ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
While we continue to deal with the devastating impact of the COVID-19 pandemic which led to significant reduction in our revenues and increased our expenditures enormously, we also have had to contend with the double jeopardy of the Russian-Ukraine war.
What has resulted in unprecedented global crises ravaging all currencies and historic living and inflation levels 10.
In the midst of these really challenging times, Parliament has in many, many instances supported Government's programmes presented to this House.
The eventual passage of the E-levy Act, the Fees and Charges Act, the Exemptions Act and the US$750 million Afrexim Loan, among others, attest to the support received from this august House.
At the same time, the exceptional challenges that the Electronic Levy bill encountered months before it was passed, also attest to the challenges that we must be mindful of going forward.
Speaker, I also wish to express the deep appreciation of Government to the various stakeholders, including Employers’ Associations, Labour Unions, Civil Society, Faith- Based Organizations, Association of Ghana Industries, Ghana Union of Traders Association, Bankers, Academia and Think-Tanks for the support we have received throughout the year, as well as the inputs that have informed and enriched our policy choices.
It is, Mr Speaker, when God’s people live together in unity- the Lord bestows His blessings.
A CHALLENGING YEAR 12.
Speaker, a year ago, I came to present a Budget with significant revenue measures to tackle our fiscal difficulties, finance the transformative agenda of Government and sustain the post COVID-19 recovery.
However, what started as a political disagreement over revenue measures in this House, triggered a series of events that significantly undermined the credibility of our budget, consequently leading to serious economic challenges, as investor confidence hit a new low.
This manifested in credit rating downgrades which triggered the closure of Ghana’s access to the International Capital Market; tightening domestic financing conditions; and increasing cost of borrowing.
The combined effects of the developments contributed to the rapid depreciation of the cedi and compounded the high debt service levels.
Speaker, our inability to access the International Capital Markets meant that, for the first time in our administration, we did not have the needed foreign currency to complement our forex earnings.
We have had to make strenuous efforts to meet our import bill, which exceeds US$10.0 billion annually.
Considering our low foreign earnings, it has been difficult to meet our import requirements including crude oil and petroleum products of about US$400m (¢4.80 billion) a month.
At the same time, the Ministry of Finance still needs to find about US$1.0 billion annually to keep our lights in our homes and workplaces.
Mr Speaker, the demand for foreign exchange to support our unbridled demand for imports undermines and weakens the value of the cedi.
This contributed to the depreciation of the cedi, which has lost about 53.8 per cent of its value since the beginning of the year.
Compared to the average 7 per cent average annual depreciation of the Cedi between 2017 and 2021, the current year’s depreciation, which is driving the high costs of goods and services for everyone, is clearly an aberration – a very expensive one.
The increases in fuel prices (Diesel currently ¢20.5 and Petrol ¢16.8) has led to increases in the prices of most goods and services.
Inflation which we managed to bring down from 15.4 per cent at the end of 2016 to 7.9 per cent at the end of 2019 and remained in single digits till the pandemic hit in March 2020 is now 40.4 per cent.
It is not only the individuals and households who are adversely affected by the depreciation of the cedi.
For us at the Ministry of Finance, the depreciation of the cedi seriously affects our ability to effectively manage our debt.
Indeed, our stock of debt has increased by ¢93 billion this year alone due to the depreciation of the cedi since the beginning of 2022.
Even as the State struggles to raise sufficient revenues, high inflation rates continue to eat away the already meagre wages of the average Ghanaian.
The lesson from this relapse in macro-economic stability makes us even more determined, as your government, to permanently restructure and transform this economy and build resilience.
Mr Speaker, we have been honest with Ghanaians about the economic challenges that the country is facing.
The President pointed out that, never have so many malevolent forces come together, in a perfect storm, to so dramatically impact our lives.
The current challenges on the back of two difficult years, since March 2020, have really tested our people and our resolve.
We empathize greatly with all Ghanaians for the undue pressures this has placed on their livelihoods.
We want to commend all of you for your forbearance during these difficult times.
We are confident that together, and with God on our side, we will turn things around.
On behalf of His Excellency the President, let me assure all Ghanaians that Government is working to change this negative narrative and demonstrate our resilience as a people and our ability to rebuild for a better future.
