ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
As a first step towards fulfilling this objective, Parliament passed the revenue, and expenditure measures as well several other macro-critical economic policies we presented in the 2023 Budget, and we are grateful for that.
Along these lines, we also needed to create additional fiscal space by: i. negotiating an International Monetary Fund (IMF) Programme; ii.
concluding a debt operations programme; and iii.
attracting significant investments (especially green investments) for a vibrant growth strategy.
Speaker, I can now report that we have been diligent and resolute in implementing these measures and successfully: i. Negotiated the US$3 billion 3-year IMF-ECF Programme, which was approved on 17th May, 2023 to support the implementation of our PC-PEG 5 ii.
Concluded on February 14th the initial part of the Debt Operations, of which the Domestic Debt Exchange Programme (DDEP); iii.
Developed a framework for the V20 Climate Prosperity Plan to attract climate investments from the private sector; and iv.
Initiated the Mutual Prosperity Dialogue to crowd in domestic and external private investment to underpin our growth strategy.
These achievements have been with the support and commitment of this august House and the Ghanaian people.
It demonstrates that when we speak with one voice, we can achieve what we set our minds to do- Genesis 11:6- “if as one people speaking the same language, they have begun to do this, then nothing they plan to do will be impossible for them” 19.
Right Honourable Speaker, accordingly, H.E.
President Akufo-Addo has asked that I convey his profound gratitude to this House for passing all the revenue Bills as well as the expenditure measures.
Indeed, our sincere gratitude also goes to all investors, financial institutions and bondholders for the sacrifice, support and forbearance in this difficult period of our country’s economic history.
We appreciate your contribution towards “turning the corner’’ and commitment to partner us in transforming the economy.
We must also extend our appreciation to the IMF, the World Bank and other Development Partners as well as the G7 and G20 members who stood so strongly with us.
Speaker, for the first six months of the year, we continue making progress to exceed our non-oil revenue targets for the year.
We have seen improvements in nonoil tax revenue collection despite some noticeable shortfalls in VAT.
However, oil revenues have fallen short of expectations due to changes in global prices.
We will, therefore, undertake a downward review of the oil-related revenue as well as the corresponding expenditures to align with the underperformance of some of our revenue handles.
Specifically, this will impact the Annual Budget Funding Amount (ABFA).
Speaker, in view of the reason outlined above, as well as the lower domestic interest payment and amortization, following the completion of a part of the DDEP, and the reduction in the foreign financed CAPEX, the Appropriation has been revised from GHS227.7 billion as presented and approved in November 2022 to GHS206.0 billion.
This is in line with Regulations 24 sub-regulation (3) of Public Financial Management Act Regulations 2019 (L.I.
6 24.
Speaker, we will, therefore, not require a Supplementary Budget.
Speaker, Government is, however, committed to pursuing a robust growth strategy within the limited fiscal space and our fiscal consolidation programme.
This will be done by attracting domestic and foreign private sector investments and expanding production, which will be encouraged and stimulated by Government policies and agencies.
Government’s Mutual Prosperity Dialogue with the private sector, will seek to facilitate the ease of doing business in order to crowd-in private domestic and foreign investments.
Speaker, security continues to be a priority of Government.
The United Nations recently reported that over 1,800 terrorist attacks, resulting in nearly 4,600 deaths, were recorded in our region - West Africa in the first six months of this year.
Due to this instability among others, increasing numbers of West African nationals are seeking refuge in our country.
This has required a review of our security expenditures within our limited fiscal space.
Speaker, this 2023 Mid-Year Fiscal Policy Review will: i. provide an update on economic performance for the first–half year of 2023 and outlook for the rest of the year; ii.
provide an update on the implementation of the IMF-supported PC-PEG including update on structural reforms and the progress towards achieving the quantitative performance criteria and indicative targets; iii.
provide an update on the Debt Restructuring Programme; iv.
present a revised 2023 fiscal framework which aligns with the IMFsupported PC-PEG; and v. outline government’s Growth Strategy to drive the recovery process.
I will now proceed to update the House on the macro-fiscal performance of the economy since December, 2022.
Speaker, as we usually do, the 2023 Budget was presented in November 2022 using end-September 2022 data.
