Mid-year Budget Review: The economy is beginning to rebound – Minister of Finance

According to Ken Ofori Atta, Minister of Finance, continuous investments and the implementation of budgetary changes have helped to stabilize the economy.

He said that since the 2023 Budget was submitted to Parliament in November of last year, plans for private investments have been announced as a result of heightened investor confidence in the economy, and the exchange rate has stabilized, inflation has abated, and interest rates have dropped.

In accordance with section 28 of the Public Financial Management Act (PFMA), 2016 (Act 921), the minister yesterday provided a mid-year review of the 2023 budget to Parliament. He promised that the government would continue to pursue adjustment and make significant efforts to create and maintain a favorable macroeconomic environment.

In accordance with section 28 of the Public Financial Management Act (PFMA), Parliament granted the minister the chance to address the House after a long wait for the Mid-year Budget Review, which was twice postponed.

Mr. Ofori-Atta gave a 36-page speech on a motion intended to inspire optimism and motivate Ghanaians to support the administration while making an appearance in the parliament yesterday in his trademark all-white “kaftan” attire.

The typical booing and applause from the Minority and Majority sides of the house, which had come to be synonymous with the budget presentations in Parliament, characterized the presentation.

Financial efficiency

After the 2023 budget was read, the minister commented on the nation’s fiscal performance during the previous six months and said that the economy was back on track to a positive primary balance.
Notably, he noted, there had been a slower rate of expenditure execution in comparison to the income shortfall, resulting in an overall budget deficit on a commitment basis of GH6.3 billion (0.8% of GDP), as opposed to the 2023 first-half budget deficit objective of GH28.3 billion (3.5% of GDP).

In addition, the primary balance had been in line with commitments, showing a surplus of GH8.8 billion (1.1 percent of GDP), as opposed to the desired surplus of GH310 million.

Additionally, the nation had a primary balance (on a cash basis) surplus of GH4.8 billion (0.6 percent of GDP), compared to the 2023 half-year deficit target of GH6.91 billion (0.9 percent of GDP), and an overall cash deficit of GH10.3 billion (1.3 percent of GDP), versus the first half budget target of GH35.49 billion (4.4 percent of GDP).

Optimism

In order to lessen the burden on people and businesses, Mr. Ofori-Atta stated his optimism that prices for products and services will reflect the direction of the economic recovery.
He remarked, “Mr. Speaker, these encouraging trends ought to lighten the load on our wallets.

The assessment described the approach for the re-alignment of the government’s program to sustain the path to stability, even if the government did not seek a supplementary budget or propose additional tax measures.

“We have not requested further funding. New tax laws have not been requested by us. We have promised to stay within budget and increase our effectiveness in allocating resources and controlling spending, according to Mr. Ofori-Atta.

Structural reforms 

He declared that the government would concentrate on structural reforms to strengthen resilience and address systemic weaknesses in key areas, such as revenue mobilization, expenditure management, commitment control and arrears clearance, debt management, financial stability, and SOE reformation in the energy and cocoa sectors.

The minister added that there would also be an emphasis on reviving the growth agenda with a growth plan that prioritized investments led by the private sector in industries including agriculture, local manufacturing, tourism, and digital transformation.

According to the minister, this growth strategy would be based on the second phase of Planting for Food and Jobs (PFJ), aquaculture, YouStart, the economic enclave project, one district, one factory (1D1F), and tech centers.

Mr. Ofori-Atta stated that the government would strengthen the ecosystem of financial services to improve the catalytic role of the Ghana Infrastructure Investment Fund, the Ghana Venture Capital Trust Fund, the Ghana Commodity Exchange, the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending Project, the Development Bank Ghana, and Consolidated Bank Ghana.

The government will launch the Mutual Prosperity Dialogue framework, initially from current businesses and also a global hunt for new participants, to improve the ease of doing business and crowd in considerable private sector investment.

Protecting social security for the weak by increasing funds for the Ghana School Feeding Programme, the Capitation Grant, and other programs is one of the major measures the government plans to prioritize.

The minister emphasized the importance of addressing the energy sector’s problems, particularly those relating to payments made to independent power producers for the production of electricity.

Mr. Ofori-Atta urged support for the Electricity Company of Ghana to boost collection significantly in order to lessen the strain the industry placed on the public purse.

We now have an updated Energy Sector Recovery Plan, and we must all support its implementation in order to move the industry in the direction of sustainability, the speaker stated.

The minister claimed that in order to ensure that revenue shocks were effectively managed, expenditure control had become more crucial.

Enhancing domestic revenue collection from sources other than oil and completing the domestic debt exchange program was also crucial.

In keeping with this, the minister said it was crucial to help the Ghana Tax Authority in its efforts to improve collection and operationalize steps to reinforce the effort put forward by the tax administration system.

According to Mr. Ofori-Atta, the mid-year review provided an even better chance for collaboration in enshrining economic stability.

We have to grab it. We must now assert that our initial examination with the fund in September was successful. To complete the turnaround, regulators, market federations, unions, and ordinary citizens must collaborate in order for each of us to do our part in ensuring that consumers are treated fairly.

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