According to Economist Dr. Adu Owusu Sarkodie, the fiscal measures announced yesterday by Finance Minister Ken Ofori-Atta are expected to restore the fiscal consolidation process outlined in the 2022 Budget.
According to him, the short-term measures will boost confidence and send positive signals to investors, encouraging them to continue doing business with Ghana.
He does, however, want the government to demonstrate its commitment to putting these measures in place.
In an interview with Joy Business, Dr. Adu Owusu Sarkodie of the University of Ghana’s Economics Department stated that these measures will also reshape some macroeconomic indicators.
“The Minister [Ken Ofori-Atta] sought to undertake all of these measures in order to restore confidence in the economy, confidence in the path of Ghanaians, and to assure Ghanaians that, through town hall meetings, they had listened to and addressed their concerns.” And also the assurance to the international community that they are doing something about the economy, so that they should come and invest in Ghana’s economy.”
The Finance Minister announced several measures, including an additional 10% cut in discretionary spending, a 50% cut in fuel coupon allocations for all political appointees and heads of government institutions, a moratorium on the purchase of imported vehicles for the rest of the year, and a moratorium on all foreign travel, except pre-approved critical/statutory travel.
Others are prioritizing ongoing public projects over new projects, cutting spending on all meetings and conferences by half with immediate effect, and pursuing comprehensive re-profiling strategies to reduce the fiscal burden of interest expenses.
The government also announced some measures to protect Ghanaians from economic shocks. They include a 15 pesewas per litre reduction in the price of gasoline and diesel beginning on April 1, 2022.
Dr. Owusu Sarkodie stated that these fiscal measures will complement measures taken by the Bank of Ghana to help the economy recover.
“Recall that the Central Bank raised the policy rate in response to rising inflation.” So the exchange rate drove inflation and all sorts of other macroeconomic variables in the economy. The restoration of the cedi’s value was critical at this critical time, and these measures are only temporary.”
“And I’ll add that the other side of this is to restore economic growth while also providing a safety net to protect the poor and vulnerable,” he said.