We have demonstrated this many times in our country, but more recently between 2017 and 2019.
We are resolved that in the next two years, Government would work with you all, with a restless determination, to turn around this economy.
Mr Speaker, in a few hours, the Black Stars will be playing their first game in the 2022 FIFA World Cup tournament in Qatar.
It is clear that we stand united as a nation behind our Black Stars.
A successful passage of the 2023 budget, a successful conclusion of negotiations with the IMF; and, making Ghana’s performance in Qatar 2022, the most successful that is winning the Cup not only for the country but for any African side on the World Cup stage, will, I dare say, bring this most challenging year to a very successful end.
To this, Mr Speaker, we pray.
As the bible says ‘behold How good and pleasant it is when God's people live together in unity!
……… for there, the Lord commands the blessing” Psalm 133 verse 1-3 Resetting Our Economy Mr.
Speaker, events since March 2020 have taught us the pervasive volatility of our world today and the wisdom in the vision of President Akufo-Addo to reset our economy through industrialisation.
This budget reflects our resolve to reset the economy and restore macroeconomic stability.
But, to do so, we need the support of the people of Ghana and the cooperation and approval of this Parliament.
Our goal now is to significantly enhance revenues, significantly cut down the cost of running government, significantly expand local production, invest more to protect the poor and vulnerable, and continue expanding access to good roads, education and health for every Ghanaian everywhere in Ghana and the diaspora.
Mr Speaker, this Budget is, therefore, anchored on a seven-point agenda aimed at restoring macroeconomic stability and accelerating our economic transformation as articulated in the Post-COVID-19 Programme for Economic Growth (PC-PEG).
These comprise an agenda to: i. Aggressively mobilize domestic revenue; ii.
Streamline and rationalise expenditures; iii.
Boost local productive capacity; iv.
Promote and diversify exports; v. Protect the poor and vulnerable; vi.
Expand digital and climate-responsive physical infrastructure; and vii.
Implement structural and public sector reforms.
To achieve these, there are three critical imperatives: successfully negotiating a strong IMF programme; coordinating an equitable debt operation programme; and attracting significant green investments.
This will enable us to generate substantial revenue, create needed fiscal space for the provision of essential public services and facilitate the implementation of the PC-PEG programme to revitalise and transform the economy.
Mr Speaker, we will undertake the following actions, initiatives, and interventions under the seven-point agenda.
● To aggressively mobilize domestic revenue, we will among others: ➢ Increase the VAT rate by 2.5 percent to directly support our roads and digitalization agenda; ➢ Fast-track the implementation of the Unified Property Rate Platform programme in 2023; and ➢ Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to one percent (1%) of the transaction value as well as the removal of the daily threshold.
● To boost local productive capacity, we will among others: ○ cut the imports of public sector institutions that rely on imports either for inputs or consumption by 50% and will work with the Ghana Audit Service and the Internal Audit Agency to ensure compliance; ○ support the aggressive production of strategic substitutes, including the list disclosed at the President’s last address to the nation; ○ Support large-scale agriculture and agribusinesses interventions through the Development Bank Ghana and ADB Bank; ○ introduce policies for the protection and incubation newly formed domestic industries to allow them to make the goods produced here competitive for local consumption and also for exports.
● To promote exports, we will among others: ○ expand our 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; ● To pursue efficiency in Government expenditures, we will among others: ○ Implement the Government directives on expenditure measures; ○ Integrate public procurement approval processes with GIFMIS to ensure that projects approved are aligned with budget allocation; ○ Review key government programmes to reflect relevance, promote efficiency, and ensure value for money; and ○ Review the efficiency of Statutory Funds ● To implement structural and public sector reform, we will among others: ○ Impose a debt limit on non-concessional financing; ○ Undertake major structural reforms in the Public Sector by reviewing the operations of 36 State-owned Enterprises, 8 Special Purpose Vehicles, 90 Joint Venture Companies, 38 Regulatory institutions, 68 Statutory Bodies and 6 Subvented Agencies; ○ Enforce compliance with a legal and regulatory framework on foreign exchange; ○ Initiate measures to overhaul the tax structures in the extractive industry; ○ Expand the gold purchase programme by the Bank of Ghana to support FX Reserve accumulation, promote an LBMA-certified gold refinery in Ghana and promote local currency stability; ● To safeguard the social protection programmes, we will among others: ○ Expand social protection programmes such as LEAP, School Feeding, and NHIS for the vulnerable and socially excluded.
