The Ministry of Finance says the Ghanaian economy is still robust as seen in its rapid rebound post-COVID-19, showing a healthy Gross Domestic Product (GDP) of 6.6 per cent for the third quarter alone and an average of 5.2 per cent for the first three quarters of 2021.
The Ministry said while the end year growth targets for 2021 had been revised to 4.4 per cent, the high-frequency indicators suggested a continued strong momentum in economic activities.
A statement by the Public Relations Unit of the Ministry said in response to a Bloomberg article on Ghana's debt that the country's economy remained strong despite the global challenges on the back of the COVID-19 pandemic, especially in emerging markets with risks such as financial stress and sluggish progress on vaccination as recently cited by the World Bank.
The Ministry, therefore, reassured, “its investors that Ghana's fundamentals remain strong as attested to by our growth in December the Ghana Revenue Authority exceeding its target in 2021 and our strong reserves position.”
It said: “Ghana will continue to show leadership in this difficult post COVID era to build a sustainable, entrepreneurial nation while ensuring that growth, job creation and fiscal consolidation are not compromised, in line with the President's vision of a Ghana Beyond Aid.”
The Ministry described the article as factually inaccurate as the country's provisional nominal debt to GDP, as at the end of November 2021 was 78.4 per cent, which was the latest data available.
“December revenue collections are seasonally the latest for any year, it is unlikely that the country's financial requirements in December will result in us exceeding 80 per cent debt to GDP by December 2021,” the statement said.
It said Ghana's debt to GDP figures a decade ago was 39.67 per cent and 47.80 per cent for 2011 and 2012 respectively and not 31.4 per cent as stated in the publication.
Additionally, the statement noted that, for the period before the COVID-19 pandemic, Ghana experienced an average debt-to-GDP ratio of 56.4 per cent from 2015 to 2019, and said in 2020, the country's GDP contracted by 0.4 per cent because of the impact of the COVID-19 pandemic on the economy.
The Finance Ministry said, financing of the additional COVID-19 related expenditures, in addition to revised revenue targets, due to the impact of the pandemic, led to an increase in debt-to-GDP from 62.4 per cent in 2019 to 76.1 per cent in 2020.
According to the statement, “the current 78.4 per cent debt-to-GDP ratio as at the end of November 2021 indicates a reduction in the rate of debt accumulation (declined by a half to 18 per cent as at November 2021 from 34 per cent in 2020.”
This, it said, attested to an improvement in the country's debt and liability management, contrary to what the Bloomberg article suggested, adding that with a positive primary balance target for 2022 – one of the key fiscal anchors in 2022 – the country should see improved stability and reduction in the debt-to-GDP ratio in 2022 and through the medium term.
The Ministry said a healthy debate in Parliament should be seen as a critical part of Ghana's growing democratic credentials and not to be deemed as a fiscal risk, assuring that government was certain that when Parliament resumed sitting, the E-Levy Bill would be passed.
The statement said: “Government is on track to meet its non-oil Tax Revenue targets for 2021 of GH¢57.05bn (13.16 of GDP). The 2022 non-oil Tax Revenue target of GH¢80.3bn moves us to tax revenue to GDP of approximately 16 per cent, which is still below our medium revenue target of 18-20 per cent of GDP.”
It further assured that the country could meet the 2022 revenue target and that the E-Levy would help to accomplish that, adding that the Ministry would continue to monitor and adjust expenditures accordingly as had been done in the past using commitment control tools at its disposal.