Ghana Economic Measures Announced October 2022
On October 30, Ghanaian President Akufo-Addo delivered a major speech to address Ghana’s economic crisis. That crisis is marked, in particular, by balance of payments constraints, steep currency devaluation, and inflation (40% year on year in October). Higher prices on fuel and food are greatly affecting the purchasing power of local Ghanaians. He outlined 12 measures the Government is taking to aid Ghana’s economic recovery, some of which could restrict imports and create new rules on foreign exchange for the oil and gas industry. The measures include:
1. Restoring macroeconomic stability through an International Monetary Fund-supported program. Ghana is targeting the end of 2022 to reach a deal with the IMF for a $3 billion extended credit facility program.
2. Tackle cost of living concerns by working to stabilize prices of petroleum products through new supply arrangements.
3. Encourage traders and distributors within Ghana to desist sharp price increases to secure their profit margins. The Government argues that this practice is contributing to inflationary pressures.
4. Restore debt sustainability by reducing the debt to GDP ration by 55% by 2028.
5. Improve tax revenue collection by the Ghana Revenue Authority from 13% to 18%-20% of GDP.
6. Pursue inclusive growth while protecting the poor.
7. Energy sector reforms to reduce the risk that this sector creates for the economy.
8. Reduce budget rigidities by capping statutory funds.
9. Continue efforts to reduce central Government expenditures by 30% (ie., continue the 30% cuts to budgeted, discretionary spending by Ministries, Departments, and Agencies, and continue the 30% cut to the salaries of senior government officials that were announced in April 2022).
10. Discourage the importation of rice, poultry, vegetable oil, fruit juices, toothpicks, pasta, fruit juice, bottled water, ceramic tiles, and other goods. These products, he asserted, can be manufactured in sufficient quantities within Ghana. Subsequently, on November 17, the Bank of Ghana announced that it would no longer provide foreign exchange support for the importation of these goods.
11. Tackle currency speculation by foreign exchange bureaus to limit volatilities in the Ghanaian currency, the cedi. (Several forex bureaus have subsequently lost their licenses).
12. Working with the Bank of Ghana and oil producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange from operations in Ghana are, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market.
13. Finally, the President provided assurances that there would be “no haircuts” to Ghanaian treasury bill holders in the debt restructuring strategy.
To learn more about the environment for doing business in Ghana, contact Commercial Service Ghana at Office.Accra@trade.gov or +233(0)30-274-1870 and see our Country Commercial Guide to Ghana for broader context on doing business in Ghana and our market intelligence reports for ongoing updates on specific topics and industries, in particular our related report on Ghanaian currency depreciation.