Gov’t Revises Macroeconomic, Fiscal Frameworks
The government of Ghana has revised its macroeconomic and fiscal framework following what it describes as changes in the global environment and Ghana’s unique challenges.
The changes were featured in the 2022 Mid-Year Budget Review.
These were announced by the Minister for Finance, Ken Ofori Atta on July 25, 2022, in Parliament.
As part, the government says it has revised the country’s economic growth estimate for 2022 to 3.7 percent, down from 5.8 percent as stated in the 2022 Budget.
This and many other revisions done are based on the developments for the first six months of 2022 and the outlook for the rest of the year with projected uncertainties about the next year, 2023.
Macroeconomic Revision
The Macroeconomic revision includes:
- Overall GDP Growth rate of 3.7 percent down from 5.8 percent;
2. Non-Oil GDP Growth rate of 4.3 percent down from 5.9 percent End period inflation of 28.5 percent up from 8 percent;
3. The overall fiscal deficit of 6.6% of GDP down from 7.4% Primary surplus of 0.4% of GDP up from a surplus of 0.1% of GDP; and
4. The Gross International Reserves of not less than 3 months import cover.
Revision to the 2022 Fiscal Framework
The government has revised the total revenue and grants from GHC100,517 million to 96,842 million.
The various fiscal framework revised include:
- Total Revenue and Grants have now been revised to GH¢96,842 million (16.4% of GDP) in 2022, down from the 2022 Budget target of GH¢100,517 million (20.0% of GDP) representing 3.7 percent reduction.
2. Total Expenditure (including payments for the clearance of arrears) has been revised downward to GH¢135,742 million (22.9% of GDP) from the original budget projection of GH¢137,529 million (27.4% of GDP).
3. Interest Payments have been revised upwards from GH¢37,447 million (7.5% of GDP) to GH¢41,362 million (7.0% of revised GDP), mainly on account of inflationary pressures and exchange rate depreciation resulting in higher cost of financing.
4. The fiscal revision, he said, will create a deficit of GH¢38,900 million up from the 2022 Budget deficit target of GH¢37,012 million.
5. Ofori Atta indicated that although the deficit is expected to be financed from both foreign and domestic sources, domestic financing will be the key driver while the Government works to regain external market access.
Revenue Measures
The Minister said the government will be pursuing four measures to generate revenue including eVAT, property rate, Waiver of Interest & Penalty and VAT on importers.
He stated that the government is considering an amendment of the Value Added Tax Act 870 to enable its electronic collection effective 1st October 2022
Additionally, he said that the collective efforts of the local government, the Assemblies, and the GRA in launching an end-to-end digitised process for Property rate will be realised by August.
The government is also seeking to extend the Waiver of Interest & Penalty to December 2022.
Finally, it will be Introducing upfront payment of VAT on importers not registered for VAT effective 1st October 2022.
Source: opemsuo.com/Hajara Fuseini
