Govt targets  7.7% deficit, 2.8% GDP growth in 2023

The 2023 budget statement and economic policy has been anchored on aggressively mobilize domestic revenue, streamline and rationalise expenditures, boost local productive capacity, promote and diversify exports, protect the poor and vulnerable, expand digital and climate-responsive physical infrastructure  and implement structural and public sector reforms.

It also supports the aggressive production of strategic substitutes, support large-scale agriculture and agribusinesses interventions through the Development Bank Ghana and Agricultural Development Bank (ADB), expand productive capacity in the real sector of the economy and actively encourage the consumption of locally produced rice, poultry, vegetable oil and fruit juices, ceramic tiles among others.

Debt exchange programme

Government will implement a debt exchange programme to address challenges but did not provide details on this plan.

Economic growth

Economic growth is expected to slow to 3.7% in 2022 from 6.7% last year and to 2.8% in 2023.

Debt limit on non-concessional financing

Government will impose a debt limit on non-concessional financing among other reforms, and will focus on using monetary policy to control inflation, which has exceeded 40%.

Mr Ken Ofori-Atta, the Minister of Finance made this known when he presented the 2023 Budget Statement and Economic Policy of the Government to Parliament.

GH₵144bn revenue

The Minister is projecting a total revenue and grants of GH₵144 billion, representing 18% of Gross Domestic Product (GDP).

GH₵205 billion expenditure

According to him, government has increased its expenditure projections by GH₵205 billion (GH₵205,431) representing 25.6% of GDP compared to a target of GH₵104 billion, equivalent to 17.6% of GDP, representing a 197.5%.

Deficit of 7.7%

The overall Budget balance to be financed is a fiscal deficit of GH₵61.5 billion, equivalent to 7.7% of GDP while the corresponding Primary balance was a deficit GH₵8.9 billion, equivalent to 1.1% of GDP.

GH¢52.6bn interest payment, GH₵45bn compensation

Projected Expenditure, he said entailed compensation of employees projected at GH₵45 billion; goods and services at GH₵8.05 billion; interest payment at GH¢52.6 billion; grants to other government units estimated at GH₵30.08 billion while Capital Expenditure (CAPEX) is projected GH₵27.7 billion.

GH₵26.7bn for energy sector payments

The Minister said Other Expenditure, mainly comprising Energy Sector Levies (ESL) transfers and Energy Sector Payment Shortfalls is estimated at GH₵26.7 billion.

He explained that this estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures on commitment basis compared to the projected outturn in 2022 and a demonstration of government’s resolve to consolidate its public finances.

Largely tax revenue measures

Mr Ofori-Atta explained that the 2023 revenue projections is underpinned by permanent revenue measures – largely tax revenue measures that will amount to 1.35% of GDP.

According to him, the measures included review of electronic levy, reforms to income tax regime, a review of the upper limits for vehicle benefits and the introduction of an additional income tax bracket of 35%.

Threshold on earmarked funds reduced

To achieve fiscal consolidation, he said government has proposed the reduction of threshold on earmarked funds from the current 25% of tax revenue to 17.5% of Tax Revenues and migrate all earmarked funds onto the GIFMIS platforms.

Cost cutting measures

On expenditure rationalisation, Ofori-Atta  announced that Metropolitan, Municipal and District Assemblies (MMDAs), Ministries, Departments and Agencies (MDAs) and State-Owned Enterprises (SOEs) have been directed to reduce fuel allocation to political appointees and their Heads by 50 per cent.

Reduction in fuel allocation to political appointees

The Cabinet directive, which takes effect from January 2023, is expected to reduce government expenditure on fuel consumption.

Ofori-Atta said the directive applied to all fuel allocation methods including coupons, electronic cards, chit systems, and fuel depots.

Non-critical projects on hold

According to him, all non-critical projects for 2023 financial year are on hold.

Moratorium on purchase of vehicles extended

The Minister also announced an extension of the moratorium on the purchase of vehicles for government work.

According to him, all sport utility vehicles in the state fleet are to be restricted to cross-country travel, and all government vehicles would be registered with green number plates from January 2023, and the purchase of vehicles  shall be restricted to locally assembled automobiles.

Only essential official foreign travels permitted

He stated that only essential official foreign travel across government including SOEs shall be allowed, and no official foreign travel shall be allowed for board members.

Submission of travel plans to Chief of Staff

The Minister directed all government institutions to submit a travel plan for the year 2023 by mid-December to the Chief of Staff, and instructed that as far as possible, meetings and workshops should be held within the official environment or in government facilities.

External training and staff development activities on hold

Furthermore, he said all government sponsored external training and staff development activities at the Office of the President, Ministries and SOEs must be put on hold for the 2023 fiscal year.

Housing, utilities, and clothing suspended

Mr Ofori-Atta announced a further cut in expenditure to affect appointments including salary freezes, and the suspension of certain allowances like housing, utilities, and clothing.
Tax waivers for foreign companies frozen

He declared a freeze on new tax waivers for foreign companies and the review of tax exemptions for free-zone, mining, oil and gas companies, and a suspension on hiring civil and public servants.

Freeze on printing of diaries, hampers, calendars

The Minister stated that no new government agency shall be established in 2023, and MDAs, MMDAs and SOEs must not print diaries, notepads, calendars, and other promotional merchandise for 2024.