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World Bank affirms 5.5% expansion of Ghana’s economy in 2022; raises concern again about rising debt

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The World Bank has affirmed its forecast of 5.5% expansion of the Ghanaian economy in 2022, higher than Sub Saharan Africa average of 3.6%.

According to its latest Africa Pulse Report, ahead of the International Monetary Fund/World Bank Spring Meetings, the Bretton Wood institution however expressed worry about the country’s debt sustainability problems, which it described could erode gains going forward.

The World Bank said higher commodity prices are projected to support both recovery in the extractive sectors and boost exports and fiscal revenues. This will help ease some pandemic induced fiscal pressures and external financing needs.

However, it added that the moderate performance of economic growth reflects debt management problems that are still looming on the economy, with few prospects for improvement.

“In Ghana, the economy is projected to pick up pace in 2022, growing by 5.5%, then slowing gradually to 5% in 2024, lower than the pre-pandemic average growth, which was around 7%. This moderate performance reflects debt management problems that are still looming on the economy, with few prospects for improvement.”

“Additionally, Ghana, Ethiopia, Malawi, and Mozambique fell short of replicating the success of most non-resource-rich countries in part because of elevated debt levels, and in some cases insecurity. In Ghana and Malawi, the disappointing performance underscores the poor management of public finances and, the need for significant growth enhancing reforms”, it said.

The Bretton Wood institution also commented on the Electronic Transaction Levy (E-levy) whose implementation will take off from May 1st, 2022. It said though the tax is expected to increase the tax base by generating about $1.1 billion in revenue, these efforts are not enough to address the country’s debt sustainability problems.

“To return to its pre-pandemic consolidation trajectory, the Government of Ghana proposed reforms that promote fiscal and debt sustainability. After resistance from the opposition, the Parliament approved the E-levy tax of 1.5% on digital transactions. The proposed tax is expected to increase the tax base by generating US$1.1 billion in revenue in 2022. Nevertheless, these efforts are not enough to address the country’s debt sustainability problems”.

Again, it said revenue from the mining sector remains weak, while pressing needs for government support continue to weigh on public finance.

Growth in Sub-Saharan Africa to decline to 3.6%

Growth in Sub-Saharan Africa is projected to decelerate from 4% in 2021 to 3.6% in 2022.

It is also estimated at 3.9% and 4.2% in 2023 and 2024, respectively.

The growth deceleration in 2022, the World Bank, said reflects several short-term headwinds, including the slowdown in the global economy particularly in the United States and China, lingering effects of the coronavirus pandemic, elevated inflation, rising financial risks owing to high public debts reaching unsustainable levels, continued supply disruptions, and the war in Ukraine.

“Given limited trade exposure, the impacts of the Russia-Ukraine conflict are expected to be negligible”, it added.

Of the region’s three largest economies, South Africa’s growth is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints, while Angola and Nigeria are projected to continue with the momentum of 2021, up by 2.7 and 0.2 percentage points, respectively, thanks partly to elevated oil prices and good performance of the non-oil sector.



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Most Ghanaians unaware of oil funded projects – PIAC  

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Most Ghanaians are unaware of projects funded with oil funds, a public fora held by the Public Interest and Accountability Committee (PIAC) in the Western North and North East regions have revealed.

In both regions, the Committee held regional public fora on the 2021 PIAC Annual Report, which brought together stakeholders from the traditional council, religious groups, security agencies, traders, educational institutions, among others to deliberate on the management and use of petroleum revenues.

The participants also called for more projects to be executed with petroleum revenues.

PIAC therefore recommended the labelling of Annual Budget Funding Amount (ABFA)-funded projects for identification.

Most Ghanaians unaware of oil funded projects – PIAC  

It again reiterated its commitment to carrying out its mandate to ensure the prudent management and use of petroleum revenues in Ghana.

PIAC commends some oil funded projects but unhappy about some

In terms of the projects funded with petroleum funds, the Committee expressed satisfaction about some, whilst critiquing others, calling for urgent steps to complete them.

The inspection of the projects took place from Sunday, 24th to Friday, 29thApril, 2022.

