2023 macroeconomic framework targets revised in mid-year budget review
Finance Minister, Ken Ofori-Atta, has made significant revisions to the country’s macroeconomic framework for 2023.
These revisions or adjustments were prompted by developments witnessed in the first half of 2023 and the crucial necessity to align with the targets of the IMF-supported PC-PEG (Programme for Consolidation of Progress and Promoting Economic Growth).
Key revisions to the macro-fiscal targets for the year 2023 encompass alterations to the overall Real GDP Growth rate, Non-Oil Real GDP Growth rate, End-period headline inflation, Primary Balance on Commitment basis, and Gross International Reserves.
The key revisions to the macro-fiscal targets for 2023 year include:
i. Overall Real GDP Growth rate of 1.5 percent down from 2.8 percent;
ii. Non-Oil Real GDP Growth rate of 1.5 percent down from 3.0 percent;
iii. End-period headline inflation of 31.3 percent, from 18.9 percent;
iv. Primary Balance on Commitment basis of a deficit of 0.5 percent of GDP compared to a surplus of 0.7 percent of GDP, aligning with IMF-supported PC-PEG target Primary balance;
v. Gross International Reserves (programme definition) sufficient to cover at least 0.8 months of imports of goods and services by 2023.
Mr Ofori-Atta further articulated that the factors that drove these revisions encompass fiscal developments for the first half of 2023, changes in base pay on the Single Spine Salary Structure, partial restoration of capped transfers to the NHIS and GETFund, the impact of the completed Domestic Debt Exchange Program (DDEP), and IMF ECF Programme disbursements.
The drivers of the revisions to the 2023 Fiscal Framework the Minister noted include:
i. Fiscal developments for Jan-June 2023 reflecting shortfalls in revenues and lower spending;
ii. Increase in base pay on Single Spine Salary Structure of 30 percent compared to the assumed 20 percent for the 2023 Budget;
iii. Partial restoration of capped transfers to the NHIS and GETFund;
iv. The impact of the completed Domestic Debt Exchange Program (DDEP) on debt service cost as well as on revenue mobilisation;
v. IMF ECF Programme disbursements for 2023 of US$1.2 billion and reflection of other catalytic financing including the World Bank US$530 million (DPO – US$300 million and Emergency Projects – US$230 million) and expected disbursements of US$103mn from the AFDB;
vi. Revision in exchange rates, interest rates, crude oil prices, crude oil volumes, and GDP projections; and vii. The need to align 2023 Mid-Year Review to the approved IMF-supported PC-PEG.
