MoF, UoG discuss how to address challenges facing Ghana’s economy 

The Ministry of Finance (MoF) and the University of Ghana (UoG), in collaboration with the University of Ghana Business School (UGBS) and the Institute of Statistical Social and Economic Research (ISSER) have resolved to continue deliberation on the country’s finances to find solutions to the challenges facing the nation’s economy.

The decision of the state and the academic institutions was contained in a joint communiqué issued after the maiden edition of the “Quarterly Economic Roundtable” organised jointly by the Ministry of Finance (MoF), the University of Ghana (UoG) and the University of Ghana Business School (UGBS) held on Tuesday, 2 July, 2024 at the ISSER hall, under the theme: “Restoring Macro-economic Stability”.

Government commitment

Addressing guests and attendees at the “Quarterly Economic Roundtable” which resulted in the communiqué that has been issued, Minister of State at the Finance Ministry, Abena Osei Asare, said the government was committed to ensuring that it maintained fiscal discipline even though 2024 is an election year, which is usually characterised by excessive spending by government.

“The foundation of micro-economic stability is fiscal discipline. We (the government) are committed to implementing stringent fiscal policies to reduce deficits and manage public debts sustainably.

“We are also committed to transparency in public finance management, fully implementing the PFM Act and enhancing accountability mechanisms to ensure the efficient and effective use of public funds.

“There is always a high demand in election years for the government to overspend and we are committed to rationalising and containing expenditures especially in the third and fourth quarters to ensure that unbudgeted related expenditures are kept to the barest minimum or eliminated,” Ms Abena Osei Asare remarked.

Interventions

In her address, Ms Osei Asare observed that there are several measures that the Bank of Ghana is implementing to control inflation to improve the purchasing power of Ghanaians.

She further indicated that various other interventions of government are yielding fruits and they will be pursued vigorously in the third and fourth quarters to consolidate the gains made.

The private sector according to Ms Osei Asare, was a vital factor in the country’s quest to reduce its susceptibility to external pressures and everything will be done to improve same.

“Controlling inflation is critical for the purchasing power of Ghanaians and the Bank of Ghana continues to pursue critical measures to deal with this, the minister of state at the finance ministry”, Abena Osei Abena said.

“To reduce our vulnerability to external shocks, the government has continued to encourage private investment in key sectors such as agriculture, manufacturing, and technology through its flagship programmes such as the Planting for Food and Jobs (PFJ), One District, One Factory (1D1F), among others,” she further stated, adding that “It is by fostering industrialisation that we can create jobs, boost exports and enhance our economic resilience.”

The Communiqué

In the communiqué, the Ministry of Finance and the University of Ghana indicated that they take “note of the remarkable progress made towards stabilising the economy, especially in the areas of fiscal adjustments, monetary policy coordination, the implementation of the IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG), as well as completing the domestic and external debt restructuring operations.”

They also acknowledged “that Ghana continues to face a confluence of challenges including geopolitical risks, sub-regional insecurities, multidimensional vulnerability, and climate change. We further recognize that the economy continues to experience significant debt service and energy cost, compounded by the effects of tight financing conditions, the sizeable fiscal risk from State Owned Enterprises (SOEs) and increased spending in response to multiple pressures including from organized labour”.

The communiqué to this end pointed out that “in line with the theme of the [Quarterly Economic Roundtable] – “Restoring Macro-Economic Stability” – we [MoF and UoG] join the call for the continued implementation of macro-critical reforms outlined in the Post COVID Programme for Economic Growth (PC-PEG) to accelerate economic recovery.

They also affirmed their “conviction that a stable macro-economy will anchor sustainable structural transformation of the country.”

