Economist and political risk analyst, Dr Theo Acheampong, has said managers of the country’s finances face tough days ahead due largely to the economic disruption caused by the coronavirus pandemic.
Dr Acheampong took to his Facebook page to explain why the Finance Minister, Ken Ofori-Atta, and his team will face difficult public financing choices in the coming days – citing four main reasons.
“Ghana’s fiscal deficit is estimated to be a whopping -16.4% of GDP in 2020 and -9.3% of GDP in 2021. In contrast, the pre-pandemic 2020 budget originally had a -4.7% deficit estimate. This was subsequently revised to -11.2% of GDP during the mid-year budget presented by Finance Minister Ken Ofori-Atta on 23 July to account for COVID-19-related higher spending and anticipated lower revenues,” he stated.
Basing his analysis on the IMF Regional Economic Outlook for Sub-Saharan Africa, released in October 2020, he said the government also faces debt sustainability concerns as debt is projected to increase from 62.8% of GDP in 2019 to 76.7% in 2020 and 74.7% in 2021.
His third point is that “external reserves are forecasted to drop from 3.6 months of import cover in 2019 to 2.7 months of import cover between 2020-2021.”
Finally, he said although Ghana’s economy is expected to grow at 0.9% in real GDP terms this year and 4.2% in 2021, this forecast depends significantly on the pace of global economic recovery.
Meanwhile, the Finance Minister is scheduled to appear before Parliament on Wednesday, October 28, 2020, to brief the House on expenditure in advance of appropriation for January 1, 2021, to March 31, 2021.
Read Dr Theo Acheampong’s full post on Facebook below.