Mr Speaker, I want to personally thank you for your noble and wise leadership over this unique composition of this Eighth Parliament and to assure you that Government will continue to work with you and this House to deliver on the priority needs of the people.
Again, permit me to express my heartfelt gratitude to this august House for your patience and forbearance in postponing my vetting and subsequent approval, giving me time to recuperate. I recognised the historic nature of this second term, and as indicated at my vetting, I commit to ensuring the protection of the public purse and the transformation of the economy.
Mr Speaker, it is my hope that the spirit of partnership that guided our work with the previous Parliament will continue to define our collaboration over this second term for the collective good of the nation.
Mr Speaker, it is difficult to attempt to normalise the catastrophe that has befallen the world. The devastating impact of the COVID-19 pandemic on lives and the global economy is widely acknowledged. The grim statistics are that over 196 million people have been infected by the virus, 4.19 million dead, and over US$15 trillion spent. In Ghana, we join in mourning with the 823 families who have lost loved ones and pray for the recovery of those afflicted.
The COVID-19 induced global recession has been the deepest since the end of World War II, 76 years ago. The global economy contracted by 3.3 per cent in 2020, a 6.7 per cent decline relative to the 3.4 per cent growth forecast by the IMF back in October, 2019. Growth in Sub- Saharan Africa was -1.9 per cent. Ghana achieved a 0.4 per cent growth.
From the very first day that the novel Coronavirus arrived here in Ghana in March 2020, the Government of President Nana Addo Dankwa Akufo-Addo recognised the dire consequences that it would have on our economy, particularly on jobs, and on our ability to raise revenues to meet both the cost of managing the pandemic and Government's regular spending obligations. If I may quote
from the President's address on 27th March, 2020, where he underlined the challenge and the approach:
“Should the virus continue to linger for the rest of the year, the effects on our economy would be dire. However, as we have demonstrated over the course of the last three years, where we inherited an economy that was growing at 3.4 per cent and transformed it into one which has grown by an average of 7 per cent over the last three (3) years, I assure you that we know what to do to bring back our economy back to life. What we do not know how to do is to bring people back to life. We will therefore protect people's lives, then their livelihoods.”
Mr Speaker, therefore, the hardships that COVID-19 pandemic visited on people's lives, the stress on parents, the frustrations of young people, the negative impact on businesses, for both employers and employees, the worsening of the unemployment situation, the effect on the public debt and the stress on revenue mobilisation, was unprecedented but expected. Indeed, no country in the world had prepared for the crisis that unfolded.
That is why leadership was therefore, assessed by the measures that individual countries and their respective leaders took to deal with the crisis. Here in Ghana, we took responsible, innovative, decisive and bold actions to tackle the crisis.
That is why, a year ago, on Thursday, 23rd July, 2020, I came before this House to present what I called “an extraordinary Mid-Year Fiscal Policy Review of the 2020 Budget Statement and Economic Policy”, and secured more funds to provide an immediate and appropriate response to the severe economic impact of the pandemic.
In addition, the 2021 Expenditure- in-Advance-of-Appropriation presented to this House on 28th October, 2020, saw to the uninterrupted delivery of Government business in the first quarter of this year; and, the on-going implementation of the 2021 Budget and Economic Policy of Friday, 12th March, is driving the revitalising economy in line with our theme of Completion, Consolidation and Continuity.
With these approvals, we intervened with timely measures to help, particularly, households, schools, hospitals and businesses to withstand the impact of the pandemic. Government provided direct transfers to households through food
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distribution and absorption of water and electricity bills. Tax waivers to frontline health workers and stimulus packages to small and medium-scale enterprises were also provided.
Mr Speaker, these interventions stabilised the situation, protected lives, supported businesses and preserved jobs which would otherwise have been lost. In fact, although the workload from the public sector had to be reduced in many cases, all through this COVID-19 crisis, Government has never for once embarked on any programme of laying off workers. Rather, we have continued to pay all workers and even proceeded to employ more in some critical areas such as Security and Health services.
Mr Speaker, let me use this opportunity to thank Organised Labour and Employers for their role in concluding wage negotiation with Government in May. The negotiations were marked by a shared understanding of the state of the economy, that we as a nation cannot share what we do not have; a collective will to improve productivity, raise more revenue and ensure decent wages in the years to come.
Mr Speaker, as a result of our competent management of the crisis
situation, Ghana's economy has outperformed its peers, recovering faster. After recording negative growth in the second and third quarters of 2020, the economy rebounded strongly in the last quarter of the year, continuing well into the first quarter of 2021.
The Ghana Statistical Service reports that overall GDP growth for the first quarter of 2021 was 3.1 per cent. The growth was even better excluding oil at 4.6 per cent. The Bank of Ghana Composite Index of Economic Activity (CIEA) attests to the strong growth recovery, with the index growing at 33.1 per cent at the end of May, 2021 as compared to a contraction of 10.23 per cent at the end of May, 2020.
Mr Speaker, on inflation, we are witnessing one of the lowest numbers on record in about two years. Inflation, which, at the height of the pandemic, hovered around 11.8 per cent, dropped to 7.5 per cent in May, 2021 before inching up slightly to 7.8 per cent in June. The Bank of Ghana will continue to implement appropriate monetary policy to maintain inflation rate within the target of 8+-2 per cent.
The cedi has been relatively stable in the past four years, and maintained
its stability even in this pandemic year. For the first time in the Fourth Republic, the exchange rate did not see a spike after an election year. Cumulatively, from the beginning of the year to date, the exchange rate has depreciated by 0.6 per cent against the US dollar thus appreciating by 3.6 per cent against the Euro. This stability is expected to continue as we move towards the close of the year.
The relatively strong performance of the external sector led to an increase in the reserves position to US$11.0 billion which is equivalent to 5.0 months of imports, one of the highest on record. This compares well with a reserved position of US$9.2 billion, equivalent to 4.3 months imports cover, in the corresponding period last year.
Mr Speaker, we are managing the finances of the country with discipline and competence. The fiscal operations for the period of January to June, 2021 indicates that the overall budget deficit was GH¢22.32 billion, which is equivalent to 5.1 per cent of GDP. The corresponding primary balance for the period was a deficit of GH¢7.3 billion, also equivalent to 1.7 per cent of GDP as against a target deficit of GH¢4,797 or 1.1per cent of GDP. 23. We will continue to pursue our fiscal consolidation agenda
to ensure that we remain within the appropriation given by this House.
Mr Speaker, I would like to note that notwithstanding our elevated debt levels as a result of the COVID-19 but our inflation rate is lower than it was in 2016, our interest rates are lower than they were in 2016, our exchange rate is more stable than it was in 2016, our foreign exchange reserves are much higher than they were in 2016, and we did not have to lay off any workers, nor cancel teacher and nursing training allowances. Furthermore, we did not go to the IMF for a bailout programme, neither have we built an interchange for the price of three. This is because we have managed the economy much better than it was managed up to 2016. Let us not forget this.
On the back of these and other deliberate policies, our country has attracted more foreign direct investments in the midst of the pandemic. As at the end of June 2021, the total FDI into the country was valued at US$954.2 million, indicating an increase of 71.2 per cent from US$ 557.2 million recorded over the same period last year.
Mr Speaker, the strong rebound in growth, the low inflation rates, the stable currency, the strong reserve