Tema-Ghana, Nov. 12, MNN – “Ghana was at the edge of the cliff, COVID-19, and the Russia-Ukraine war just gave us a tap and we straight away tumble into the bottomless economic pit,” Mr. Kenneth Thompson, Chief Executive Officer of Dalex Finance has stated.
He explained that all the factors put together led to the downgrading of the country’s debt rating which subsequently pushed investors to take their monies out of the country to other places as they lost confidence in the economy.
Speaking on the topic: “Navigating through the current economic crisis with or without International Monetary Fund,” at the 17th edition of the Monthly Stakeholders Engagement and Workers’ appreciation day seminar organized by the Ghana News Agency’s Tema Regional Office, Mr. Thompson called for pragmatic efforts to deal with the nation’s economic challenges.
He also charged the government to restore investor confidence in the Ghanaian economy, explaining that investors are confident when the news about the future is good and stock prices are rising.
Mr. Thompson emphasized that it was a simple matter of demand and supply, explaining that if people lose confidence in the economy, coupled with the increase in the price of fuel, the dollars would fly out, and not having enough supply of it, would lead to the crash of the currency.
The Dalex Chief Executive Officer noted that due to the economic difficulty Ghana was in, the COVID-19 pandemic, as well as the Russia-Ukraine war, compounded the issue.
Touching on other contributing factors pushing Ghana to seek a bailout from the IMF, during the event, Mr Thompson said Foreign Direct Investment (FDI) through buying of the country’s bonds noting that 52 percent of the country’s debt was in the hands of foreigners.
Another factor he said was excessive public debt revealing that over 40 percent of Ghana’s income was used to service loan interest, adding that unwanted public expenditure also put pressure on Ghana’s revenue.
He further said it also created FDI flight which facilitated the crash of the cedi saying, “Once your debt is downgraded, and the majority of your debt is being held by foreigners, once it gets to a certain level, they will take their money out.”
The Dalex Finance Chief Executive also advocated for Ghana to improve its tax collection mechanism as one of the measures to improve investor confidence in the country’s economy.
He said the inability of the country to collect more revenue to fund its budget was a contributing factor to the many reasons why Ghana was having a vicious cycle of going to the International Monetary Fund (IMF) severally without any permanent solution.
The Dalex Finance Chief Executive indicated that it was not enough to introduce new taxes such as the E-levy while implementation and collection of existing ones were not being effectively done.
He also questioned the rationale behind giving foreign entities huge tax exemptions revealing that the country loses an estimated GHC5 to GHC10 billion in terms of tax exemptions annually.
Mr. Francis Ameyibor, Ghana News Agency Tema Regional Manager explained that the event aimed at providing a platform for both state and non-state organizations to address national issues to enhance development.
He said it also serves as a motivational mechanism to recognize the editorial contribution of GNA reporters toward national development in general, growth, and the promotion of the Tema GNA as the industrial news hub.
