15th July 2024

Ken Ofori-Atta, Finance Minister

The government, through the Ministry of Finance, has begun the process of preparing the 2022 budget, which keenly focuses on promoting an inclusive and sustainable COVID-19 era recovery.

The 2022 to 2025 medium-term guideline directs all Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal and District Assemblies (MMDAs) to focus the 2022 budget on creating opportunities and providing solutions toward achieving sustainable economic growth, without harming the climate or leaving families in poverty.

The Ministry in a statement indicated that the guidelines provide the policy direction of the government, instructions on the processes and procedures, as well as budget expenditure ceilings to guide MDAs and MMDAs toward preparation of the 2022-2025 budget.

“Government will therefore focus on revitalising and transforming the economy. The approach is to catalyse the private sector in targeted areas to fast-track industrialisation, competitive import substitution, digitalisation, export expansion and the creation of decent jobs -particularly for the youth,” it said.

In its medium-term fiscal policy objective, the government intends to pursue a fiscal consolidation drive toward fiscal and debt sustainability to support macroeconomic stability while supporting implementation of government’s flagship programmes and the Ghana CARES Programme.

“This strategy will progressively reduce the overall fiscal balance back to the Fiscal Responsibility Act (FRA) deficit threshold of 5 percent of GDP and a primary surplus by 2024,” the guideline highlighted.

Projection

In 2022, the government is projecting an overall budget deficit (including financial sector clean-up and IPPs cost) at GHC39.2billion, equivalent to 7.9 per cent of GDP. This is expected to moderate downward to GHC30.3billion (4.8 per cent of GDP) by 2024 and finally to GHC30.8billion (4.3 per cent of GDP) in 2025.

The corresponding primary balance is estimated to be at a deficit of GHC2.1billion, representing 0.4 per cent of GDP for 2022 – returning to a surplus of GHC2.6billion – 0.5 per cent of GDP; GHC8.4billion – 1.3 per cent of GDP; and GHC10.5billion – 1.5 per cent of GDP for 2023, 2024 and 2025 respectively.

Provisional data indicate that the economy is beginning to recover from the COVID-19 pandemic impact, and to sustain this recovery phase, the government’s plans is to support productive sectors of the economy, as well as the vulnerable, through implementation of the Ghana CARES (Obaatanpa) Programme and flagship intervention programmes.

The fiscal data show that total revenue and grants for January to June 2021 amounted to GHC28.30billion (6.5 percent of GDP), against a programmed target of GHC32.36billion (7.5 percent of GDP); whereas total expenditure including the clearance of arrears for the same period amounted to GHC50.62billion (11.7 percent of GDP), against a programmed target of GHC55.09billion (12.7 percent of GDP).

This resulted in an overall fiscal deficit of GHC22.32billion (5.1 of GDP) against a programmed target of GHC22.73 billion (5.2 percent of GDP). The primary balance for the period recorded a deficit of GHC7.29billion (1.7 percent of GDP) against a programmed target of GHC4.80billion (1.1 percent of GDP).

Priority areas

According to the guidelines, the government’s priority areas for 2022 and the medium-term include supporting the health sector and expanding social safety nets; COVID-19 containment measures; developing the country’s infrastructure, with a priority focus on roads, railways, water and sanitation, hospitals and housing.

Others include diversifying productivity and high-value services; implementing bold reforms to increase revenue mobilisation and the efficiency of public expenditures; as well as deepening structural reforms to make the machinery of government work better for the people; and rolling out digital technologies to improve service delivery.

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