The Full Communiqué 

1. We, the Conveners of the Quarterly Economic Roundtable (QER), representing the Ministry of Finance and the University of Ghana, organized an inaugural QER on Tuesday, 2nd July 2024 at the Institute of Social, Statistical and Economic Research of the University of Ghana and wish to communicate the following:
2. Deeply appreciate the support of Dr. Mohammed Amin Adam, Hon. Minister for Finance, Professor Nana Aba Appiah Amfo, Vice Chancellor of the University of Ghana and the graceful presence of Mrs. Abena Osei-Asare, Hon. Minister of State, Ministry of Finance, Dr. Alex Ampaabeng, Hon. Deputy Minister, Ministry of Finance, Prof. Gorden Awandare, Pro Vice-Chancellor, University of Ghana, Dr. Nii Kwaku Sowa, Country Director of the International Growth Center (IGC), the panel discussants and well-meaning Ghanaians from industry, academia and policy sectors.
3. Commend the public-spirited partnership that birthed and characterised the maiden QER and urge continued selfless collaboration for the QER series with the aim to support constructive economic policy discourse in Ghana.
4. Note the remarkable progress made towards stabilizing the economy, especially in the areas of fiscal adjustments, monetary policy coordination, the implementation of the IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG) as well as completing the domestic and external debt restructuring operations.
5. Acknowledge that Ghana continues to face a confluence of challenges including geopolitical risks, sub-regional insecurities, multidimensional vulnerability, and climate change. We further recognize that the economy continues to experience significant debt service and energy cost, compounded by the effects of tight financing conditions, sizeable fiscal risk from State Owned Enterprises (SOEs) and increased spending in response to multiple pressures including from organized labour.
6. In line with the theme of this Roundtable – “Restoring Macro-Economic Stability” – we join the call for the continued implementation of macro-critical reforms outlined in the Post CoVID Programme for Economic Growth (PC-PEG) to accelerate economic recovery. We affirm our conviction that a stable and sustained macro-economy will anchor sustainable structural transformation of the country.
7. Strongly support the Ministry’s continued commitment to inclusive development in compliance with key social and governance standards. We call for the timely, effective and full implementation of the social safety-net interventions to mitigate the impact of fiscal adjustment on the vulnerable.
8. Ensure the legislation of a debt ceiling and review the fiscal responsibility law to include legislation of a debt ceiling to ensure that deficits and debt are contained within sustainable thresholds. In addition, there is the need to ensure expenditure rationalization especially in procurement and compensation through the digitalization of payroll systems.

All government expenditures across the MMDAs should be captured under the GIFMIS system. Also, labour productivity should be enhanced and factored into wage negotiations while ensuring that wage agreements with labour unions are over a medium-term period to ensure predictability and planning.

9. Transition from a Central Government oriented budgeting system to a General budgeting regime; ensuring the inclusion of all other entities with quasi-fiscal operations.
10. Ensure the resolution of high budget rigidities and promote digitalisation of tax processes and economic transactions. Further, promote regular forensic audits to curb breaches in payroll, procurement, and other expenditures.
11. Strongly recommend the building up of the existing Sinking Fund to ensure that there is enough resources to repay the restructured domestic and international debts when they fall due.
12. Encourage the Ministry of Finance and the Bank of Ghana to deepen their collaboration for a more effective monetary and fiscal policy coordination to support macroeconomic stability and the growth agenda.

We also call for the two institutions to strengthen their partnerships and institutional coordination with global and regional financial and economic institutions, other development partners, and the private sector to unlock resources to catalyse and sustain economic recovery.

They should coordinate policies actions to stabilize prices, the exchange rate, and support the banks to reduce the cost of credit to the private sector.

We also call on the two institutions to ensure that the Development Bank of Ghana makes available cheaper source of funding to the agricultural and light manufacturing sectors to support higher value addition.

We believe that this will enable our local industries produce import substitutes and improve their export competitiveness.

13. We also believe that the current monetary policy framework and exchange rate regime is best suited for Ghana given that the global economy in the midst of financial technology and innovations has moved away from capital controls.

In this regard we call for the urgent need to address the structural bottlenecks in food production, a continued focus on import substitution industrialization, and diversification of Ghana’s exports away from primary products to manufactures.