A Deputy Finance Minister, John Kumah, has criticised the negative outlook of the economy by the Member of Parliament for the Ajumako-Enyan-Esiam constituency, Dr. Cassiel Ato Forson.
In a statement on Facebook, the deputy Minister insisted that Dr. Forson’s predictions are “not supported by data.”
“It is unfathomable to think that a former Deputy Minister of Finance could be this pessimistic, speculative, and propagandist on important issues concerning the economy of Ghana.”
While Mr. Forson expects economic difficulties in 2022, Mr. Kumah said “the economy is expected to grow at 4.9% even with ravaging COVID-19.”
“The government is turning around the economy back to the era of high growth before the COVID-19 pandemic came to our shores,” he added.
Dr. Forson predicted a 30% increase in the prices of general goods and further depreciation of the cedi as well as more increases in fuel prices.
Defending the performance of the cedi, Mr. Kumah said the cedi had depreciated by 3.63% compared to 3.93%, same time in 2020.
“This represents one of the lowest depreciation seen in the currency in the last decade. The Pound has only depreciated by 1.64% compared to 7 08% in 2020. The cedi as at end December 2021 had appreciated against the Euro by 4.48%.”
“Certainly, it is out of place to speculate about a currency with this sterling performance. Government is confident that the cedi will hold against the major trading currencies in 2022 given all the innovative currency management policies introduced, including the forward auction,” the deputy minister added.
Find below John Kumah’s response to Ato Forson
Often, you expect those who are well-informed about development in this economy to speak the truth backed by facts. It is unfathomable to think that a former Deputy Minister of Finance could be this pessimistic, speculative, and propagandist on important issues concerning the economy of Ghana. It is therefore important, I state categorically, that all the speculations by Hon. Ato Forson is his own creation and is not supported by data.
Indeed, the economy is expected to grow at 4.9% even with ravaging COVID-19. The government is turning around the economy back to the era of high growth before COVID-19 pandemic came to our shores.
1. It is not true that prices of goods are to increase by circa 30% as Hon. Ato is speculating. There is no evidence to back this speculation.
2. On the cedi’s performance, I’m surprised at Ato’s submission. As of the end of December 2021, the cedis had depreciated by 3.63% compared to 3.93% same time 2020. This represents one of the lowest depreciation seen in the currency in the last decade. The Pound has only depreciated by 1.64% compared to 7 08% in 2020. The cedi as of the end of December 2021 had APPRECIATED against the Euro by 4.48%. Certainly, it is out of place to speculate about a currency with this sterling performance. Government is confident that the cedi will hold against the major trading currencies in 2022 given all the innovative currency management policies introduced including the forward auction.
3. On fuel, it is important to state that Hon. Ato’s opinion on the potential increase in fuel is not supported by any data. Indeed, the Office of President on 31st December 2021 directed the Ministry of Finance to extend the withdrawal of Price Stabilisation and Recovery Levies on Petrol, diesel, and LPG for an additional one month. Though fuel prices response to a number of factors, Government is determined to cushion consumers as and when necessary.
4. On taxes, let me intimate that the government is not introducing any new taxes as being speculated. The e-levy as was announced by the Finance Minister is the only levy before Parliament for consideration.
5. On interest rate, Hon. Ato’s expectation of a hike is untenable. Following the banking sector reforms, our banks have been well positioned to lend to credit worthy clients at a cheaper cost. Though NPLs have increased due to COVID-19, Government is very certain that interest rates will not go out of the roof. The Government through programmes such as YouStart and GhanaCARES will support individuals, businesses, and institutions with cheap credit to help them realise their dreams.
6. On domestically focused financing, Hon Ato’s view that such an approach is bad for the economy is laughable. Our domestic market has proven capable of meeting the funding needs of the government. Through the numerous policy interventions in the market, the market has now become solid and ready to provide the funding needed to support the budget.
In doing so, the government in line with the Debt Management Strategy is mindful of the cost-risk trade off and will at all times ensure that fine balance is maintained and to protect the interest of the Republic.