Mr Speaker, last year, I presented our plan to get us back to pre-pandemic macro-stability and growth levels.
More importantly, I shared the President’s strategy to improve the living standards of Ghanaians and address our central challenge – unemployment.
The strategy was anchored on building a Sustainable Entrepreneurial Nation through fiscal consolidation and Job Creation.
I am happy to report that we have piloted the YouStart Programme and launched the District Level programme.
Mr Speaker, we now have the commitment of our banks and development partners and are confident that the ¢10 billion, 1 million jobs will be achieved in the next three years.
We are now embarking on a journey to fundamentally reposition our economy with the Post-COVID-19 Programme for Economic Growth (PC-PEG), to be supported by the IMF, World Bank and other friendly sovereigns and the private sector (domestic and international), as our blueprint.
We are mindful that it will require broad-based contributions and sacrifices.
There will be costs to the fiscal adjustments we intend to make in the coming years to sustain our stability, recovery and eventual transformation.
My pledge to this House is that there will be fiscal discipline.
That every pesewa that we ask the Ghanaian people and businesses operating in Ghana to contribute will be spent well.
The challenges we face are daunting but we must not lose sight of the greatest strength of being Ghanaian: resilience, entrepreneurial zeal, faith, courage, solidarity and hope.
I, therefore, ask all of us to play a constructive role in getting our nation fully back on track.
Ours is a country with real prospects and the challenges notwithstanding, Ghana will rise again, and my faith is premised on the fact that a lot has already been achieved, especially over the course of the Fourth Republic and our policy, as outlined in this budget to reset the economy, if supported will ensure that, indeed, we have not wasted the current global crisis, but used it to make our economy stronger and the progress and prosperity of our people even more assured.
SECTION 2: GLOBAL ECONOMIC DEVELOPMENTS AND OUTLOOK Economic Growth and Inflation Mr Speaker, the global environment is fragile, and the outlook remains uncertain.
Global economic activity in 2022, has slowed down more broadly and sharply than anticipated.
Economic growth in Emerging Markets and Developing Economies is expected to slow down from 6.7 per cent in 2021 to 3.7 per cent in 2022, with a similar pattern expected in 2023.
In Sub-Saharan Africa, growth is expected to slow down to 3.6 per cent in 2022 and 3.7 per cent in 2023, from 4.7 per cent in 2021 due to low investment and a worsening trade balance.
Overall, global inflation has risen, driven largely by increases in energy and food prices.
Inflation in Emerging and Developing Economies has also risen from an average 5.9 per cent in 2021 to 9.9 per cent in 2022.
The war in Ukraine has further heightened inflationary pressures.
The exchange rates across the major international currencies depreciated rapidly by the end of the third quarter of 2022.
As of November 23, 2022, the Ghana cedi depreciated cumulatively by 54.2 per cent against the US Dollar.
Similarly, the Ghana cedi depreciated cumulatively by a 48.5 per cent against the British Pound.
Overview of Macroeconomic Performance (Jan-Sep.
2022) Mr Speaker, I now present to this august House the provisional macroeconomic performance for the first three quarters of 2022 based on available data for the period.
To better assess the macroeconomic developments for the first three quarters of the year, permit me to restate the macroeconomic targets set for 2022 as presented in the 2022 Mid-Year Fiscal Policy Review: • Overall Real GDP growth of 3.7 per cent; • Non-Oil Real GDP Growth rate of 4.3 per cent; • End-period inflation of 28.5 per cent; • Overall fiscal deficit of 6.6 per cent of GDP; • Primary surplus of 0.4 per cent of GDP; and • Gross International Reserves sufficient to cover at least three and half months of imports of goods and services.
Mr Speaker, data on the performance of the economy at the end of the third quarter highlights the continued adverse impact of the challenging global and domestic environment on the economy.
As I indicated earlier, these developments have manifested through rapid exchange rate depreciation, high inflation, unsustainable debt burden, fiscal stress and external sector shocks, among others, despite the monetary and fiscal policy interventions that were deployed in the first three quarters of the year.
