Ghana gov’t unveils spending cuts to tackle deficit

Ken Ofori-Atta
Ghana's Finance Minister Ken Ofori-Atta

The Akufo-Addo administration has prepared spending cuts to help reduce the budget deficit, a move expected to restore investor confidence in holding Ghana’s assets.

The government has also said these moves are aimed at ensuring the 7.4% deficit target set in the 2022 budget is met.

Already authorities are ratcheting up their response to a selloff of the West African nation’s foreign-currency debt sparked by concern the country won’t achieve revenue and debt targets announced by Ofori-Atta in November. On Monday, the central bank raised interest rates by the most in two decades, while the government is also considering raising as much as $2 billion in syndicated loans to support the budget.

The currency has weakened more than 17% against the dollar this year, making it the worst performer on the continent. It traded 1% weaker at 7.5274 per dollar by 4:15 p.m. in Accra, while the yield on the nation’s 2026 Eurobond declined for the first time in three days, by 7.8 basis points to 16.64%.

Find attached the raft of measures introduced by the government

  • The government plans to cut discretionary spending by an additional 10 percent. The Ministry of Finance is meeting with Ministries, Departments and Agencies to review spending plans for the rest of the year.
  • There will be a 50  percent cut in fuel coupon allocation for all political appointees and heads of government institutions to ensure efficient use of energy resources. This measure is effective April 1, 2022. Fuel coupons normally account for over GHS 60 million, according to the Finance Minister.
  • The suspension of the purchase of imported vehicles for 2022 to reduce total vehicle purchases for the year. This will affect all new orders, especially Four-wheel drives.
  • The suspension of all foreign travels except pre-approved statutory travels or critical travels.
  • The government plans to conclude measures to eliminate ghost workers from the government payroll by the end of 2022.
  • The government hopes to conclude renegotiations of the Independent Power Producer capacity charges by the end of the third quarter of 2022 to further reduce capacity payments by 20 percent to generate total savings of GHS1.5 billion.
  • Moratorium on the establishment of new public sector institutions by the end of April 2022
  • Prioritise ongoing projects over new projects to enhance the efficient use of limited public funds by finishing ongoing or stalled projects
  • The reduction of expenditure on all meetings and conferences by 50 percent.
  • Pursue reprofiling strategies to reduce the interest expense burden on the fiscal.
  • The government also plans to liaise with organised labour to implement measures in the Kwahu declaration of the 2022 National Labour Conference. These include reforms towards addressing salary inequities.
  • Ministers and the Heads of SOEs will also be contributing 30 percent of their salaries from April to December 2022 to the Consolidated Fund.


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