By Joshua AMLANU & Ebenezer NJOKU
The economy is “on the right trajectory” and rebounding stronger than anticipated, with government successfully reversing negative trends and living within its means finance minister Dr. Mohammed Amin Adam has said.
Delivering the 2024 Mid-Year Fiscal Policy Review in parliament, Dr. Adam argued the data paint a picture of an economy on the mend – backed by improved macroeconomic indicators and successful debt restructuring efforts.
“It is evident that we are on the right trajectory. The economy is rebounding stronger than anticipated. The choices we have made and policies being implemented are yielding results. We have reversed the negative trends, all the indicators are looking better,” Dr. Adam stated.
The minister highlighted several key achievements, including conclusion of the Extended Credit Facility’s second review with the International Monetary Fund (IMF), resulting in a disbursement of US$360million. This brings the total disbursement to about US$1.6billion.
Most significantly, he added, was progress in the external debt restructuring efforts, which have seen the Official Creditor Committee (OCC) covering US$5.1 billion and resulting in approximately US$2.8billion debt relief.
“We have concluded negotiations with our Eurobond holders covering US$13.1billion, which will lead to a US$4.7billion cancellation of our debt and provide US$4.4billion debt service relief between 2023 and 2026,” he noted.
Economy on the mend
The economy’s resilience is evident in the Gross Domestic Product (GDP) growth figures. The economy expanded by 2.9 percent last year, while non-oil GDP grew by 3.3 percent. In the first quarter of 2024 growth was 4.7 percent, the highest growth recorded since the second quarter of 2022.
Inflation, a key concern in recent years, has shown significant improvement with headline inflation decelerating significantly to 23.2 percent at end-December 2023, representing 31.4 percentage points reduction from the peak of 54.6 percent recorded in December 2022. In June 2024, headline inflation declined to 22.8 percent.
The external sector also showed positive developments with the current account improved to a surplus of US$1.41billion, driven by a strong growth in remittances as reforms in the Fintech ecosystem started to yield positive results.
Revision
On account of these improvements, government has revised its macroeconomic framework for 2024. Overall Real GDP Growth rate is revised upwards from 2.8 percent to 3.1 percent; Non-Oil Real GDP Growth rate of revised upward from 2.1 percent to 2.8 percent, with the headline inflation target for end of the year remaining unchanged at 15 percent.
On the fiscal front, the minister emphasised government’s commitment to living within its means.
“We have reined-in expenditures to ensure we are within 2024’s Budget Appropriation and exceeded the mid-year revenue target by 0.2 percent by end-June, 2024. In effect, Mr. Speaker, we are living within our means,” Dr. Adam stated.
Government has also revised its revenue projections upward, with Total Revenue and Grants being revised upward by 0.5 percent to GH¢177.22billion (17.4 percent of GDP) in 2024 from the 2024 Budget target of GH¢176.41billion (16.8 percent of GDP), Dr. Adam announced.
To achieve these targets government plans to implement several measures, which include broadening the tax base, a simplified digital solution for operationalising the modified taxation scheme and an electronic book-keeping system, he added.
Dr. Adam also mentioned plans to onboard 2,000 more taxpayers onto the electronic invoicing system (e-VAT) by end of the year.
“Government will re-institute the integrated property tax system by synthesising data from MMDAs, Lands valuation, ECG and other relevant government agencies to create a comprehensive digital property record database,” he stated.
Road tolls returning
Looking ahead, Dr. Adam announced plans to reintroduce road tolls – stating that government will develop a framework for the re-introduction of Road and Bridge Tolls to “facilitate the processes for implementing a modernised and efficient road and bridge tolling system commencing in 2025″.
While acknowledging the progress made, Dr. Adam cautioned against complacency. “Despite these significant risks, this Mid-Year Fiscal Policy Review reasserts government’s commitment to pursuing growth in a context of fiscal consolidation and debt sustainability,” he concluded.
Analysts remain cautious about government’s ability to maintain fiscal discipline while stimulating growth in an election year, stating that the coming months will reveal whether positive trends highlighted in this mid-year review can be sustained and translated into tangible improvements in the lives of ordinary Ghanaians.
