African Reserves

Ghana: Economy not in distress… Ministry of Finance denies Bloomberg report

Ghana’s economic fundamentals remain strong with improving debt and liability management, the finance ministry has assured investors in the country.

He said that despite the global challenges occasioned by the COVID-19 pandemic, the country does not face any impending external imbalance or reserve shortfall, contrary to media reports.

A statement released yesterday by the ministry’s public relations unit described the Bloomberg article captioned – ‘Ghana’s debt sinks deeper into distress as investors lose patience’ as misleading.

“Despite the global challenges that exist as a result of the covid-19 pandemic and particularly in emerging markets, with risks such as financial strains and slow progress on immunization as recently cited by the World Bank, the ministry wishes to reassure all its investors that the fundamentals of Ghana remain strong.

“[It is] evidence of this: our growth in Q3-2021; the Ghana Revenue Authority exceeds its target in 2021; and our strong reserve position. Ghana will continue to show leadership in this challenging post-Covid era to build a sustainable and entrepreneurial nation while ensuring that growth, job creation and fiscal consolidation are not compromised in line with the vision of the president of a Ghana beyond aid,” he said.

Correcting the article’s “serious factual errors”, he said that on the contrary the 81.5% mentioned as the country’s year-end debt-to-gross domestic product (GDP) ratio, the provisional nominal debt at GDP, at the end of November 2021, was 78.4 percent, which is the latest data available.

He said Ghana’s debt to GDP figures ten years ago were 39.67% and 47.80% for 2011 and 2012, respectively, not 31.4% as stated in the publication. Bloomberg.

For the period before the global COVID-19 pandemic, he said Ghana experienced an average debt-to-GDP ratio of 56.4% from 2015 to 2019, while in 2020 Ghana’s GDP grew by 0. .4% due to the impact of Covid. -19 Pandemic on the economy.

He explained that funding additional Covid-19 related expenses, in addition to revised revenue targets, due to the impact of the pandemic, resulted in an increase in the debt-to-GDP ratio from 62.4% in 2019 to 76.1% in 2020. .

“The current debt-to-GDP ratio of 78.4% at the end of November 2021 rather indicates a reduction in the rate of debt accumulation (i.e. it has halved for reach 18% in November 2021, compared to 34% in 2020).

“This demonstrates an improvement in our debt and liability management, contrary to what the article seeks to suggest. the debt-to-GDP ratio in 2022 and the medium term,” he said.

The statement said it is regrettable that foreign investors and market participants are nervous following the deadlock in parliament over the passage of the electronic direct debit bill.

“The market now seems to be pricing into our obligations the perceived risks of having a slim majority in Parliament and the consequences of that. major revenue policy measures as presented in the 2022 budget.

“The Ministry would like to state that a healthy debate in a vibrant Parliament is an essential part of Ghana’s growing democratic credentials and should in no way be seen as a fiscal risk,” he said.

The statement expressed the government’s confidence that when parliament resumes sittings this month, the e-tax bill, which has already been discussed and approved by the parliament’s finance committee, will pass.