Chief Executive Officer (CEO) of Dalex Finance, Ken Thompson, has given his plain diagnosis of the state of Ghana's macroeconomy, describing it as frail.
Speaking at the CIMG-hosted event, Ken Thompson engaged in a hypothetical conversation with the Finance Minister, Ken Ofori-Atta where he sought to show that the cedi was overvalued using the Big Mac Index -- published by The Economist to measure purchasing power parity (PPP) between two currencies.
According to the Dalex Finance CEO, the overvalued cedi made Ghanaian exports expensive and non-competitive, while imports were relatively cheap.
He notes that this development results in stunted economic development and unemployment.
Ken Thompson makes the case that the trickle-down effect of the overvalued cedi will jeopardize most, if not all government policies including the“Planting for Food and Jobs” programme.
He said the polices are likely to be non-competitive because of the overvalued cedi.
Ken Thompson argues that the state of Ghana’s economy started experiencing challenges since 2017.
“We spent almost 100% of all our revenue including grants on three line items as follows: compensation to employees, interest payments, and, statutory payments, example GETFund, District Assemblies Common Fund, and NHIS."
Mr Thompson also raised concerns over the rise in government expenditure which he described as worrying.
“Since we spend over 100% of our revenue on these 3 items, all our other expenditure is done from monies borrowed. We are borrowing to fund consumption and not to fund investment.
"Our debt is piling up (70% of GDP), and, we may not be in a position to repay in future. Even before then, any natural or man-made disaster could send us into a default tailspin of government obligations causing intolerable hardship, widespread business failures, and mass unemployment,” he stated.
Solutions
Touching on the solutions that the Finance Minister, Ken Ofori Attah, should take to rescue the “sinking ship”, Ken Thompson stated that increasing taxes and reintroducing property rates could deal with the issues of revenue generation once and for all.
“We are not likely to reduce our expenditure on salaries in the short term, and even though there has been some capping of statutory obligations the net effect is negligible. Our only hope is to increase revenue in the short to medium term in order to fund consumption expenditure,“ he stated.
He is, therefore, expecting the government to get the informal sector to start paying individual taxes, enforce evidence of tax payment on property registration, for example, vehicle registration, company registration, land title registration and increase taxes across board especially property taxes.
"That is our hope in the short term, and reduction in profligate spending, example stopping the purchase of numerous Toyota Land Cruisers that cost over GHC 600,000 each,” he admonished.
Source: JFM/Ghana
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@Eric if your mother is dead and you are saying she is asleep that is up to you. We are all witnessing what is going in the country so don't give us any false hope
Massa; whether you like it or not what the man is saying is CORRECT ; Ghana is technically BROKE !!!!!and don't kid your self this is no NPP or NDC matter ; this is a Ghana's headache because our debt is now over 140 billion GHC besides the trend is that each government that takes power stills and accumulates debt for the next government to come and pay ; Nana Addos nephew Ofori=Atta's strategy of using taxation to close the deficit gap is failing BIG TIME ; the figures at the port will show that the government is not raising as much tax as they thought they could because the virus of corruption in the system is huge ; every GHANAIAN IS A THIFF OR A CROOK ; Tema harbour is still massively riddled with corruption -BIG TIME ; importers cannot clear their goods at the port and therefore the government is losing revenue;impoters who cannot clear their goods find that their goos are sold for less that a third of the goods at the port because they cannot clear them ; the government loses revenue ; collection of taxes from the business sector is a mirage because it has failed !!!; the government charges huge import duties at the port which been reflected in the high prices because the cedi is losing value; the government is faced with huge debt repayment obligations ; the government cannot borrow on the local market again because they have already borrowed 2.5 billion GHC on the local band market ; their next is perhaps borrow again on the international market - MR THOMPSON IS RIGHT GHANA IS IS DIRE FINANCIAL TROUBLE !!!!!;BESIDES THIS A FRINEDS :GIRLFRINEDS AND FAMILY GOVERNMENT SO WHO CAN TELL NANA ADDOP HE IS GOING WRONG !!!!!!
How many countries are healthy are sound f Ghana is broke. Even USA, Britain have massive debts but the difference is the money is used in worthwhile projects for the country, In Africa and most third world we mismanage our funds.
Ken's analysis is incorrect,misleading and deceiving.Ghana's economy is currently prudently managed than ever,and all indicators point to vigorous positive growth.In fact Ghana's economy is one of the fasters if not the fasters growing economy in the world,that's why foreign investors are trooping in.He Ken is struggling with his business,due to gov't's smart financial and economic policies unfavorable to him.Shame on him,he's a liar!
Go to hellwith your analysis. Your NDC source of funding your biz is drying up so you are shouting at the rooftop. No more cheap treasury bill slush funds. It is your biz that is broke. Give us a break. Nation wreckers
How many people in Ghana have properties that are eligible for tax. How many people earn enough income to pay tax when they are already burdened by high cost of living. Where is the $million promised to each constituency. Nana and Bawumia told Ghanaians that Ghana is not poor.
WE CAN'T CONTINUE TO LIVE IN THE ***barred word***'S PARADISE.... THE COUNTRY BELONGS TO US THE YOUTH AND WE WILL FORCEFULLY CLAIM WHAT BELONGS TO US RIGHTFULLY... GHANA FIRST, WE CAN'T BE SOLD FOR THE QUEER MONEY.... VERY DISGRACING, BAD BUSINESS COMING FROM A VERY RHETORIC AND NO ACTION GOVERNMENT. TIME IS UP
Occult man like u will never see any thing good.If u think ghana is broke, close down ur company Dalex Finance and relocate to Afganistan.
How many presidents were at the wedding ceremony of Dabgote's Daughter? I was shocked to see Nana there, whiles even the President of the Host nation Nigeria only sent the vice there. The other day too he was at a funeral in South Africa. What has the Presidency turn into? Then we turn to complain we don't have the funds to pay University lecturers? I just hope no minister will come out and tell us this due to the bad administration of the previous government, cos we were made to understand that there is money in Ghana to do virtually everything. More so, most of the debt left by the previous government are not being pain e.g NHIA 2016 arrears not not being paid, while they have accumulated bills for 2017. Now Bawumia and the Wife should come again, Dr are suffering, Nurses are suffering, Farmers are suffering, students are suffering and..............the list goes on. Am waiting for his next economic lecture series! Even the Central university where he does give these lectures is broke and is sacking some of their staff. Time will tell we're all waiting.........
I am not surprised cos the governance in the country is not about developing the nation but rather about for filling campaign promises. It will not take us any where. Ghana is far better in every thing than Austria but go there and you will see that Ghana is really in crises. Look only God can change the direction of this country Ghana. ***barred word*** hole indeed.