Ghana’s finance minister has vowed to crack down on corruption and wasteful public spending as the government attempts to plug a financing gap and keep its International Monetary Fund programme on track.
Ken Ofori-Atta, who was appointed after President Nana Akufo-Addo took office in January, said the measures being taken by the government included rooting out ghost workers and ensuring all state contracts went to public tender. The government has also said it will appoint a special prosecutor to investigate suspect deals agreed under the previous administration in west Africa’s second-biggest economy.
“The measures we are taking are necessary. We feel the economy will respond strongly to them, and therefore maybe against all the odds we will be able to meet the targets,” Mr Ofori-Atta, a former investment banker, told the Financial Times. “The president has declared a war against corruption and we ourselves are putting structures in place to make sure we don’t go off the rails.”
He said it was still feasible that the budget deficit — which hit 9 per cent of gross domestic product last year — could be narrowed in line with IMF targets to between 3 and 4 per cent of GDP in 2018. The Treasury hopes to achieve this by increasing revenue collection by a third, although the IMF said this week the government’s projections were “optimistic”.
Ghana was forced to turn to the IMF for a three-year $918m loan programme in 2015, after the nation, which began exporting oil seven years ago and produces large amounts of gold and cocoa, was hit by the slump in commodities prices.
The previous government was criticised for missing targets on issues ranging from ending crippling power cuts to reining in the deficit. Mr Akufo-Addo’s administration says it has unearthed additional evidence of mismanagement.
The government said in January it had found a $1.6bn “hole” in the budget as a result of previously undisclosed expenditures. The cocoa marketing board later announced that a $1.8bn syndicated loan, agreed in 2016 and which was to be used to buy this year’s crop, was “all gone”.
“It was an extraordinary year,” said Mr Ofori-Atta, referring to fiscal slippages that occurred ahead of the December election, which ended eight years of rule by John Mahama and his National Democratic Congress.
He acknowledged that regaining the confidence of investors would be a tough task, blaming the previous government for having repeatedly “broken faith”.
A big challenge for the minister will be reducing debt, which is above 70 per cent of GDP. The previous government took advantage of investors’ search for yield to tap international capital markets twice in three years and raise $1.5bn, including $750m two months before the election.
“The critical issue is one of confidence. The new team gets it,” Mr Ofori-Atta said. “We are doing things differently, we understand there has to be better policy clarity and more transparency and accountability.”
With inflation falling and the IMF forecasting that growth will pick up this year to about 6 per cent, analysts and investors are giving the new government the benefit of the doubt.
In a note this month, David Cowan, Africa economist at Citi, said the consensus was “a fair assessment”. But he added that it was too soon to tell whether fiscal consolidation, long promised, would be delivered.