We now have end-December 2022 data, which indicate that: i. Overall Real GDP growth was 3.1 percent compared to the revised target of 3.7 percent; ii.
Non-Oil Real GDP growth was 3.8 percent compared to the revised target of 4.3 percent; iii.
End-December inflation rate was 54.1 percent compared to the projected 28.5 percent; iv.
Total Revenue and Grants for the period amounted to GH¢96.7 billion (15.8 % of GDP) compared with the revised target of GH¢96.84 billion (16.4 percent of GDP).
v. Total Expenditure on commitment basis amounted to GH¢165.1 billion (27.0% of GDP) against the revised target of GH¢133.8 billion (22.6% of GDP); vi.
Overall Budget deficit on commitment basis was 11.8 percent of GDP against the revised target of a deficit of 6.3 percent of GDP; vii.
Primary Balance on commitment basis was a deficit of 4.3 percent of GDP against a revised target of a deficit of 0.7 percent of GDP viii.
On cash basis, the Overall Budget deficit was 10.7 percent of GDP against the revised target of a deficit of 6.6 percent of GDP; ix.
The corresponding Primary Balance on cash basis was a deficit of 3.2 percent of GDP against a revised target of a surplus of 0.4 percent of GDP; and x. Gross International Reserves was equivalent to 2.7 months of import cover.
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.
As I have indicated, we have made significant progress on restoring macroeconomic stability and the narrative is changing.
The economy is showing signs of recovery.
The exchange rate has stabilised, inflation has softened, and interest rates have declined since December, 2022.
Speaker, these outturns are the result of focused implementation of all the measures we presented in the 2023 Budget and the positive sentiments arising from the progress with the IMF Programme, which I will now discuss.
8 IMF-SUPPORTED PC-PEG 34.
Speaker, towards addressing the macro-fiscal challenges the economy faced in 2022, Government engaged the IMF to support the implementation of our PC-PEG.
On 17th May, 2023, the Executive Board of the IMF approved a 36-month Extended Credit Facility (ECF) in an amount equivalent to SDR 2.242 billion (approximately US$3 billion).
The Programme is anchored on Government’s PC-PEG and designed to restore macroeconomic stability and debt sustainability.
It includes extensive reforms to strengthen resilience and lay the foundation for stronger and more inclusive growth.
Speaker, the Programme has been designed to address the key issues facing the economy through the following key priority targeted interventions: i. large and frontloaded fiscal consolidation to bring public finances back on a sustainable path.
The programme envisages a cumulative fiscal adjustment of 5.1 percentage points (ppt) of GDP over the programme period (2023-2026) with a fiscal effort of 3.8 percentage points (ppt) in 2023 alone.
The primary deficit on commitment basis will be reduced from 4.3 percent of GDP in 2022 to 0.5 percent in 2023.
The fiscal consolidation will be executed by both mobilising more domestic revenue, and improving the efficiency of spending; ii.
protect the vulnerable through enhancement of existing social protection programmes, including the Livelihood Empowerment Against Poverty (LEAP), National Health Insurance Scheme (NHIS), the Capitation Grant, and the School Feeding Programme.
The 2023 Budget, for example, doubled the benefits under the LEAP Programme as well as boosted the allocations to the School Feeding Programme; iii.
strong and ambitious structural reforms in tax policy, revenue administration, public financial management, financial sector, as well as strong measures to enhance revenue mobilisation and address weaknesses in the energy and cocoa sectors – both are critical to bring public finances back on sustainable path while creating fiscal space for critical development spending; iv.
bring inflation under control through prudent monetary policy including appropriate monetary policy tightening and the elimination of monetary financing of the budget.
Containing inflation pressures requires coordination between fiscal policy and monetary policy.
v. rebuild international reserve buffer to 3 months of imports by the end of the Programme.
The Bank of Ghana is pursuing enhanced flexible exchange rate policies to help rebuild international reserves; vi.
restore debt sustainability and preserve financial stability following the Domestic Debt Exchange Programme (DDEP) to support private investment and growth; and vii.
pursue reforms to encourage private investment, strengthen growth, and create more jobs.
