National Communications Officer of the National Democratic Congress (NDC), Sammy Gyamfi says the once admired Ghana’s economy is in a sorry state due to the poor management by President Akufo-Addo and his vice, Dr. Mahamudu Bawumia.
This is in reaction to the B- and Caa1 rating of Ghana’s economy by Fitch and Moody respectively.
In a statement, Sammy Gyamfi insists that the ratings by reputable international institutions are the country’s worst-ever rating.
According to him, Ghana is now in the junk category of nations and no longer has the confidence of investors.
“In short, Ghana’s economy has been collapsed by Alhaji Bawumia and President Akufo-Addo. We are now in the junk category of nations. We no longer have money for developmental projects. Moody's projects that Ghana's government debt ratios will continue to deteriorate in the next few years with extremely weak debt affordability significantly constraining policymaking.
“We are in a situation where we must continue to borrow at very high-interest rates to meet our basic needs. This is going to escalate the level of hardships and suffering in the country for all Ghanaians,” parts of the Sammy Gyamfi statement reads.
To address the country’s economic situation, Sammy Gyamfi is recommending that the government plugs the holes in the public sector and significantly reduce financial irregularities, leakages, waste, and corruption.
He also wants government to cut down expenditure which has been mainly consumption-related.
Below is the full statement from Sammy Gyamfi:
ON THE MATTER OF GHANA’S DOWNGRADE BY FITCH AND MOODY’S:
The B- and Caa1 rating of Ghana’s economy by Fitch and Moody’s respectively is our worst-ever rating by these internationally reputable agencies. What these downgrades simply mean is that:
1. Ghana’s economy has virtually collapsed. Investor confidence in Ghana’s ability to meet its debt obligations is at an all-time low. What this effectively means is that the country’s credit rating is very poor and highly risky. In other words, the investor community believes that our ability as a country to stabilize and service our debt is very very weak.
2. So bad and precarious is our economic situation that Ghana has lost access to the international capital (eurobond) markets. Hence, the country’s significant reliance on very costly short-term domestic borrowing, which is increasingly leading to the crowding out of the private sector. Even worse is the fact that Ghana defaulted on its loan repayments in 2020 and 2021 ($1,035,867 and $744,048 respectively).
3. This situation has been largely occasioned by the reckless spending of the Akufo-Addo/Bawumia government, which reckless spending reached its climax in 2020 and has now inescapably plunged the country into an unprecedented budget deficit. This coupled with the government’s penchant for reckless and unprecedented borrowings which have been largely wasted on consumption-driven activities of this government have plunged the nation into an unsustainable debt hole. Currently, Ghana’s debt to GDP ratio is at an all-time high of 83% according to Fitch (i.e including energy sector debt), with interest payments of about 50% of total revenue. This current situation is worse than the country’s economic position when we joined the HIPC program sometime in the year 2001.
4. In short, Ghana’s economy has been collapsed by Alhaji Bawumia and President Akufo-Addo. We are now in the junk category of nations. We no longer have money for developmental projects. Moody's projects that Ghana's government debt ratios will continue to deteriorate in the next few years with extremely weak debt affordability significantly constraining policymaking. We are in a situation where we must continue to borrow at very high interest rates to meet our basic needs. This is going to escalate the level of hardships and suffering in the country for all Ghanaians.
5. The solution to the economic crises on our hands doesn’t lie in the E-levy but rather:
* Cutting down on government’s expenditure which has been mainly consumption-related. For example, the rental of hyper-expensive luxurious jets by President Akufo-Addo must cease forthwith.
* Plugging the holes in the public sector and significantly reducing financial irregularities, leakages, waste and corruption.
* Reviewing and significantly reducing tax exemptions, among others.
In all this, the head of the economic management team, Alhaji Bawumia has gone mute and is no where to be found. The chickens have come home to roost. It is time for reality check.