Most Ghanaians unaware of oil funded projects – PIAC  

In the Western North Region, the Committee inspected the construction of a 3-storey Regional Coordinating Council (RCC) Administration Block in Sefwi Wiawso, construction of three Senior Staff Bungalows at Sefwi Wiawso and a rural market in Amoaya in the Bodi Constituency. The construction of the RCC building received ₵10.5 million from the Annual Budget Funding Amount (ABFA) in 2020 and 2021.

Members of the Committee expressed satisfaction of the project which had been completed, commissioned, and was in use.

The Committee also expressed satisfaction with the senior staff bungalows which received a total of GH₵1,779,660 from the ABFA in 2020.

The project was reported to be 90% complete with bungalows erected and roofed, internal finishing virtually completed, and external works ongoing.

Most Ghanaians unaware of oil funded projects – PIAC  

Again, the Committee welcomed the upgrading of the Nalerigu – Gbintri road, in the North East region which was allocated ₵20 million from the ABFA in 2020. It was also inspected by the PIAC team and officials of the Ghana Highway Authority.

In terms of project that the Committee called for urgent action to be completed, they included the rural market, situated in Amoaya, in the Western North region which received ₵107,327 from the ABFA in 2020, but work had stalled and the construction of a 3-Storey Administration Block for the Council, located in Nalerigu in the North East region.

Construction commenced in 2019, and the project was expected to have been completed in 2021. Outstanding works include painting, tiling, electricals, and furnishing.

PIAC was established under Section 51 of the Petroleum Revenue Management Act (PRMA), to among others, monitor and evaluate compliance with the Act. The Committee was inaugurated and commenced work on 15th September, 2011.



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Manufacturing, Petroleum sub-sectors push Producer Price Inflation to 31.2%

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Government Statistician, Prof. Samuel Kobina Annim

The manufacturing and petroleum sub sectors pushed the Producer Price Inflation (PPI) high to 31.2%, signaling increasing price of goods and services.

According to the Ghana Statistical Services, the month-on-month change in the producer price index between March 2022 and April 2022 was 1.1%.

Indeed, the producer inflation for the Manufacturing sub-sector, which constitutes more than two-thirds of the total industry, increased by 2.6 percentage points to 38.6%.

That of the Petroleum Price Index also went up to 76.1% in April 2022, signaling the rising fuel prices at the pumps.

The PPI in the Mining and Quarrying sub-sector increased by 1.6 percentage points over the March 2022 rate of 33.6% to 35.2% in April 2022.

The utility sub-sector however recorded a 1.1% inflation rate for April 2022.

In April 2022, two out of the 16 major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 38.6%.

Manufacture of coke, refined petroleum products and nuclear fuel recorded the highest inflation rate of 76.1%, while the publishing, printing and reproduction of recorded media recorded the least inflation rate of 2.6%.

For month-on-month, the manufacturing sub-sector recorded the highest monthly inflation rate of 1.6%, followed by the mining and quarrying sub-sector which recorded a rate of 0.4%. The utility sub-sector recorded no inflation in the month of April 2022.

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Increase in policy rate to stifle economic growth – Databank Research

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A further tightening of the Monetary Policy Rate (MPR) of the Bank of Ghana could stifle economic growth, Databank Research has projected.

This is because liquidity levels are already tight on the interbank market

According to its Weekly Fixed Income Update, while it maintains an additional 200 basis hike in the policy rate in 2022, it expect the Monetary Policy Committee (MPC) to exercise restraint in May 2022, deferring a potential 100 basis points hike in MPR to July 2022.

Real returns on fixed-income securities are also depressed with the high inflation profile, continually undermining the Treasury’s financing operations.

“We note that short-term interest rates are misaligned, resulting in negative real yields, which could prompt the MPC to act in the week ahead”, it however pointed out.

Ghana’s inflation continued the relentless run in April 2022, rising to 23.60% year-on-year as against 19.40% in March 2022.

Therefore, inflation has increased by 11% over 4 months in 2022, continuing the upward run since second half of 2021.

The first and second-round effects of petroleum and transport price hikes, elevated food prices and the lagged impact of exchange rate pass through are the main drivers of the April 2022 inflation rate. “We believe these cost-push pressures will persist until the third quarter”, the report stressed. Additionally, it noted that the implementation of the Electronic Transaction Levy from May 1st, 2022, and the impending hike in utility tariffs are further upside risks to inflation



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