Ghana plans budget cuts to save the economy

Ghana’s president, Nana Akufo-Addo, addressed the nation in a half-hour speech that was broadcast on Sunday. He explained the variety of steps his administration will be taking to get out of financial trouble, including those to encourage domestic industry.

Nana Akufo-Addo mentioned a 30 percent reduction in the salary of the President, Vice President, Ministers, Deputy Ministers, and political office holders as one of these steps.

“We are in a crisis, I do not exaggerate when I say so. I cannot find an example in history when so many evil forces have come together at the same time. But, as we have shown in other circumstances, we shall turn this crisis into an opportunity to resolve not just the short-term, urgent problems, but the long-term structural problems that continue to bedevil our economy,” said the Ghanaian president.

An age of many disappointments began with the emergence of the Covid-19 epidemic. Growth stalled and the cost of borrowing in the markets rose steadily.

The impact of the Russian-Ukrainian conflict on global food and energy prices made these issues worse. The country’s inflation rate has reached over 37%, and the cedi’s depreciation against the dollar has increased significantly compared to earlier in the year, losing nearly 40% of its value.

The Achilles heel of the Ghanaian economy, debt, has increased most significantly. The country’s gross domestic product today comprises over 80% of it.

The Accra government was forced to end its three-year strike against the IMF because of an untenable load. Since the nation’s independence in 1957, the IMF has been requested 17 times for new aid plans, which is a tough pill for the African juggernaut to swallow.

“We have gone to the (International Monetary) Fund to repair, in the short term, our public finances, and restore our balance of payments, whilst we continue to work on the medium to long-term structural changes that are at the heart of our goal of constructing a resilient, robust Ghanaian economy and building a Ghana beyond aid.”