Speaker, it is instructive to note that our path towards securing an approved IMF-supported Programme has been characterised by speed and resoluteness.
More specifically, the following key and significant milestones were accomplished.
We, among others,: i. achieved Staff Level Agreement (SLA) in December 2022, 6 months after we formally requested for the IMF’s support to back our PC-PEG; ii.
were supported by China’s agreement to co-chair the Ghana’s Paris Club Official Creditor Committee (OCC); iii.
secured financing assurances from the OCC, co-chaired by China and France, on 12th May, 2023, 5 months after our formal request in December 2022; iv.
secured an IMF Board approval on 17th May 2023, 5 months after the SLA and 10 months after our formal request for a Fund Programme; v. secured US$3bn IMF financing equivalent to three times Ghana’s quota; vi.
front-loaded disbursement of IMF resources with 40 percent in 2023 and the rest spread between 2024-2026; and vii.
successfully concluded a domestic debt exchange programme.
The results are clear.
We are witnessing the catalytic impact of crowding in other resources- · we are in discussions with the World Bank for a $900 million Development Policy Operation; the United States, through the International Development Finance Corporation, has announced a programme to invest US$300 million towards the construction of a Data Centre under the G7 Partnership for Global Infrastructure and Investment (PGII).
Speaker, several key stakeholders played diverse roles in Ghana’s successful journey towards the approval of the IMF-Supported Programme.
On behalf of His Excellency, President Akufo-Addo, I would like to express our sincere gratitude to Rt.
Hon Speaker and Members of Parliament, our participating bondholders, retirees, financial institutions and other stakeholders, who played critical roles.
Permit me to express our sincere gratitude to the Managing Director of the IMF, her team led by Stephan Roudet and the Executive Board for providing the unfathomable cooperation throughout the whole process.
We are also grateful to the World Bank Group, the US Treasury and US Development Finance Corporation.
Government appreciates our other Development Partners, both multilateral (such as AfDB and Afreximbank) and bilateral, for their support under the programme.
Speaker, as a nation, we must and will prevail.
Indeed, our only recourse is to be successful at the upcoming First Review of the Programme in September, 2023 and all other subsequent reviews.
We are, therefore, respectfully calling on every member of this august House and “Fellow Ghanaians” to support these reforms.
Speaker to support the effective implementation of the IMF-supported PC-PEG, Government has put in place an implementation strategy.
STATUS OF PROGRESS TOWARDS ACHIEVING IMF PROGRAMME OBJECTIVES 42.
Speaker, the IMF-Supported Programme will be monitored and reviewed semiannually, based on agreed targets to be met by end-June and end-December each year.
We will prepare for a comprehensive assessment of the targets by the IMF during the First Review in September 2023, which will assess: i.
9 Structural Benchmarks (SBs); ii.
6 Quantitative Performance Criteria (QPCs); and iii.
3 Indicative Targets (ITs).
Speaker, the IMF-supported PC-PEG has also prioritized social protection reforms to ensure that the vulnerable are protected from the impact of the ongoing fiscal adjustment.
Social spending on health, social protection, and education will be closely monitored to ensure timely disbursement of funds to beneficiaries.
In addition, an indexation mechanism for benefits under the LEAP programme will be put in place by end-September 2023.
Furthermore, the coverage of LEAP will be expanded, and its targeting improved to cover the extreme poor by 2024.
Speaker, Cabinet also approved a turn-around strategy for COCOBOD as part of measures to improve financial viability of the institution and to position it to deliver increased value for the people of Ghana.
I take this opportunity to assure all our key stakeholders of Government’s commitment to the unwavering implementation of our very own PC-PEG (Growth Programme) which undergirds the IMF- approved programme.
DEBT OPERATIONS 47.
Speaker, we announced in the 2023 Budget Statement that we will embark on a debt restructuring programme to alleviate fiscal pressures by: · reducing debt servicing costs; · improving debt sustainability; and ensuring macroeconomic stability and economic growth.
The restructuring is critical to the implementation of the IMF supported PC-PEG Programme.
To ensure a return to the path of debt sustainability, a comprehensive debt strategy, centred on a restructuring programme was pursued.
