The government of Ghana is making key downward revisions to the macro-fiscal targets and Gross Domestic Product (GDP) projections for the year 2023 to reflect a slowdown in the economy.
The slowdown is due to difficult global conditions and the implementation of a fiscal consolidation plan aligned with the Post-COVID-19 Programme of Economic Growth (PC-PEG) supported by the International Monetary Fund (IMF).
Mr Ken Ofori-Atta, Minister of Finance, announced this when he presented the Mid-Year Fiscal Policy Review of the 2023 Budget Statement and Economic Policy to parliament.
He announced revised GDP projections, including a 1.5 percent overall real GDP growth rate from 2.8 percent, a 1.5 percent non-oil real GDP growth rate from 3.0 percent, and a 31.3 percent end-period headline inflation target from 18.9 percent.
“Overall GDP growth, on the other hand, is expected to rebound to 2.8 percent, 4.7 percent, and 4.9 percent in 2024, 2025, and 2026, respectively.” “This is the result of growth-oriented and structural transformation strategies being implemented,” he explained.
The minister also projected a 0.5% GDP deficit versus a 0.7% GDP surplus on a commitment basis, in line with the IMF-supported PC-PEG target Primary balance.
He also predicted that by 2023, the country’s Gross International Reserves would be sufficient to cover at least 0.8 months of imports of goods and services.
“However, the PC-PEG has charged us with developing an enhanced Growth Strategy supported by crowding in of private domestic and foreign investments to further boost growth.” “We are optimistic about the private sector’s ability to boost growth and jobs,” he said.
Mr Ofori Atta explained that the drivers of the 2023 Fiscal Framework included the need to align the 2023 Mid-Year Review with the approved IMF-supported PC-PEG, revenue shortfalls and lower spending for the first half of the year, and a 30% increase in base pay on Single Spine Salary Structure compared to the assumed 20% for the 2023 budget.
He also mentioned “partial restoration of capped transfers to the NHIS and GETFund; the impact of the completed Domestic Debt Exchange Programme (DDEP) on debt service cost as well as revenue mobilisation; and US$1.2 billion in IMF ECF Programme disbursements for 2023.”
He also stated that the average crude oil price has been reduced from US$88.55 per barrel in the 2023 Budget to US$74.0 per barrel.
As a result, Mr Ofori-Atta stated that total petroleum receipts have been revised downward from US$1.54 billion to around US$1 billion, representing a 32% decrease.