Mr Speaker, the economic performance for the first three quarters of the year is summarised as follows: Mr Speaker, provisional GDP data from Ghana Statistical Service (GSS) published in September 2022 indicate that overall Real GDP for the first half of 2022 recorded an average year-on-year growth of 4.0 per cent (3.4 per cent in Q1 2022 and 4.8 per cent in Q2 2022 respectively).
Non-Oil GDP expanded by 4.1 per cent and 6.2 per cent in the first and second quarters of 2022, respectively.
• The latest data indicate that headline inflation accelerated to 40.4 per cent in October 2022, from 37.
2 per cent in September and 33.9 per cent in August.
The rise in the October inflation was broad-based, driven by both food and non-food prices.
• The Monetary Policy Rate has increased by 1,000 basis points (from 14.5% to 24.5%) since the beginning year as the Central Bank deployed its monetary policy tools to anchor inflation expectations; • Developments in the money market broadly showed rising interest rates across the yield curve.
For example, the discount rate on the 91-day instrument has increased to 32.5 per cent as of today from 12.5 per cent in December 2021; • The Public Debt-to-GDP ratio stood at 75.9 per cent at the end of September 2022, up from 76.7 per cent at the end of December 2021.
• Gross International Reserves (GIR) stood at US$6,591.8 million, equivalent to 2.9 months of imports cover, at the end of September 2022 from a stock position of US$9,695.2 million (equivalent to 4.3 months of imports cover) at the end of December 2021.
Fiscal Developments Summary of Fiscal Performance Q1-Q3 2022 Mr Speaker, the 2022 Mid-Year Fiscal Policy Review revised the 2022 fiscal framework against the backdrop of unfavourable global and domestic developments.
The fiscal deficit target was revised to 6.6 per cent of GDP down from the 7.4 per cent set in the 2022 Budget.
Similarly, the primary balance target was revised upwards to a surplus of 0.4 per cent of GDP from a surplus of 0.1 per cent.
This was on the back of revisions in GDP projections, adjustments in the expected yield from the 2022 revenue measures, adjustments to reflect the 30 per cent discretionary expenditure cuts, adjustments in interest payments, and adjustments in the allocation for compensation of employees to incorporate a 15 per cent Cost of Living Allowance (COLA), adjustments in the exchange rate on account of higher depreciation, and adjustments to the Benchmark Crude oil price.
Mr Speaker, provisional data on Government fiscal operations for January – September 2022 shows a shortfall in revenue performance and a faster execution of expenditures.
This resulted in an overall budget deficit of GH¢41,699 million (7.0% of GDP), against a programmed deficit target of GH¢36,684 million (6.2% of GDP).
The corresponding primary balance for the period was a deficit of GH¢9,597 million (1.6% of GDP), against a deficit target of GH¢5,794 million (1.0% of GDP).
Revenue Performance Mr Speaker, Total Revenue and Grants amounted to GH¢65,399 million (11.0 per cent of GDP), compared with a target of GH¢67,307 (11.4 per cent of GDP) and the GH¢49,108 million (10.7 per cent of GDP) recorded in the corresponding period in 2021.
The outturn for Total Revenue and Grants represents a shortfall of 2.8 per cent compared to the period’s target and year-on-year growth of 33.2 per cent.
The shortfall in revenue stemmed from the less robust performance recorded in all the revenue handles for the period.
Mr Speaker, Domestic Revenue for the period amounted to GH¢64,601million (10.9 per cent of GDP), falling below the target of GH¢66,503 million (11.2 per cent of GDP) by 2.9 per cent.
The outturn, however, represents a year-on-year growth of 34.0 per cent and constituted 98.8 per cent of Total Revenue and Grants.
Expenditure Performance Mr Speaker, Total Expenditure (including arrears clearance and discrepancy) for the period amounted to GH¢109,421 million (18.5 per cent of GDP), above the target of GH¢103,992 million (17.6 per cent of GDP) by 5.2 per cent.
Compensation of Employees amounted to GH¢27,146 million (4.6 per cent of GDP), 2.9 per cent below the budgetary provision of GH¢27,947 million (4.7 per cent of GDP).
The Wage bill constituted 91.3 per cent of the total Compensation and amounted to GH¢24,734 million.
