Ghana’s new government will make steep spending cuts this year to recover the economy, Finance Minister Cassiel Ato Forson said on Tuesday as he announced wider than expected deficit and debt figures for 2024, particularly in the cocoa and energy sectors.
“The state of the economy … does not reflect an economy that has turned the corner,” Forson said during his first budget speech to parliament.
“It reflects an economy in severe distress, burdened by debt repayment humps, mismanagement and a lack of accountability.”
The West African country is emerging from its deepest economic crisis in a generation, with turmoil in the vital cocoa and gold industries.
President John Dramani Mahama, who took office in January, has vowed to boost the economy and create jobs. He faces the fallouts of a cost-of-living crisis, an ongoing bailout from the International Monetary Fund and a sovereign debt default in the cocoa and gold-producing nation.
Forson said Ghana, which faces significant external debt service costs over the next four years, should reduce its financing needs to improve its credibility.
He announced a “shock therapy” of spending cuts, that will be compensated for by scrapping levies on consumers and targeted measures on revenue generation to reduce deficit.
“The government’s decision to keep its promise to remove four poorly designed taxes… was a rare combination of good politics and smart policy,” said Bright Simons, an analyst at Accra-based think tank IMANI Africa
Reuters/Shakirat Sadiq
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