Although the country has seen improvements in non-oil tax revenue collection, some noticeable shortfalls in VAT were however discovered. Also, oil revenues have fallen short of expectations due to changes in global prices.
Consequently, government is to undertake a downward review of the oil-related revenue as well as corresponding expenditures to align with the underperformance of some of revenue handles.
Specifically, this will impact the Annual Budget Funding Amount (ABFA), Finance Minister Ken Ofori-Atta told parliament yesterday.
However, effects of the Domestic Debt Exchange Programme (DDEP) on the financial sector elevated liquidity and solvency risks from impairment losses, the minister stated.
More importantly, the minister indicated that the macroeconomic environment has changed significantly since the 2023 Budget was presented to parliament in November 2022.
“Although pressures still exist and there are formidable risks on the horizon, our economy is in a better position than it was seven months ago as the macroeconomic environment has seen relative stability since beginning of the year.”
Consequently, overall Real GDP growth for 2023 has been revised to 1.5 percent from 2.8 percent and non-oil Real GDP growth has also been revised – to 1.5 percent from 3.0 percent.
The downward revision in projected growth for 2023 is an indication of a broad slowdown in the three sectors of the economy as a result of factors such as the fiscal consolidation plan and difficult global conditions, Mr. Ofori-Atta stated.
The 2023 revised fiscal framework is now fully aligned with the IMF programme’s fiscal objectives in terms of primary balance (cash and commitment), revenue path and trajectory of primary expenditures.
Given the limited fiscal space, as well as our determination not to accumulate new arrears, our growth agenda will be mainly financed from domestic and external private sector investments as well as a rationalisation of ongoing programmes.
The approach is to prioritise existing programme that are critical for growth and can be implemented to deliver quick results without huge demands on available budgetary resources, the Finance Minister added.
The revisions of the 2023 fiscal framework are driven by several factors… There was an increase in the base pay on the Single Spine Salary Structure, which was set at 30 percent instead of the previously assumed 20 percent for the 2023 Budget. Third, there was a partial restoration of capped transfers to the National Health Insurance Scheme (NHIS) and Ghana Education Trust Fund (GETFund).
In conclusion, the Minister for Finance emphasised that our unity – ‘Nkabom’ – will be vital in confronting the daunting challenges facing our economy.