Interest Payments for the period amounted to GH¢32,101 million (5.4 per cent of GDP), against the target of GH¢30,890 million (5.2 per cent of GDP) reflecting the higher cost of borrowing and the adverse impact of the currency depreciation on external interest.
Domestic Interest Payments constituted 78 per cent of total Interest Payments for the period.
Financing Operations Mr Speaker, the fiscal operations for the period resulted in an overall budget deficit of GH¢44,022 million (7.4% of GDP), against a target of GH¢36,684 million (6.2% of GDP).
The corresponding primary balance for the period was a deficit of GH¢11,921 million (2.0% of GDP), against a deficit target of GH¢5,794 (1.0% of GDP).
The fiscal deficit for the period was financed mainly from domestic sources amounting to GH¢37,491 million (6.3% of GDP), accounting for 85.2 per cent of the total financing.
Foreign financing for the period amounted to GH¢6,531 million (1.1% of GDP) and accounted for the remaining 14.8 per cent of the financing.
Public Debt Developments for January - September 2022 Mr Speaker, provisional debt data as at end of September 2022 shows a significant increase in Ghana’s public debt largely due to exogenous factors.
The end-September 2022 provisional figures indicate that total gross public debt stood at ¢467,371.31 million ($48,871.34 million), representing approximately 75.9 per cent of GDP.
The domestic debt component is GH¢195,657.60 million, which is 31.79 per cent of GDP, whilst external debt is GH¢271,713.71 million, representing 44.15 per cent of GDP.
The increase in domestic debt is largely on account of rising interest costs.
Domestic debt as a share of total public debt reduced from 51.6 per cent in 2021 to 41.9 per cent as at end of September 2022.
Mr Speaker, the external debt as a percentage of the total debt stock is 58.1 per cent as at the end of September 2022.
The sharp growth in the external debt stock is largely driven by the depreciation of the local currency.
The depreciation of the Ghana cedi added GH¢93,855.15 million to the external debt stock.
Overall, debt accumulation increased from 20.7 per cent in 2021 to 32.7 per cent as at end of September 2022, reflecting the impact of the depreciation of the Ghana cedi on the external debt side.
Outlook for External Sector in 2023 and the Medium Term Mr Speaker, the external sector performance in the outlook will depend largely on the quick resolution of the Russia-Ukraine war and the outcome of recession fears in advanced economies.
The thrust of the external sector will focus on rebuilding external buffers enough to cover at least three and half months of imports of goods and services to cushion the economy against adverse external shocks.
This will be underpinned by, among others, bilateral support, and strong remittance inflows.
Measures by BOG to address the Exchange Rate depreciation Mr Speaker, the Bank of Ghana will continue to monitor inflation developments and respond appropriately to contain price pressures.
Monetary Policy will focus on using the monetary policy rate to, among others, contain inflationary pressures.
Since August 2022, the Bank of Ghana has successfully been working with mining firms, international oil companies, and their bankers to purchase all foreign exchange arising from the voluntary repatriation.
UPDATE ON THE GHANA’S ENGAGEMENT WITH THE IMF FOR A FUND-SUPPORTED PROGRAMME Mr Speaker, since Government announced its engagement with the International Monetary Fund (IMF or the Fund) for a supported Programme on July 1, 2022, we have made substantial progress.
The Fund assured Government of its strong commitment and support in these difficult times.
Mr Speaker, Government and the IMF have agreed on programme objectives, a preliminary fiscal adjustment path, debt strategy and financing required for the programme to be in line with the Government’s Post-COVID-19 Programme for Economic Growth (PC-PEG).
The PC-PEG is Government’s blueprint to restore macroeconomic stability, promote debt sustainability, sustain economic recovery and support structural reforms.
2023 and Medium-Term Overall Macroeconomic Targets Mr Speaker, guided by the medium-term policy objectives, the following macroeconomic targets are set for the medium-term (2023-2026): i. Overall Real GDP to grow at an average rate of 4.3 per cent; ii.
Non-Oil Real GDP to grow at an average rate of 4.0 per cent; iii.
Inflation to be within the target band of 8±2 per cent; iv.
Primary Balance on Commitment basis to average 0.8 % of GDP in the 2023- 2026 period; and v. Gross International Reserves to cover at least 4 months of imports.