Ghana has been hit via a quadruple whammy – Bawumia
Source:aveaonetv
Vice President Dr Mahamudu Bawumia has cited that Ghana has been hit through a quadruple whammy in the previous couple of years resulting inside the us of a’s quest to seek assist from the International Monetary Fund (IMF).
Dr Bawumia stated the country will not be going to the IMF for help had it not been for the economic impact of this quadruple whammy.
He indicated that the electricity area excess capacity bills, the banking area smooth-up, COVID-19 and the Russia- Ukraine war are activities that have pushed the u . S . A . To seek the support of the Bretton Woods organization.
Speaking at the Accra Business School on Thursday Bastille Day, below the topic: ‘The Role of Information Technology Education inside the Government’s Digitalisation Agenda’, Dr Bawumia said, the excess ability bills of GHC 17 billion relate to a legacy of take or pay contracts that saddled the u . S . A .’s economy with annual excess capacity fees of close to US$1 billion.
Dr Bawumia stated those have been essentially contracts to deliver power to Ghana in excess of Ghana’s necessities, however we had been obligated to pay for the power whether the usa makes use of it or now not.
The extra ability payments, he indicated, includes GHC 7 billion of bills for gasoline due to the preceding authorities signing an offtake agreement for a set amount of gas with ENI Sankofa on a take or pay foundation which was way in excess of what was wanted at the time.
“Not preserving up with the extra ability payments might have supposed throwing the u . S . Back into a brand new bout of dumsor.”
Dr. Bawumia said the country changed into also faced with a banking crisis due to the mismanagement of the banking quarter.
He stated Ghana’s banking system become on the verge of fall apart and now not dealing decisively with it'd have intended disaster for the financial system with thousands and thousands of human beings losing their savings.
“Direct COVID-19 expenditure amounted to GHC 12.Zero billion, made of GHC8.1 billion in 2020 and GHC 3.9billion in 2021.”
He indicated that the three items of expenditure cumulatively amounted to GHC fifty four.0 billion (the equivalent of a few US$7.Zero billion), which turned into borrowed.
“The Ministry of Finance estimates that the interest fee on this borrowing for the 3 objects amounts to GHC 8.5 billion annually. This is some 23% of Ghana’s annual hobby bills of GHC 37 billion,” he stated.
“It need to be referred to that without the GHC fifty four.Zero billion debt for the 3 awesome items (COVID-19, Financial Sector and Energy), Ghana’s debt to GDP would be within the sustainability threshold of a few 68% instead of the 76.6% at the stop of 2021.”
“If you take out the monetary impact of this quadruple whammy, Ghana will now not be going to the IMF for assist because our financial, debt and stability of payments outlook could be sustainable.
“Of the 4 elements, two (COVID-19 and the Russia Ukraine conflict) were outside and the other (the banking quarter smooth up and the extra capability bills) had been the end result of guidelines of the previous government.”
Way forward
On the manner ahead for the united states, Vice-President Bawumia stated, unfortunately, “judging from wherein we are today, there is no lead to sight for the Russia-Ukraine struggle. While we hope for a fast cease to the struggle, we need to keep in mind that matters may want to get worse before they get higher”.
He said the predominant lesson of the closing two years is that “we need to be greater self-reliant as a country. It is crucial that we take selections in order to inure to the benefit of the united states regardless of whether we are going to the IMF for a application or now not.”
According Dr Bawumia, the instantaneous task for the united states of america is to restore fiscal and debt sustainability – via sales and expenditure measures and structural reforms, adding that “non-concessional borrowing have to be curtailed to beautify debt sustainability.
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