President Nana Addo Dankwa Akufo-Addo has said Government is mindful of the potential impact of the Domestic Debt Exchange Program (DDEP) on pension funds and would not act in any way to short-change workers in protecting their pensions.
That, he emphasised is the reason why the Government, through an MOU signed with Organised Labour on 22nd December 2022, “decided to grant exemption to all pension funds in the Domestic Debt Exchange Programme.”
At the same time, in the MOU, President Akufo-Addo said both Government and Organised Labour agreed “to explore mutually beneficial options within debt sustainability limits, and also promote macroeconomic stability and economic recovery in the spirit of social partnership”.
And in the regard the President proposed that within global risk management practice, the options should include to diversify the portfolio of pension funds from the current 70% in government paper to real sector investments including rail, housing, urban transportation, motorways and airport as is done by other pension funds.
Addressing workers on the May Day celebrations at Bolgatanga in the Upper East Region, President Akufo-Addo said Government acknowledges the impact of the DDEP on the domestic financial sector, and had also taken steps to mitigate the impact on that sector.
Government through the Finance Minister announced that “we are establishing the Ghana Financial Stability Fund (GFSF) to provide, amongst others, solvency and liquidity support to eligible financial sector institutions, which may be affected by the DDEP.”
The President emphasised that protecting incomes and pensions, in this economic crisis, is tied to increased productivity, enhanced revenue mobilisation, effective expenditure management, and the effectiveness and sustainable management of the public sector wage bill.
He said the country’s expenditure on compensation of employees, which comprises wages and salaries, allowances, pensions, gratuities and social security contributions, represents 56.01% of tax revenue, higher than the ECOWAS threshold of 35%.
That, the President noted calls for immediate steps to increase productivity in the public service, as well as aggressively increase revenue collection by the Ghana Revenue Authority.
President Akufo-Addo said the current crisis provides an impetus for diversifying trade and production, and exploring alternative income earning opportunities.
It is in the country’s interest, he stated that Ghanaians patronise domestic goods and services to hasten economic recovery, create jobs, and boost worker’s incomes.
“Many a time, we overlook the national penchant for foreign goods and services, but are quick to blame Government when it begins to have a toll on our foreign reserves.”
The President assured that Government would continue to do what is within its control. “However, consumer preference for goods and services must be deliberately championed by us all.”
On the status of the Ghana/IMF programme negotiations, President Akufo-Addo said after achieving a Staff Level Agreement in December, 2022, government had continued to work tirelessly to complete all prior actions required to present Ghana’s Programme to the IMF Executive Board for approval.
“We have also made substantial progress on the debt exchange programme, as well as on our engagements with bilateral creditors to secure financing assurances required for the IMF Programme.”
“We are assured that the next round of meetings of the Paris Club will result in the formation of Official Creditor Committee, inclusive of China, and the provision of financing assurances,” he added.
The IMF and the World Bank, according to the President had been supportive in this journey and with the progress made so far, “we expect the IMF Board to consider Ghana’s programme for imminent approval, after the financing assurances are provided.
President Akufo-Addo thanked Organised Labour for the role they have played in this journey, especially their inputs into the preparation of the government’s Post COVID-19 Programme for Economic Growth, which underpins the IMF-supported Programme.
“We are very confident that the approval of the IMF Programme will contribute significantly to revival of confidence required to drive the successful implementation of the Post COVID-19 Programme for Economic Growth and the key structural reforms for economic recovery and sustained inclusive growth,” he added.
Already, he said the progress government have made in securing the IMF Staff Level Agreement, in the debt exchange programme, and the implementation of key structural reforms, are yielding benefits.
“Inflation is decelerating, interest rates on government treasury notes are declining, the depreciation of the cedi is slowing down, and GDP growth for 2022 has performed beyond expectations,” he said.
The theme for the May Day Celebrations was: “Protecting Incomes and Pensions in an Era of Economic Crisis is Our Responsibility”,
Rex Mainoo Yeboah, ISD