The Minister for Finance, Ken Ofori-Atta, on Wednesday, 15 November 2017, appeared before parliament to present the Budget Statement and Economic Policy of the Government for the year ending 31st December 2018.
The budget which was themed “Putting Ghana back to work”, stated that the structure of the economy broadly remains unchanged with continued dominance of the Service Sector, adding that the share of Services in overall output is estimated at 55.9 percent, which is a marginal decline from 56.8 percent registered in 2016. The share of Industry is estimated at 25.6 percent, compared with 24.3 percent in 2016, while that of Agriculture is estimated at 18.5 percent.
Touching on the macroeconomic performance for 2017, the minister said provisional data on the performance of the economy from January- September 2017, shows that nearly all the macroeconomic indicators are on target. He explained that overall provisional GDP growth of 7.9 percent is expected for 2017, with Non-oil GDP expected to record 4.8 percent at the end of the year.
On Sector Growth Performance, Mr. Ofori-Atta intimated that Industry is estimated to grow by 17.7 percent at the end of 2017, making it the best performing sector in terms of growth. This, he said, is largely due to an increased production in upstream oil and gas. Agriculture and Services Sectors are projected to grow at 4.3 percent and 4.7 percent respectively.
“Headline consumer price inflation declined steadily from 15.4 percent in December 2016 to 11.6 percent in October 2017. The downward trend in inflation was largely driven by exchange rate stability, tight monetary policy and prudent fiscal consolidation policies. Broad money supply growth slowed down in 2017 with a 20.0 percent year-on-year growth at the end of September 2017, compared with a 22.3 percent growth a year ago. Credit to the private sector and public institutions from January to September 2017 by Deposit Money Banks (DMBs) recorded a 3.2 percent annual growth compared with 17.4 percent in the same period of 2016.” The minister added.
Shedding more light on the external sector, Hon. Ofori-Atta hinted that the trade balance recorded a surplus of US$707.6 million (1.5% of GDP) against a deficit of US$1.8 billion (4.3% of GDP) in the same period of 2016. Total export receipts rose by 25.1 percent year-on-year, while imports declined by 5.3 percent due to lower non-oil imports. Current account deficit was halved to an estimated US$1.1 billion (2.4% of GDP) in the first three quarters of 2017, compared with a deficit of US$2.1 billion (4.9% of GDP) for same period last year. Overall balance of payments surplus of US$379.3 million (0.8% of GDP) is recorded for the first three quarters of 2017, compared to a deficit of US$1.4 billion (2.9% of GDP) for the same period in 2016.
The minister also reported that preliminary fiscal data up to the end of September 2017 indicates that the fiscal outturn was broadly in line with expectations despite shortfalls in revenues. The overall deficit on cash basis was 4.6 percent of GDP against a budgeted target of 4.8 percent while the primary balance moved into surplus, albeit marginally lower than the targeted Both Total Revenue and Grants and Total Expenditure (including arrears clearance).
Total Revenue and Grants for the period amounted to GH¢28,429.2 million, equivalent to 14.1 percent of GDP compared with a target of GH¢31,346.4 million (15.5 percent of GDP). Although the outturn is 9.3 percent below the budgeted target, it represents an annual growth of 16.2 percent compared with 4.1 percent during the same period in 2016. Provisional data through September of 2017 indicates that Total Expenditure, on the other hand, including the clearance of arrears amounted to GH¢37,705.0 million (18.7 percent of GDP) compared to the target of GH¢41,036.2 million, representing a budget shortfall of 8.1 percent below target. Also, Government is broadly on track with the primary balance target, recording a surplus of GH¢434.5 million (0.2 percent of GDP), against a target of GH¢586.7 million (0.3 percent of GDP).
Government, through prudent management of the economy has successfully reduced Ghana’s debt burden. This according to the minister was achieved as a result of a reduction in the fiscal deficit and a policy of debt re-profiling. Consequently, the debt to GDP ratio has declined from 73 percent at the end of December 2016 to 68.6 percent at the end of September 2017. It is important to note that the annual average rate of debt accumulation of 36.0 percent over the last four years, has declined over the last nine months to about 13.58 percent.
The macroeconomic targets for 2018 fiscal year are set as follows: Overall GDP growth rate of 6.8 percent; Non-oil GDP growth rate of 5.4 percent; End period inflation rate of 8.9 percent; Average inflation rate of 9.8 percent; Fiscal deficit of 4.5% percent GDP; Primary balance (surplus) of 1.6 percent of GDP, as well as Gross Foreign Assets to cover at least 3.5 months of imports of goods and services.
As a policy to stimulate investment and to shape economic behaviour, the following policies according to the minister will be introduced in 2018.
Give Tax Breaks to help Position Ghana as a Higher-Education Hub; Grant tax Incentives for Young Entrepreneurs of age 35 years and below who start their own businesses- holidays will be based on the number of persons employed; Review the current income tax thresholds by pegging the tax-free threshold to the current minimum wage in an effort to protect low-income earners and ensure fairness in our income tax administration; Introduce a Voluntary Disclosure Procedures (VDP) in the Revenue Administration Act, 2016 (Act 915) to waive penalty on voluntary disclosures and payment of unreported and understated taxes by taxpayers within a period agreed with the Commissioner- General of GRA; Extend National Fiscal Stabilisation Levy (NFSL) and Special Import Levy (SIL) to the end 2019 as a short-term measure, as efforts are made to improve compliance.
In addition, the minister said government in 2018 would undertake a comprehensive review of pay systems to attract and retain skilled personnel to the public. Government will accelerate the full roll out of the Human Resource Management Information system (HRMIS) to cover all MDAs, MMDAs and Subverted institutions by the end of June 2018. As a continuous measure to decentralise salary validation and ownership by management units across the country, government will leverage the existence of Internal Audit Units in the various MDAs and MMDAs across the country to provide assurance on Electronic Salary Payment Validation (ESPV) and HR validation. The Ministry will work with GET FUND to set up a Voluntary Education Fund to enable Ghanaians make voluntary contributions to support education.
The presentation which aired live on Joy News, an Accra based Media House, was projected for students to view at the R.S. Amegashie Auditorium of the Business School. After the presentation, some students, particularly from the Accounting and Finance classes shared their thoughts on the budget with Joy Business. Below are photos from the event.
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