Finance Minister Highlights Economic Rebound And Fiscal Progress In Final Budget Review Before Elections
Finance Minister Dr. Mohammed Amin Adam has announced that the country has made significant progress in fiscal consolidation, with the economy rebounding due to the effective implementation of the 2024 Budget policies and programs.
He highlighted that the economy expanded by 2.9%, surpassing the target of 1.5%, while non-oil GDP grew by 3.3%. The first quarter of 2024 saw growth of 4.7%, the highest since the second quarter of 2022.
Presenting the mid-year budget to lawmakers at Parliament House in Accra, Dr. Adam stated, “This turnaround is the result of effective implementation of the policies and programs outlined in the 2024 Budget. We have successfully navigated challenges over the last seven months. The economy is rebounding stronger than anticipated, with all indicators looking better.”
He also noted that the 4.7% growth rate reported by the Ghana Statistical Service for the first quarter of 2024 exceeded the 3.1% recorded in the same period in 2023.
Dr. Adam cited the positive impact on inflation, which declined to 22.8% by the end of June, down 31 percentage points from December 2022, suggesting that achieving the 15% target by the end of 2024 is possible.
The exchange rate has largely stabilized compared to December 2022, with a depreciation rate to the US Dollar of 18.6% as of June 2024, an improvement over the 22.0% recorded last year. Gross International Reserves increased to 3.1 months of import cover by the end of June 2024, up from 2.5 months in the same period last year.
The government successfully concluded the second review of the Extended Credit Facility with the International Monetary Fund (IMF), leading to the disbursement of the third tranche of $360 million, bringing the total disbursement to approximately $1.6 billion.
Additionally, the Debt Restructuring program with the Official Creditor Committee (OCC) covered $5.1 billion, resulting in about $2.8 billion in debt relief, meaning no debt service to official creditors from 2023 to 2026.
Dr. Adam also announced the disbursement of an additional GH¢1.5 billion to provide relief and bailouts for those with funds locked in fund management companies. The government will establish a framework for reintroducing road and bridge tolls in 2025 and operationalized the integrated property tax system.
A review of the Fiscal Responsibility rules was also conducted to include a debt rule to support debt sustainability and the establishment of an independent Fiscal Council.
Minority Leader Dr. Cassiel Ato Forson criticized the budget review as a “missed opportunity” and expected the Finance Minister to scrap key taxes such as the e-levy, Covid levy, and sanitation levy.
He described the review as “uninspiring, bereft of new ideas, and failing to offer a roadmap for addressing the numerous problems facing the people of Ghana.”
He revealed that the government has incurred new arrears, accumulating GH¢4.5 billion.
Ghana’s budget deficit stood at 3.4% of GDP in the first half of the year.
This is the final budget review before the presidential elections on December 7, where Vice President Mahamudu Bawumia of the governing New Patriotic Party will face off against the main opposition candidate, John Dramani Mahama. Other highlights include:
Non-oil real GDP growth for 2024 is forecasted at 2.8%, up from the initial estimate of 2.1%.
The inflation forecast for end-2024 remains at 15%.
International reserves increased to $6.9 billion by the end of June, equivalent to 3.1 months of import cover.
Since the completion of the domestic debt exchange program in September, two coupon payments have been honored, with the third payment of 6.1 billion cedis ($395 million) scheduled for August.
