The depth of the domestic capital market has improved in recent times and is capable of meeting the financing needs of government for 2022 fiscal year, Charles Adu-Boahen, Minister of State at the Finance Ministry, has said.
However, he said Government was mindful of the cost of borrowing from the domestic market in order not to crowd out the private sector.
MrAdu-Boahen disclosed this during a news conference in Accra on Monday to brief the press on government engagement with both offshore and onshore investors to update them on Ghana’s economic performance and outlook.
The Ministry of Finance and Bank of Ghana from January 20-24 embarked on Non-Deal Investor Roadshow to engage with investors and also brief them on developments in the Ghanaian economy.
He said the government this year would focus on the domestic market to raise resources instead of the international market.
Mr Adu-Boahen said government already had $750 million Special Drawing Right out of the budgeted financing of $1.5 billion for 2022 to meet its financial obligations and the country’s financial commitments would be financed from multilateral and bilateral sources and other instruments.
On the engagement with the investors both domestic and foreign, the Minister of State at the Finance Ministry said the engagement of the government with both domestic and foreign investors has been successful and the feedback very encouraging.
He said the engagement provided opportunity for the government to respond to the questions and concerns of the investors who had assets under management in excess of $4 trillion and also actively participated in Ghana’s Eurobond issuance programme and had been following the country’s development story.
The Minister of State at the Finance Ministry said the government explained and addressed the concerns of the investors which bordered on the policy to cut 2022 expenditure by 20 per cent across board, 2021 economic performance and outlook, the status of the E-Levy, 2022 revenue target and government’s ability to meet the target.
“As a government, we felt it necessary to speak directly with our investor base and assure them of the steady progress being made towards economic rebound anchored on fiscal consolidation and debt sustainability,” MrAdu-Boahen said.
“We have observed that Ghana’s Eurobonds spreads have started to tightened across the curve, meaning that the engagement was successful and had an impact. It is important, I reiterate that these engagements over the past three days have impacted the market positively and concerns of investors over the economy in particular, on the budget have been addressed,” he said.
Responding to a question whether the delay in the passage of the E-Levy would not affect government revenue, MrBoahen responded in the negative.
He said the government provided some space for the approval and collection of the levy and that would not affect government revenue.
The First Deputy Governor of the Bank of Ghana, Dr Maxwell Opoku-Afari, answering a question on the impact of the cut of expenditure on growth, said the cut in expenditure would not necessarily dampen growth.
He said the government provided a lot of stimulus package for businesses last year and that would help boost growth.
Dr Opoku-Afari said the cut in expenditure was one of the fiscal tools to correct the imbalances in the economy such as the budget deficit.