DI: Gov’t has performed despite Covid shocks

A policy think tank, Danquah Institute (DI), has lauded the performance of the Akufo-Addo government in managing the country’s economy in the face of the COVID-19 pandemic. The commendation comes in the wake of NDC fueling a skewed narrative that the government is unable to service its debts due to poor economic management. A statement issued by the Executive Director of DI, Dr. Antoinette Tsiboe-Darko, accused the Minority caucus in Parliament of being bent on frustrating government’s efforts at revenue mobilisation, saying that sends wrong signals to the investor community and puts the country in difficult times.
“It is our guided opinion then that, despite the impact of the COVID-19 pandemic, Government has managed the economy of Ghana extremely well and is on a recovery trajectory with a GDP that has consistently outperformed the sub-Saharan African average. A balanced conversation between debt and economic progress shows that the future prospects of the Ghanaian economy are only bleak if some politicians are not minded to put the national interest over and above the lure to score partisan political points,” part of the statement read.
Debt servicing The policy think tank is convinced that the greatest, practical threat to Ghana’s ability to service its debt lies not only in the depths of government’s pockets and how the servicing of debts is done alone. It believes that largely falls on the capacity and appetite of the opposition to frustrate government’s revenue mobilisation efforts and the signals that this sends to investors. DI noted that the country’s high debt level can be attributed to the COVID-19 pandemic and the government’s efforts to clean up the banking sector, as well as restructure the various energy sector contracts the government had signed.
“If these are discounted from the public debt, debt to GDP would have been around 68% (in addition to the COVID-19 shocks). It is important to note that the spending to ensure a stable financial and energy supply sector was important to recover growth, enable the private sector business to have a conducive environment to work and save jobs. This also enabled us to build resilience before the COVID-19 shocks set in,” DI noted.
Gov’t performance It emphasised that Ghana’s pre-COVID-19 GDP was among the strongest on the continent, averaging 6.5% in 2019, and remains so post-COVID-19, largely due to the sound macroeconomic policies and investments undertaken by the Government. “Provisional figures show that the Ghanaian economy grew at 3.5% during the first half of the year and over 6.6% in the third quarter of 2021. This renders the Ghanaian economy as one of the fastest growing economies in the world today. Ghana’s debt accumulation which stood at 33.6% as at the end of 2020 significantly declined to 18.13% as at the end of 2021. This is also clear evidence of Government’s commitment to reducing the growth of Ghana’s debt,” it added.
DI also expects a further reduction in 2022, following the comeback to surplus on the primary balance, as debt management strategies over the past five years have been anchored, both locally and internationally, on extending the yield curve, gradually reducing interest rate on primary issuance and shifting roll-over pressures to ease any repayment pressure.
DI insists that from the Debt Strategy report, Ghana’s maturity profile shows that there are no significant pressures over the next two years, while the use of the sinking fund strategy also allows the economy to build up funds towards future maturities. “Our analysis also shows a credible plan in the 2022 budget to mobilise revenue to fund Government spending. This will also mean that Government and its agencies must manifestly be seen to be prudent in the use of the funds raised from taxpayers,” the statement concluded.