Speaker, the perimeter for the restructuring includes both domestic (central government debt and some parastatals) and external.
The main aim of the operations is to reduce debt servicing costs and restore our debt sustainability.
The debt operation focuses on achieving by 2028: i. the present value of overall debt and external debt to GDP to below 55 percent and 40 percent thresholds, respectively; and ii.
external debt service to revenues and exports below the 18 percent and 15 percent thresholds, respectively.
Domestic Debt Exchange Programme (DDEP) 51.
Speaker, on 5th December 2022, Government launched the DDEP in a transparent manner while seeking to minimise its impact on bondholders.
After three (3) months of negotiations with the different bondholder groups and amendments to the original terms, Government successfully completed the DDEP on 14th February.
Total bonds outstanding at the settlement date amounted to GH¢126,978.5 million, of which GH¢29,286.2 million were held by Pension Funds, bringing the total eligible bonds to GH¢97,749.6 million.
The Ministry received final participation of GH¢82,994.5 million, representing 84.9 percent of total eligible bonds.
The DDEP has provided the Government with increased fiscal flexibility and addressed cash and other liquidity constraints.
Once again, we are grateful to all investors who participated in this exchange.
Speaker, to complete the domestic debt operations, Government announced in April 2023 its intention to further pursue the discussions around the following domestic debt instruments which were excluded from the DDEP perimeter: i. Energy sector Independent Power Producers (IPPs); ii.
Cocobills; iii.
Local US dollar denominated bond; and iv.
Bank of Ghana non-tradable debt.
Out of these remaining Debt instruments, Government launched debt operations for the Cocobills and local US dollar-denominated bonds on 14th July, 2023.
The settlement date is today 31st July, 2023.
We look forward to a successful operation.
Speaker, although Pension Funds were exempted from the main DDEP, we continue to engage them.
We are also engaging with the IPPs on debt relief and financing arrangements to achieve both debt sustainability for Ghana and financial sustainability for the energy sector.
Speaker, as part of the restructuring process for external Debt, Government requested the treatment of the bilateral debt under the G20 Common Framework beyond the Debt Service Suspension Initiative.
Government also held a series of engagements with its bilateral creditors via the Paris Club to provide financing assurances to support Ghana’s IMF-ECF request.
The Official Creditor Committee for bilateral creditors was established and cochaired by China and France.
The Committee provided financing assurances on 12th May 2023, to support the IMF’s Board approval of Ghana’s IMF-ECF request on 17th May 2023.
Speaker, Government has also begun the process of negotiating with its commercial creditors (our Eurobond investors).
Two bondholder groups have been formed, comprising domestic and regional bondholders as well as international bondholders.
Government has already shared a set of data and scenarios to commence discussions.
On the restructuring of Eurobonds, we expect to receive counteroffers from the bondholders in the short-term and envisages an agreement by year end.
Impact of the Debt Restructuring 62.
Speaker, the Financial Sector, comprising Commercial Banks, Specialised Deposit Taking Institutions, Insurance Sector, and Fund Managers, participated significantly in the DDEP.
The effects of the debt operations on the financial sector is elevated liquidity and solvency risks from impairment losses.
Regulators, including the Bank of Ghana, provided temporary regulatory forbearance to mitigate the liquidity impact of the DDEP.
Importantly, Government is working with key partners to establish a Ghana Financial Stability Fund to provide liquidity and solvency support to the financial institutions.
The eligibility criteria agreed with regulators and international partners will be published soon.
Speaker, these macro-prudential interventions and operations were also to address the impact of the large external shocks within a wider global economic context, which I now proceed to discuss.
Speaker, we are also mindful of the impact of the debt exchange programme on individuals and Government is working hard to stabilise the economy and towards a faster economic recovery to ameliorate impact on the welfare of the individuals.
OVERVIEW OF RECENT MACRO ECONOMIC DEVELOPMENTS Global Developments 66.
Speaker, the global economy continues to struggle through a patchy recovery phase, following the shocks (including those from the CoVID-19 pandemic and the Russia-Ukraine war).
