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| (Photo credit: graphic.com.gh) |
During a meeting in London, Ghana's Minister of Finance, Ken Ofori-Atta, assured holders of Ghana's international bonds that the government will adhere to budgeted expenditure in 2024, despite it being an election year.
Ofori-Atta stated that the government will stay within the International Monetary Fund (IMF) supported budget, which will be presented to Parliament next month. According to reports, the country's economy has shown signs of stability, with GDP growth averaging 3.1% in the first half of the year, and inflation declining to a 12-month low of 38.1% in September. The fiscal front has also seen positive results, with a surplus of about GH¢2 billion in the primary balance for the first half of the year. Gross International Reserves (GIR) also stood at $2.1 billion, equivalent to 1.0-month import cover.
Despite concerns from investors about overspending in election years, Ofori-Atta assured that the government will remain committed to the IMF-supported program and the 2024 budget. He emphasized the importance of macroeconomic stability, low inflation, and a stable currency value for Ghanaians, rather than increased public spending. “Ahead of the 2024 election year, let me assure you that we are committed to implementing the IMF supported PC-PEG as planned, and this is what our constituents expect from us as this will help us further support the strong economic recovery” he assured.
Ken Ofori-Atta, went on to provide an update on the country's external debt restructuring exercise. He emphasized the importance of successfully completing this exercise for Ghana's financial stability.
The minister declared that the government was dedicated to keeping up the IMF-supported implementation of a broad range of policy reforms.
By revising the Fiscal Responsibility Act of 2018 (Act 982) and moving up the purchase of the Integrated Tax Administration System, he said that the organization's top objective was to secure the sustainability of its finances and debt.
According to Mr. Ofori-Atta, the government was also concentrating on financial sector reforms to improve the Bank of Ghana's (BoG) framework for targeting inflation, rebuild commercial banks' capital buffers, and restore international reserves buffers.
"The Livelihood Empowerment Act's benefits are being improved in actual terms, and we are also focusing on social protection and structural improvements" he added.
Ken Ofori-Atta expressed confidence by going on to mention that as part of the Fight Against Poverty Program, the National Health Insurance Scheme and the School Feeding Program were radical changes that would help build a relatively stable and wealthier country.
The Finance Minister further stated that the DDEP will not be reopened and that all planned exchanges of domestic marketable debt had been completed.
According to Mr. Ofori-Atta, the BoG and other domestic holders of public debt made a tremendous effort, which is now history. "New debt instruments issued by the government in the domestic market are safe and secure," he declared.
In the first phase of the DDEP, the government exchanged 12 new notes with longer maturities and lower coupon rates for existing ones for GH 82 billion. The longer maturities and lower coupon rates obtained through the DDEP, according to Mr. Ofori Atta, were anticipated to give the government some much-needed breathing room and to put its domestic debt to GDP on a definite downward trend. The country's debt to GDP ratio is therefore anticipated to drop to 55 per cent within three years.
Talking of local bonds, approximately $742 million in local bonds in dollars were exchanged, with a participation rate of 91.7%; A participation rate of 97.4% was recorded for the exchange of cocoa bills worth GH 7.7 billion, and a participation rate of 95.3 percent was recorded for the exchange of Treasury bonds held by pension funds worth GH 29.6 billion.
He continued by saying that current domestic market interest rates were anticipated to stay entirely consistent with a path toward sustainable public debt given the altered structure of domestic debt brought about by the exchanges.
Ofori-Atta mentioned that the bilateral Official Creditor Committee (OCC), co-chaired by China and France, has committed to providing a debt treatment that will restore Ghana's debt sustainability and ensure full financing of the IMF program. Technical discussions have made significant progress, and the government is currently negotiating the specifics of an agreement to restructure its $5.4 billion debt owed to bilateral creditors with the OCC.
On the commercial side, two bondholder groups have been formed, consisting of domestic and regional bondholders, as well as international bondholders. The government has engaged in discussions with both groups and shared potential debt restructuring scenarios in May. They have now received debt treatment scenarios from both groups and expect to continue constructive dialogue in the upcoming weeks.
SOURCE:
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