Decisive measures to re-anchor Ghana’s fiscal consolidation
Ghana public debt remains high
Economic outlook for 2022 remains positive, BoG
Ghana’s economic outlook for the 2022 fiscal year is expected to be positive although there remains some potential risks that must be keenly monitored.
This is according to Central Bank Governor, Dr Ernest Addison.
The BoG Governor speaking at the 2021 Chartered Institute of Bankers Annual Dinner Event said, “In particular, the uncertainties surrounding food prices, petroleum price adjustments, and the potential second round effects of these are likely to exert inflationary pressures in the outlook.”
“The recent widening of Ghana’s sovereign bond spreads after a successful bond issue in April 2021 surprised all of us, although we were aware of investor sentiments and their assessment of Ghana’s fiscal risks as they see the fiscal deficit outturn for 2020 as unsustainable and expecting very bold and decisive measures from the government to re-anchor fiscal consolidation and stabilize debt”, he explained.
However, Dr Ernest Addison touching on the country’s fiscal standings said, investors have assessed that, Ghana compared to our peers, required a stronger fiscal rectitude to re-establish investor confidence which investors believe did not address their sentiments in the mid-year budget.
“The markets assessment of the 2022 budget also suggest lingering doubts about the ability of the revenue measures announced to translate into a large increase in domestic revenue. To add to this, government expenditure is projected to increase significantly in 2022,” he cautioned.
While there is currently investor uncertainty on the international capital market, which has seen a widening spread triggered by investor sell-offs, the Bank of Ghana governor said the move has created a huge financing gap and subsequently put pressure on the local currency.
“As a Market Access Country, we have a huge burden to demonstrate a strong recovery and to ensure that the bold revenue measures introduced yield the required results.”
“We are at a point where there is no room for policy forbearance on all levels, otherwise the huge financing burden could unravel the anchor and erode the gains we have made in the last 4 years. This calls for a social contract on fronts with common aspirations across the aisle to make sure we sustained the recovery momentum” the Bank of Ghana governor stressed.