Full list of measures by the Minister of Finance to alleviate economic hardship
Finance Minister Ken Ofori-Atta revealed a wide range of plans to save the country’s economy.
The minister, speaking at a press conference in Accra, expressed his optimism that the measures will go a long way in protecting citizens amid the economic downturn.
The Bank of Ghana (BoG), in its January 2022 Monetary Policy Report, said outstanding public debt was equivalent to 78.4% of GDP at the end of 2021, down from 76.1% of GDP at the end of 2020.
The country’s total outstanding public debt stood at around 344.5 billion yen in November 2021, a situation that experts have called alarming.
Fuel prices also broke through the 10¢ per liter mark amid the free fall in the local currency.
Speaking to the media on Thursday, he blamed the situation on the inability to approve parts of the 2022 budget, particularly the E-Levy and the ongoing war between Russia and Ukraine.
Regarding the failure to pass the bill, he explained that it influenced Fitch’s subsequent downgrading of the country’s creditworthiness and subsequent impact on the revenue mobilization program.
The uncontrollability of the invasion of Ukraine was also a source of concern for the government regarding the overall effect of the war.
Despite this, the Minister of Finance presented major interventions to strengthen revenues aimed at achieving the 7.4% deficit target set in the 2022 budget.
These measures include spending cuts, an intense revenue mobilization campaign, fuel price mitigation measures and foreign exchange financing.
- Discretionary spending still needs to be reduced by another 10%.
- 50% reduction in fuel voucher allocations for all politicians and heads of government institutions, including public enterprises, effective 1st April 2022.
- Imposition of a complete moratorium on the purchase of imported vehicles for the rest of the year with immediate effect. This will affect all new controls, especially 4WD. This aims to reduce total vehicle purchases by the public sector by at least 50% for the period.
- The government has imposed a moratorium on all overseas travel except for pre-approved critical/statutory travel.
- The government will conclude ongoing measures to eliminate “ghost” workers from the government payroll by the end of December 2022;
- The government will complete the renegotiation of the energy sector IPP capacity charges by the end of the third quarter of 2022 to further reduce excess capacity payments by 20% to generate total savings of 1.5 billion euros. GHS;
- impose a moratorium on the creation of new public sector institutions by the end of April 2022.
- Prioritize ongoing government projects over new projects to improve the effective use of limited government funds during the period by completing ongoing or stalled but approved projects.
- cut spending on all meetings and conferences by 50%, effective immediately.
- Heads of public enterprises must contribute 30% of their salaries from April to December 2022 to the Consolidated Fund.
- Pursue comprehensive reprofiling strategies to reduce the burden of interest charges over the year; and liaise with the Association of Organized Workers and Employers to implement with immediate effect the measures contained in the National Labor Kwahu Declaration of 2022, including reforms to address wage inequality (e.g., office holders under section 71), the weak link between salary and productivity and the sustainability of the wage bill.
Fuel Price Mitigation Measures
The government has pledged to cut margins in rising oil prices by a total of 15 pesewas per liter from 1st April. The cuts are expected to reduce gasoline prices by 1.6% and diesel by 1.4%. The details are as follows;
- BOST margin reduced by 2 pesewas per liter
- Unified Petroleum Pricing Fund (UPPF) margin reduced by 9 pesewas per liter
- Fuel Marking Margin (FMM) reduced by 1 pesewa per liter
- Primary distribution margin (PDM) reduced by 3 pesewas per liter
- National Petroleum Authority (NPA) in discussion with OMC to reduce their margins.
- The government must ensure a constant supply of fuel and manage the rate of increase in prices at the pump by ensuring that the BoG has access to adequate foreign exchange.
Revenue mobilization measures
- Begin implementation and collection of the revised property rate by the end of April 2022.
- Implement E-VAT/E-Commerce/E-Gaming initiatives by end of April 2022.
- Deploy the simplified tax declaration mobile application for all eligible taxpayers by July 2022;
- Urge Parliament to expedite passage of the Electronic Direct Debits Bill, Tax Exemptions Bill and Fees and Charges Bill.
- Prioritize the Revenue Assurance, Compliance and Enforcement (RACE) program to plug revenue leaks, especially at ports and the infamous cabal of fuel exporters and small-scale mining.
- The government must partner with the private sector to introduce digital monitoring systems for quarrying, sand mining and salt mining to get more revenue from our natural resources; and
- Immediately implement “No Duty – No Exit” policy at MPS terminal in Tema port to improve revenue collection
Financing and monetary measures
- The government must conclude an external financing agreement of up to $2 billion in the next 2 to 6 weeks in accordance with the external financing approved for 2022 and for liability management.
- The Ministry of Finance will work with the Central Bank to review the foreign exchange retention policy to ensure that multinational companies in the extractive sectors retain foreign exchange earnings from the sale of our resources in the country.
Additional medium-term measures.
- Wean public higher education institutions from the government payroll and instead provide them with a “block grant” of a fixed amount.
- Pursue reforms to address structural challenges in public finance management, including procurement and commitment control, payroll management, and human resource management.