March 24, 2022

Ofori Atta Unfolds Measures To Salvage Ghana’s Economic Downturns

The Finance Minister, Ken Ofori Atta has finally freed Ghanaians of suspense over the Akufo-Addo-led government’s measures to alleviate hardship on the country and ease economic pressure.

Addressing the press on Thursday, March 24, the Finance Ministry unfolded four key areas, including Expenditure, Fuel, Revenue and Currency to use to reverse the economic ravages.

According to Ken, the measures are urgent and decisive actions required to address the challenges and ensure the achievement of the fiscal deficit target of 7.4% of GDP of the 2022 budget.

Expenditure Cutting Measures

In addition to the 20% expenditure cut of Ministries, Departments and Agencies (MDA) at the beginning of 2022, the sector Minister announced a further 10% cut of the expenditure of the MDA.

“Discretionary spending is being further cut by additional 10%. The Ministry of Finance is further currently meeting with MDAs to review their spending plans for the rest of the three quarters.”

Additionally, the Government has approved that ministers and heads of State Owned Enterprises (SOEs) contribute 30% of their salaries from April to December 2022 to the Consolidated Fund, Ken said.

Also, effective February 1, the government said political appointees and Heads of Government Institutions, including SOEs, will have their fuel allocation coupon cut by fifty (50%).

Additionally, the government has imposed a moratorium on all foreign travels except for pre-approved critical statutory travels. This, the Finance minister said, takes effect immediately, .

The government has also imposed a moratorium on the purchase of imported vehicles for the rest of the year with immediate effect. This, the government said, will affect all new orders, especially the four-wheel drives.

“We will ensure that the overall effect reduces total vehicle purchase by the public sector by at least 50% for the period,” the Minister said.

Also, the Government says it will conclude ongoing measures to eliminate ghost workers on the government payroll by the end of December 2022 as well as conclude the re-negotiations of the energy sector‘s IPP’s capacity charges by the end of the third quarter of 2022 to further reduce excess capacity payments by 20% to generate the total savings of 1.5 billion cedis

Ken Ofori Atta also noted that the government will impose a moratorium on the establishment of new public sector institutions by the end of April 2022 by prioritising growing public projects over new projects. This is to enhance the efficient use of limited public funds over the period by finishing ongoing or stalled but approved projects.

Also, the government seeks to reduce expenditure on all meetings and conferences by 50% effective immediately and pursue comprehensive reprofiling strategies to reduce the interest spent burden on the fiscal.

The government says it will liaise with Organised Labour and Employers Association to implement with immediate effect, the measures captured in the Kwahu Declaration of the 2022 National Labour Conference, including reforms towards addressing salary inequities and inequalities, the weak link between pay to productivity and sustainability of the payroll.

Fuel Price Mitigation Measures

Ken Ofori Atta stated that effective April 1, the government has decided for the next three months, to reduce petroleum price build-up margins in by 15 pesewas per litre as a means of mitigating the impact of the rising price of petroleum products at the pump.

“BOST margin reduced by 2 pesewas per litre, Unified Petroleum Pricing Fund margin reduced by 9 pesewas per litre, Fuel Marking Margin reduced by 1 pesewa per litre, Primary Distribution Margin reduced by 3 pesewas per litre. These reductions in margins are expected to reduce the prices of petrol by 1.6% and diesel by 1.4%”.

He also disclosed that the National Petroleum Authority (NPA) and the Ministry of Energy are in discussions with the Oil Marketing Companies (OMCs) to reduce their margins as well.

Ofori Atta added that “We anticipate the measures taken to strengthen the currency will help stabilise the prices at the pump. ”, he said.

Revenue Measures

The government says it will impress on Parliament to pass the E-levy bill, Tax Exemptions bill and Fees and Charges bill as a way of expanding the public purse.

It is further looking forward to prioritising the Revenue Assurance,s Compliance, and Enforcement (RACE) programme to check revenue leakages, especially at the ports, the infamous fuel bunkering cartels and small scale mining exporters.

Ken noted that the government will partner with the private sector to introduce digital systems to monitor quarrying, sand winning and salt winning to get more revenue from our natural resources.

It will also immediately enforce the “No Duty No Exit” policy at the Meridian Port Services (MPS) terminal at the Tema Port to improve revenue collection.

Additionally, he said the government will begin implementation and collection of revised Property Rate by end of April 2022 and roll out the simplified tax filing mobile application for all eligible taxpayers by July 2022.

Financing and Currency Measures

The Finance Minister announced that “Government of Ghana is to conclude external financing arrangement of up to 2 billion dollars in the next two to six weeks in line to approve external financing for 2022 and for liability management and to manage the slide of the cedi.

Also, the Ministry of Finance will work with the Central Bank to review the foreign exchange retention policy in line with approved external financing for 2022 and liability management, the sector minister said.

Ken noted that over the medium term, the government plans to wean off public tertiary institutions from government payroll and provide them with a fixed amount “blog grant” instead.

The government will also pursue reforms to address structural challenges in public financial management including procurement and commitment control, payroll management and human resource management.

Source: Fuseini

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