Finance Minister Ken Ofori-Atta has disclosed in the 2023 budget that as part of measures to boost local productive capacity, government intends to cut the imports of public sector institutions which rely on them – either for inputs or consumption – by 50 percent.
This, he said, will be enforced with help from the Ghana Audit Service and Internal Audit Agency to ensure compliance, and in return government will support the production of strategic substitutes.
The minister also disclosed that policies will be introduced for the protection and incubation of newly formed domestic industries, thus allowing them to make goods produced in the country competitive for local consumption and also export.
He further added that large-scale agriculture and agribusiness interventions will be supported through the Development Bank Ghana and ADB Bank.
The move to make the country an import substitution and export-oriented one becomes necessary as the currency has been on its knees – suffering sharp depreciation partly due to high dependence on importation, which exceeds US$10billion annually.
“Ghana’s heavy dependence on imports places tremendous pressure on the cedi, creating an unfavourable balance of payments position. On average, Ghana’s import bill exceeds US$10billion annually and is accounted for by a diverse range of items including iron, steel, aluminum, sugar, rice, fish, poultry, palm oil, cement, fertiliser, pharmaceuticals, toilet-rolls, toothpicks, fruit-juices, etc.,” the minister indicated.
He added that: “Currently, the country has capacity to locally produce items which account for about 45 percent of the value of its annual imports. These include rice, fish, sugar, poultry, cement, pharmaceuticals, jute bags and computers, etc.
“To this end, government will target these products for import substitution by supporting the private sector through partnerships with existing and prospective businesses – to expand, rehabilitate and establish manufacturing plants targetted at producing these selected items.”
Also, to promote exports it will expand productive capacity in the economy’s real sector and actively encourage consumption of locally produced rice, poultry, vegetable oil, fruit-juices and ceramic tiles among others.
Indicating that the 2023 budget will focus on government’s resolve to structurally transform the economy, Ken Ofori-Atta said it has become more urgent to mobilise domestic revenue – especially since the country’s access to the international capital market is largely closed.
He said government will take the hard, unpopular but necessary decisions to build back better and emerge stronger by leveraging domestic revenue.
“We urgently need to restore debt sustainability/macro-economic stability and grow the economy,” he said, adding that measures are underway to improve revenue collection efforts by leveraging technology to enhance tax administration, identify and register taxable persons, and improve tax compliance.
According to the budget, domestic revenue for the period amounted to GH¢64.6billion (10.9 percent of GDP), falling below the target of GH¢66.5billion (11.2 percent of GDP) by 2.9 percent. The outturn however represented a year-on-year growth of 34 percent, and constituted 98.8 percent of total revenue and grants.