The Finance Minister, Ken Ofori-Atta has announced some revisions to Ghana’s key macro-fiscal targets for 2023.
Presenting the Mid-Year Budget in parliament on July 31, 2023, the minister stated that government has reviewed end year inflation target upward to 31.3 percent, from the previous 18.9 percent for the year.
In addition, overall Real GDP growth rate has been reviewed down to 1.5 percent from the initial 2.8 percent, while Non-Oil Real GDP growth rate was also reduced to 1.5 percent from 3.0 percent.
“Primary Balance on Commitment basis of a deficit of 0.5 percent of GDP compared to a surplus of 0.7 percent of GDP, aligning with IMF-supported Post-COVID-19 Programme of Economic Growth (PC-PEG) target Primary balance; as well as Gross International Reserves sufficient to cover at least 0.8 months of imports of goods and services by 2023,” he announced.
He explained that 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. Speaker, with the approval of Parliament, Government set out to achieve the following key macroeconomic targets for 2023:
i. Overall Real GDP growth of 2.8 percent;
ii. Non-Oil Real GDP growth of 3.0 percent;
iii. End-December inflation rate of 18.9 percent;
iv. Overall budget deficit of 5.9 percent of GDP (on commitment) and 7.7 percent on cash basis;
v. Primary Balance (Commitment basis) of a surplus of 0.7 percent of GDP and deficit of 1.1 percent of GDP on cash basis; and
vi. Gross International Reserves to cover not less than 3.3 months of imports.”
Mr. Ofori-Atta is however optimistic that overall GDP growth will rebound to 2.8 percent, 4.7 percent, and 4.9 percent in 2024, 2025 and 2026, respectively.
This, he argues is a result of the implementation of growth-oriented and structural transformation strategies in the PC-PEG.
“We have, however, been charged in the PC-PEG to develop an enhanced Growth Strategy supported by crowding in of private domestic and foreign investments to further boost growth. We are confident of a private sector outlook to boost growth and jobs”, he said.
He disclosed that the 2023 revised fiscal framework is now fully aligned with the IMF programme fiscal objectives in terms of primary balance (cash and commitment), revenue path, and trajectory of primary expenditures.
Mr. Ofori-Atta explained that the reasons for the revision include the fact that government missed its revenue target from January to June 2023.
He added that government also increase the base pay on the Single Spine Salary Structure by 30 percent compared to the assumed 20 percent for the 2023 Budget; a situation that altered its spending.