Deep expenditure adjustments sustain fiscal performance in 1H 2023 – GCB Capital Research
In a comprehensive analysis, GCB Capital Research has underscored how profound expenditure adjustments have effectively maintained fiscal performance during the first half of 2023.
Ghana’s Finance Minister, Ken Ofori-Atta, presented the review of the nation’s 2023 budget statement and economic policies to Parliament on July 31, 2023. This step was in accordance with Section 28 of the Public Financial Management Act, 2016 (Act 921).
The review elucidated significant strides achieved in the ongoing macroeconomic, fiscal, debt, and structural reforms mandated by the Post-COVID-19 Programme for Economic Growth (PC-PEG), bolstered by the Extended Credit Facility.
Aligned with the assessment of the budget’s performance across the first half of the year, the Minister unveiled vital fiscal framework adjustments in tandem with the macro-fiscal trajectory prescribed by the IMF-backed program. These amendments serve as a prelude to the inaugural review scheduled for September 2023.
In this context, the government recalibrated the total appropriation for 2023, downsizing it to GH¢ 206 billion. This marks a notable -9.54% deviation from the initial budget. Constrained by fiscal limitations and a lack of growth-supportive policies within the context of frontloaded fiscal consolidation, the government enacted revisions to both overall and non-oil real GDP growth projections. For the year 2023, these revised estimates stand at 1.5%, as opposed to the initial figures of 2.8% and 3% respectively.
In light of the prevailing economic landscape, the government anticipates an elevated end-of-year inflation rate, ascending to 31.3% from a prior 18.9%. The projected net foreign exchange reserve cover is also expected to weaken, hovering at approximately 0.8 months.
These revised figures collectively reflect the multifaceted challenges inherent in the near-term macroeconomic environment, necessitating substantial and resolute reforms within the ongoing IMF-supported program to navigate and correct the course.
