Ghana’s main opposition party has filed a motion in Parliament to censure Finance Minister Ken Ofori-Atta, citing mismanagement of the economy and the worsening cost-of-living crisis.

The motion, submitted by Minority Leader Haruna Iddrisu, is scheduled for a vote on November 10 and will require a two-thirds majority to pass.

In an interview in Accra, Iddrisu called on members of the ruling New Patriotic Party (NPP) to back the motion, arguing that the Finance Minister’s leadership has contributed to economic hardship across the country. “The cost of living is skyrocketing, and the costs of doing business are also skyrocketing,” Iddrisu said. “Businesses are failing and collapsing, people are losing their investments and savings, and we need to save the Ghanaian economy and preserve it for the future. That is the motivation behind our motion.”

Ofori-Atta, who has served as Finance Minister since 2017, has come under intense pressure in recent months amid a collapsing currency, soaring inflation, and widespread public frustration. Ghana’s cedi has lost 57% of its value against the dollar so far this year, while annual inflation hit 37.2% in September, sparking protests from traders and consumers.

Yields on Ghana’s eurobonds have spiked, with the country’s 2032 dollar bond climbing 16 basis points to 28.5% by close of trading in Accra on Tuesday. Investor concerns over the sustainability of Ghana’s debt continue to mount. Public debt now stands at GHS 402.4 billion ($28 billion), nearly triple what it was five years ago, amounting to about 68% of GDP. Interest payments on debt now consume nearly 68% of tax revenue.

The Finance Minister is currently leading negotiations with the International Monetary Fund (IMF) to secure a bailout package of up to $3 billion. The government has also begun discussions with domestic bondholders over a potential debt restructuring, a move seen as necessary for IMF approval.

“This is an additional negative risk factor for the bonds in our view given that some lawmakers might not attend budget discussions, which will be crucial for an IMF agreement, without the minister’s resignation,” said Kaan Nazli, a money manager at Neuberger Berman Asset Management. “Political ramifications aside, we would not think a change of guard is necessarily bad if the senior team at the ministry stays intact. The team has experience, having worked with the IMF and various important themes.”

About 80 of the 137 NPP lawmakers last month publicly called on President Nana Akufo-Addo to remove Ofori-Atta from office, declaring they would not take part in any government business in Parliament—including the 2023 budget—until he is dismissed.

President Akufo-Addo, however, has urged patience. He has asked MPs to allow Ofori-Atta to remain in place through the conclusion of the IMF deal and the presentation of the 2023 budget before reconsidering his future. Ofori-Atta’s long-standing relationship with investors and his banking background have been credited with helping Ghana secure eurobond issuances even in difficult conditions.

“Ofori-Atta’s background as a banker and good relations with investors and other market participants have been a significant factor for Ghana being able to regularly borrow multi-billion amounts in the eurobond market, despite its challenging public finances,” said Mark Bohlund, senior credit research analyst at REDD Intelligence.

However, Fitch Ratings has warned that Ghana’s external debt may also require restructuring. In a statement last September, the IMF emphasized that it cannot disburse funds to a country with unsustainable debt levels unless steps are taken to resolve the issue, including seeking relief from creditors.

Ofori-Atta initially resisted going to the IMF, pursuing a domestic strategy that included cutting discretionary spending for 2022 by up to 30%. But that approach failed to reassure markets or halt capital flight. He eventually reversed course and formally requested assistance from the Fund.

“You can criticize them for not going soon enough to the IMF, but now at least it appears that they’re addressing the issue,” said Kevin Daly, investment director at Aberdeen Standard Investments. “From a continuity standpoint it probably makes sense for Ofori-Atta to stay until the IMF is on board.”

According to Ghana’s constitution, a successful vote of censure does not automatically remove a minister from office, but it allows the president to revoke the appointment if the official does not resign.

With the economy under severe pressure and political tensions rising, the outcome of the November 10 vote could shape Ghana’s fiscal direction for years to come.

Source: Bloomberg