Akufo-Addo pledges fiscal discipline in 2020 Election year
President Nana Addo Dankwa Akufo-Addo has indicated that he will not allow the 2020 election year pressure, to cause the treasury to throw away the fiscal discipline his administration has achieved as of now.
In preparing the 2020 budget, the President has given firm directives to his Ministers that the fiscal stability which has been restored must not be compromised.
The Fiscal Responsibility Act, which is the new anchor of discipline for the government of Ghana, prohibits any government from incurring a deficit beyond 5 per cent of Gross Domestic Product (GDP).
At a press briefing at Peduase near Aburi in the Eastern Region on Sunday, where President Akufo-Addo's Cabinet was meeting for its 64th Regular meeting and 9th Retreat, the Minister of Information, Mr Kojo Oppong Nkrumah revealed that the President has been quite clear to his Ministers that he will not countenance on the fiscal discipline achieved as of now.
The meeting, according to the Minister of Information focused on the preparation of the 2020 budget.
He said President Akufo-Addo has set out clear red lines that should not be crossed in 2020 by over spending just to win the election and thereby compromise on fiscal discipline.
He said the president is quite clear that if you do that, you will only have to come back in 2021 to start the process again and therefore make it counterproductive.
He said that was why the Fiscal Responsibility Act was passed and has therefore been clear with his Ministers on that one.
Below is a full copy of the Minister of Information's briefing
Cabinet completes 64th regular meeting and 9th retreat focusing on the economic turnaround ahead of the 2020 budget.
Cabinet has just completed its 64th regular meeting and 9th retreat in Peduase to examine the status of the economic turnaround program and approve a framework for the 2020 Budget.
The meetings chaired by President Akufo-Addo have been focused on examining the results of the governments efforts at correcting the economic challenges inherited at the start of the administration’s work.
It has also been focused on laying down some red lines in the preparation of the 2020 budget.
On the results of work done so far, cabinet was pleased to note.
- Inflation which measures the rate at which prices of Goods and services increase, was at 15.3% when President Akufo-Addo took over. Through a combination of prudent policies in the real sector, prudent fiscal and prudent monetary policies inflation is now at 7.5%. The President has instructed the various agencies who have worked to achieve this to keep on the downward inflationary path so that Ghanaians continue to benefit from relatively lower rate of price increase.
- Growth of the Ghanaian economy had slowed down to 3.4% at the end of 2016. Through the various interventions of government particularly in Agriculture (PFJ, PERD, RFJ) growth has seen a rebound and is projected to remain above 6% by the end of 2019. The President has instructed that resources be made available to continue with programs to engineer growth and jobs across various economic sectors. This will ensure that our economy continues to create more opportunities for the majority of our people.
- The annual budget deficit, which accounts for the year on year gap between revenues and expenditure has closed significantly. In 2016 it was at 9.3% and has now been reduced to 4.7% this year 2020 with a legal commitment to ensure that it doesn’t exceed 5%. Mr President is resolute in his marching orders to the Finance team to ensure this is observed.
- Interest rates
In 2016 the Interest Rate (Int Bank) as at 2016 was at 25.26. it was reduced to 19.34 in 2017 when Akufo-Addo assumed Office and recorded a reduction to 15.20 as at September. Mr President has been consistent in urging the central bank to explore ways to push this further down and make cost of borrowing cheaper for the Ghanaian private sector.
- Gross International reserves constituted 3.5months of Import cover as at Dec 2016. With gains in exports the Akufo-Addo administration has increased it to 4.1% of import cover as at September, despite BoGs support during some of the trying moments of our currency.
All in all, evidence is that the fundamentals of the economy have been significantly strengthened.
Cabinet was additionally pleased to note that 16 flagship programs are being executed despite the fiscal challenges of Ghana.
Key among them is the fact that the administration’s Free SHS program which is designed to ensure that every Ghanaian child, regardless of family wealth, place of birth or gender benefits from basic education to the senior high school level, is working smoothly nationwide. Mr President has instructed that no resource should be spared in ensuring that the 1.2 million Ghanaian children benefit fully and are prepared to contribute significantly to Ghana’s future growth.
The PFJ program has also be largely successful translating into increased food production with its attendant reduction in food inflation (which has contributed to the reduction in general inflation). Mr President again has been clear that especially saboteurs in the business of stealing and smuggling inputs like fertilizer have to be dealt with very strongly to deter others.
IPEP programs were noted to be progressing nationwide. Mr President has also been keen to whip the responsible agencies to speed up the completion of projects for the benefit of the people. As commencement certificates have already been issued and contractors gradually getting on site, the whip is out to speed up work for the benefit of the people.
In preparing the 2020 budget, the President has given firm directives that the fiscal stability which has been restored must not be compromised. The Fiscal Responsibility Act, which is the new anchor of discipline for the government of Ghana, prohibits any government from incurring a deficit beyond 5% of GDP. President Akufo-Addo has particularly mentioned that election year pressures should not and will not cause the treasury to throw away fiscal discipline.
The need to meet revenue projections is critical in ensuring that our desires as a nation are met. Roads, more jobs, more health infrastructure and keeping the lights on as has been done since 2017, will depend on the treasury successfully mobilizing the needed resources and all stakeholders in the economy contributing their due. Mr President is insistent that everyone be encouraged and aided to pay their fair share in reaching our national goals and we all have to rally around that call.
Flagship programs of government are also to be completed. This will require completion of their funding and more rigor in the work of the MDAs responsible for them. Mr President has been very clear to Ministers that he will not take any slippages on delivery of those programs.
Finally, other statutory obligations for the year, especially the election are to be carried within the national resource envelope. This is a critical feature of the Ghana beyond aid agenda which requires us to focus more on generating internal resources to meet our key obligations as a state.
The President and Cabinet are upbeat about ending the year on a high fiscal and economic performance AND delivering a budget for 2020 which will help consolidate the gains made so far for our continued growth and prosperity agenda. Mr President is currently heading to the Volta Region to start from tomorrow to Tuesday night, his 2-day tour of the Volta Region.
Related story: US$600 million to be injected into cocoa sector
Akufo-Addo Addo stimulates Cocoa industry with 600m USD
The Akufo-Addo administration acting through Cocobod will inject a 600m USD stimulus package into the cocoa sector through a Cocoa Productivity Enhancement Program which will among other things step up Ghana’s production to 1.5m tones by 2027.
The stimulus will target rehabilitation of plantations, improvement in storage and domestic processing, stimulation of local consumption as well as efforts to increase output on farms among others and spans a 7-year period.
The Administration believes that Cocoa, being a major pillar of our economy cannot be allowed to survive at its own pace. Cocoa farmers who have been the backbone of the Ghanaian economy already have good news for 2020 in cocoa price structure but now get an additional dose through this stimulus package.