Minority Members of Parliament have proffered a stark assessment of Ghana’s economy, concluding that it is in a recession.
At a press conference held in Accra on Tuesday, Ranking Member on Parliament’s Finance Committee, Cassiel Ato Forson, said growth rate of key sectors of the economy have declined sharply, “with some sectors recording negative growth rates.”
“The construction subsector which recorded a strong and robust growth rate in 2016 has since assumed a declining trend due to government’s failure to pay contractors for work done. Growth in the financial sector has also worsened due to the unprecedented accumulation of arrears by the government which has resulted in the upsurge of non-performing loans,” he said at the news conference held in Parliament ahead of the presentation of the 2019 budget on Thursday, November 15, 2018.
This assessment by the Minority was preceded by another stark presentation by the West Africa Fiscal Institute (WAFI) which warned of a meltdown in the financial sector.
Making a presentation on the health of the economy, Mohammed Alhassan, a financial analyst at WAFI said the government must ensure that debts owed contractors are paid to enable them to honour their debt obligations to banks and other financial service providers.
Unless these are done, according to him, the microfinance sector risks a meltdown.
Negative growth
Mr Ato Forson, who is also MP for Ajumako-Enyan-Esiam Constituency in the Central Region, said the current state of Ghana’s financial sector is inundated with indicators that point to a recession.
“The financial sector is seeing a recession, a negative growth. In the first quarter of 2017, the growth rate was -11.2%. This is not according to me, this is from the Ghana Statistical Service. In the second quarter 2017, the growth rate is -8.6%; the third quarter we are seeing a growth of -25.5% and in the fourth quarter, we are seeing a growth of -25%.
“In fact in 2018, the financial sector and insurance activities have seen a decline. In fact, we are seeing an -11.6% and -13.4% for the first and second quarter,” he said.
He also compared growth figures for Q1 2018 and Q1 2017, which according to him, show that the economic situation is getting worse.
He has urged the government to stop living in denial about the health of the economy.
Expectant budget
A key feature of next year’s budget to be presented in Parliament on Thursday will be the freeing up spending restrictions as Ghana begins its exit from the International Monetary Fund (IMF) programme.
The Extended Credit Facility gave Ghana some $918 million over three years. Restrictions on expenditure and employment within the public sector, as well as pressure to improve domestic resources and reduce the budget deficit, are expected to ease up.
The 2019 Budget, which will be the Nana Akufo-Addo-led administration’s third budget, would be the first that will not be under the supervision of the IMF.
At a press briefing held last Wednesday, the Minister of Information, Kojo Oppong Nkrumah, said “the Minister of Finance will demonstrate to Ghanaians what, as we exit the IMF programme, the Akufo-Addo administration intends to do to maintain the Fiscal Discipline, which has been restored; increase liquidity in the Ghanaian economy, and sustain the heightened growth.”
He added that the government has rolled out the biggest social spending activities in the country’s recent history, which included the Free Senior High School programme, the Expanded School Feeding Programme and the Planting for Food and Jobs.
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