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Depreciation of the cedi; Petrified Mahama Clings To Dialogue … To tackle economic conundrum

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Former President John Dramani Mahama

Former President John Dramani Mahama has once again advised the government to put a team of economic experts together to dialogue and proffer solutions that would salvage the country from its current economic woes.

“A national dialogue on the economy, bringing some of our best brains together will serve us well, even as we prepare for debt restructuring and negotiation of an IMF programme”, the former President wrote on his official twitter page yesterday.

Mr Mahatma’s counsel was hinged on the recent rating on Ghana’s economy carried out by rating agency, Standard and Poor’s (S&P) Global Ratings, as well as the depreciation of the currency.

He wrote, “There appears to be no end to the problems with the Ghanaian economy, with the recent downgrade to CCC+/C Junk status. The steep depreciation of the Ghana Cedi in recent days, clearly shows that the mid-year review of the 2022 budget failed to win back the confidence of the investor community and the Ghanaian public”, portions of the twitter post read.

Last Friday, S&P Global Ratings revised Ghana’s rating from B-/B to CCC+/C, putting the country’s creditworthiness into junk status. It also reviewed the country’s economic outlook to negative, reflecting “Ghana’s limited commercial financing options, and constrained external and fiscal buffers.”

The ratings agency observed, however, that the COVID-19 pandemic and the conflict in Russia have magnified Ghana’s fiscal and external imbalances.

“Demand for foreign currency has been driven higher by several factors, including non-resident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products,” it said.

S&P added that Ghana’s inability to access Eurobond markets has affected the economy. In his post, Mr Mahama said despite these challenges, he does not see any plans being put in place by the government to rescue the economy from falling in the ditch hence his advocacy for a dialogue.

“Unfortunately, no credible remedial plans have been put forward by the government to salvage the economy”, he observed and advocated for a national dialogue to rescue the economy from the ditch.

Meanwhile, the government has expressed disappointment in the report released by the rating agency. The Minister for Finance, Mr Ken Ofori-Atta issued the government’s official response on Monday and said the government was disappointed in the report due to the fact that it did not acknowledge the policies the government has put in place this year alone to address the challenges.

“Government is disappointed by S&P’s decision to downgrade Ghana despite bold policies implemented in 2022 to address macro fiscal challenges and debt sustainability which have been significantly exacerbated by global external shocks”, portion of the response read.

The Minister lamented about delays in the passage of key revenue measures introduced in the 2022 budget as a cause of the poor revenue performance in the first half of the year.

He, however, said that government is committed and confident that it will successfully emerge from the challenges in the shortest possible time as it has demonstrated the track record of doing so.

Mr Ofori-Atta noted that all the revenue measures introduced in the 2022 budget, including the review of the MDA fees and charges bill, the tax exemption bill, the E-Levy bill, have all now been promulgated by Parliament and  are now in full implementation mode to support the country’s fiscal and debt sustainability policies.

He said the government would continue to be proactive in addressing the impact of these external and domestic headwinds on the economy and on the lives and livelihoods of Ghanaians.

AGNES ANSAH

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