It is within such context that the IMF, in its April 2023 World Economic Outlook update, projects global output growth to decline significantly to 2.8 percent in 2023, from 3.4 percent in 2022, before rising slightly to 3.0 percent in 2024.
The projected slowdown reflects synchronous policy tightening around the globe, especially in the United States, the Euro area, the United Kingdom, and China, to contain the surge in inflation and worsening financial conditions.
Despite signs of modest growth in early 2023, persistent high inflation and the global financial market turmoil have proven too strong and dampened hopes of a robust recovery.
Commodity Prices in World Markets 68.
Speaker, the price of crude oil declined by 15.7 percent between August 2022 and February 2023.
This was due to a weakened demand, largely attributed to a huge decline in oil consumption in China.
According to IMF’s World Economic 14 Outlook update, July 2023, crude oil prices are projected to fall from an average of US$96.4 a barrel in 2022 to US$73.1 a barrel in 2023.
However, gold and cocoa prices have performed better than anticipated.
Domestic Developments 69.
Speaker, global developments, severely impacted the domestic economy.
The performance of key indicators in 2022 are as follows: i. Overall real GDP growth declined from 5.1 percent in 2021 to 3.1 percent in 2022.
This was lower than the 3.5 percent projected for the year; ii.
Non-oil GDP growth declined over the period, recording a growth of 3.8 percent compared to 6.6 percent recorded in 2021; iii.
Headline inflation accelerated consecutively from 13.9 percent in January to 29.8 percent in June 2022 and to a peak at 54.1 percent in December 2022 following the sharp currency depreciation and surge in commodity prices; iv.
Interest rates broadly trended upward across the spectrum of the yield curve, consistent with the tightening policy stance.
The 91-day and 182-day Treasury bill rates increased to 35.48 percent and 36.23 percent respectively, in December 2022, from 12.49 percent and 13.19 percent respectively, in the same period of 2021; v. Cumulatively, the Ghana Cedi depreciated by 30.0 percent, 21.2 percent and 25.3 percent against the US dollar, the Pound Sterling and the Euro, respectively.
This compared with an appreciation of 3.5 percent against the euro and a depreciation of 4.1 percent, and 3.1 percent against the US dollar and the pound respectively, in 2021; and vi.
Gross International Reserves declined by US$3,457.03 million to US$6,238.19 million equivalent to 2.7 months of import cover.
Speaker, on the fiscal front, there were several key developments in 2022.
Government, sought to, among others, strengthen its fiscal consolidation programme which commenced in 2021.
The objective was to gradually return to the Fiscal Responsibility Act thresholds of a fiscal deficit of no more than 5 percent of GDP and an annual positive Primary Balance at the close of 2024.
The strategy included pursuing a strong revenue-led consolidation to complement expenditure rationalisation measures.
However, owing to several factors, Government’s fiscal policy suffered major setbacks from both external and domestic shocks.
Speaker, before discussing the 2022 fiscal outturns, we would like to note that the fiscal anchor in the context of the IMF-supported PC-PEG, is the Primary Balance on commitment basis.
To align with this requirement, Government, therefore, had indicated in paragraph 210 of the 2023 Budget Statement, that the 15 fiscal accounts would henceforth be reported on commitment basis, thereby, taking into account outstanding unpaid commitments of Government.
Speaker, the assessment on commitment basis promotes transparency, enables a real-time monitoring of Government’s fiscal performance, and provides a realtime view on the payables, thus helping to prevent while reducing the accumulation of arrears.
This information is also essential for the public to get a comprehensive view of the bold fiscal policies to restore fiscal and debt sustainability in Ghana.
Speaker, with this context, the provisional data on Government’s fiscal operations for 2022, indicate that: i. Total Revenue and Grants for the period amounted to GH¢96.65 billion (15.8% of GDP) compared with the Mid-Year Review target of GH¢96.84 billion (16.4% of GDP) and the projected outturn of GH¢98.08 billion (15.9% of GDP); and ii.
on the other hand, Total Expenditure (on commitment basis) amounted to GH¢165.06 billion (27.0% of GDP) compared to the Mid-Year Review target of GH¢133.84 billion (22.6% of GDP) and the projected outturn of GH¢159.01 billion (25.8% of GDP).