a GH¢100 Fund for Labour and Faith-based organisations for retraining and skills development e. Increase the CapBuss Programme by GH¢150 million to, among others, facilitate credit of GH¢50 million to support the Creative Arts, the Media and the Conference of Independent Universities. f. Retain provision of free water for the next three months g. Retain free electricity for all life-line customers for the rest of the year.

The agenda of the President is to modernise Ghana for all Ghanaians. Thankfully, Mr. Speaker, this leader, Nana Addo Dankwa Akufo-Addo, is only in his first term in office.

Mr. Speaker, before I finally conclude, let me pay tribute to all Ghanaians who have endured the difficult and drastic fallouts from the ravages of this virus, an unknown enemy.

Enduring lockdown, social distancing, mandatory wearing of masks to taking our entrepreneurial spirit in our own hands, have proven the can-do spirit of the Ghanaian. Our endurance is emblematic of the biblical Job who persevered in the hope that God will show himself at the right time.

Together with James, the brother of Jesus, in James Chapter 1 verse 4, I will say to them: “Let endurance complete its work, so that you may be complete and sound in all respects, not lacking in anything”. Mr. Speaker as often repeated by the President, this too shall pass. I am confident that with Government working closely with this House, we will emerge from this crisis even more united and purposeful as Ghanaians to fulfil our manifest destiny as the Black Star of Africa.

Mr. Speaker, this Mid-Year Fiscal Policy Review and its programmes draws us closer to our collective aspirations. Whiles this pandemic requires us to exceed the limits imposed by 44 the FRA, Act, 982, we have had to make these major expenditures to protect lives and livelihoods of Ghanaians and sustain businesses. We therefore request a supplementary Budget of GH¢11,896,477,566.00 to enable us continue this extraordinary task.

Mr. Speaker, before I take my seat, allow me to express sincere gratitude for the enormous support this august house has extended me since taking office. I truly appreciate the long hours Honourable Members of Parliament sat through, considering and passing key bills and measures for the ASEMPA BUDGET in 2017, the ADWUMAPA budget in 2018, MPONTUO Budget of 2019 and the NKOSUO AND NKANBOM Budget of 2020.

Mr. Speaker, the task ahead is great, yet it is a noble and glorious challenge - a challenge which calls for the courage to dream, the courage to believe, the courage to dare, the courage to do, the courage to work and the courage to attain excellence in achievement. As a Government, we have dared to dream, believe, work and achieve. Mr. Speaker, this caring government shall continue to be the eyes of the blind, the feet to the lame, the father to the needy, and the champion against injustice, wherever it rears its ugly head. Let us as a nation choose joy and know that He will restore the years that the locust has eaten. Mr Speaker, the Lord indeed reigns. Clearly, we can and will do more with the privilege of service to God and country.