Gov’t anchors 2023 budget on 7 macroeconomic restoration measures
The Government of Ghana (GoG) has anchored the 2023 Budget Statement and Economic Policy on seven measures it believes will restore macroeconomic stability and accelerate economic transformation post the Covid pandemic and amid the ongoing Russia-Ukraine war.
Some actions, initiatives and interventions to be taken by the government under the seven macroeconomic restoration measures include increment in the VAT rate from the current 17.5% to 20%; 0.5% downward review of the E-Levy charge from 1.5% to 1%, among others.
Making the 2023 Budget Statement presentation on Thursday, November 24, on the floor of Parliament, Minister for Finance, Ken Ofori-Atta averred the 2023 budget reflects government’s resolve to reset the Ghanaian economy.
Adding that, government’s goal for the next fiscal year -2023- is to significantly enhance revenues, significantly cut down the cost of running government, significantly expand local production, invest more to protect the poor and vulnerable, continue expanding access to good roads, education and health for every Ghanaian everywhere in Ghana and the diaspora.
According to the Finance Minister, the seven measures aimed at restoring macroeconomic stability and as articulated in the country’s Post-Covid-19 Programme for Economic Growth document (PC-PEG) include;
- Aggressively mobilize domestic revenue;
- Streamline and rationalise expenditures;
- Boost local productive capacity;
- Promote and diversify exports;
- Protect the poor and vulnerable;
- Expand digital and climate-responsive physical infrastructure; and
- Implement structural and public sector reforms
“To achieve these, there are three (3) critical imperatives: successfully negotiating a strong IMF programme; coordinating an equitable debt operation programme; and attracting significant green investments.
“This will enable us to generate substantial revenue, create needed fiscal space for the provision of essential public services and facilitate the implementation of the PC-PEG programme to revitalise and transform the economy,” said the Minister.
Speaking further, the Minister said, “Mr. Speaker, we will undertake the following actions, initiatives, and interventions under the seven-point agenda.
● To aggressively mobilize domestic revenue, we will among others:
➢ Increase the VAT rate by 2.5 percent to directly support our roads and digitalization agenda;
➢ Fast-track the implementation of the Unified Property Rate Platform programme in 2023; and
➢ Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to one percent (1%) of the transaction value as well as the removal of the daily threshold.
● To boost local productive capacity, we will among others:
○ cut the imports of public sector institutions that rely on imports either for inputs or consumption by 50% and will work with the Ghana Audit Service and the Internal Audit Agency to ensure compliance;
○ support the aggressive production of strategic substitutes, including the list disclosed at the President’s last address to the nation;
○ Support large-scale agriculture and agribusinesses interventions through the Development Bank Ghana and ADB Bank;
○ introduce policies for the protection and incubation newly formed domestic industries to allow them to make the goods produced here competitive for local consumption and also for exports.
● To promote exports, we will among others:
○ expand our productive capacity in the real sector of the economy and actively encourage the consumption of locally produced rice, poultry, vegetable oil and fruit juices, ceramic tiles among others;
● To pursue efficiency in Government expenditures, we will among others:
○ Implement the Government directives on expenditure measures;
○ Integrate public procurement approval processes with GIFMIS to ensure that projects approved are aligned with budget allocation;
○ Review key government programmes to reflect relevance, promote efficiency, and ensure value for money; and
○ Review the efficiency of Statutory Funds
● To implement structural and public sector reform, we will among others:
○ Impose a debt limit on non-concessional financing;
○ Undertake major structural reforms in the Public Sector by reviewing the operations of 36 State-owned Enterprises, 8 Special Purpose Vehicles, 90 Joint Venture Companies, 38 Regulatory institutions, 68 Statutory Bodies and 6 Subvented Agencies;
○ Enforce compliance with legal and regulatory framework on foreign exchange;
○ Initiate measures to overhaul the tax structures in the extractive industry;
○ Expand the gold purchase programme by Bank of Ghana to support FX Reserve accumulation, promote an LBMA certified gold refinery in Ghana and promote local currency stability;