The Minister for Finance, Ken Ofori-Atta, has told Parliament that the economy is responding to treatment.
According to the minister, the government has made significant progress on restoring macro-economic stability and thus the narrative about the once-ailing Ghanaian economy is changing.
“As I have indicated, we have made significant progress on restoring macro-economic stability and the narrative is changing. The economy is showing signs of recovery,” he said.
The Minister for Finance made this known on the floor of Parliament on Monday, July 31, 2023 when he presented the fiscal review of the 2023 budget, in fulfillment of Section 28 of the Public Financial Management Act (Act 921).
Briefing the House on the status of the economy, the Minister for Finance cited that the exchange rate has stabilised, inflation has softened and interest rates have declined since December 2022.
He explained that these out-turns were the result of the focused implementation of all the measures presented in the 2023 budget and the positive sentiments arising from the progress with the IMF Programme,
However, he added that despite the positive signs of recovery, there was a need to revise the 2023 macro-fiscal framework to align with this year’s budget.
He explained that the framework of the budget, anchored on the Post-Covid-19 Programme for Economic Growth (PC-PEG) supported by the $3 billion International Monetary Fund facility was guided by the September 2022 data that underpinned the 2023 Budget in November 2022.
KEY TARGETS
In the 2023 budget, the Minister for Finance sought the approval of Parliament for the government to set out to achieve some key macroeconomic targets.
The target included a 2.8% overall real GDP growth, a 3.0% non-oil real GDP growth, an 18.9% end-December inflation rate, a 5.9% overall budget deficit on commitment and a 7.7 percent cash basis.
The rest were 0.7% primary balance on a (commitment basis), surplus of GDP and a deficit of 1.1% of GDP on a cash basis, and Gross International Reserves to cover not less than 3.3 months of imports.
Stressing that the government was making significant progress, the Minister attributed this to the implementation of the Post-Covid programme being supported by the IMF.
REVISIONS
In the mid-year budget review, the government revised the target for the overall real GDP growth rate of 1.5% down from 2.8%; the non-oil real GDP growth rate of 1.5% is now down from 3.0%.
Also, the end-period headline inflation has been revised from 18.9% to 31.3 percent; the primary balance on a commitment basis of a deficit of 0.5 percent of GDP compared to a surplus of 0.7 percent of GDP, aligning with the IMF-supported PC-PEG target Primary balance.
The gross international reserves projected to cover 3.3 months of imports have been revised to cover at least 0.8 months of imports of goods and services by 2023.
DEBT RESTRUCTURING
The Minister reminded the House that the 2023 budget would introduce the Domestic Debt Exchange Programme (DDEP), which he said was critical to the implementation of the IMF-supported PC-PEG Programme.
He told Parliament yesterday that after three months of negotiations with the different bondholders, the government raised GH¢126,978.5 million in total outstanding bonds at the settlement.
Out of the amount GH¢29,286.2 million were held by Pension Funds, bringing the total eligible bonds to GH¢97,749.6 million.
The ministry received a final participation of GH¢82,994.5 million, representing 84.9 percent of total eligible bonds.
However, the minister indicated that the government was mindful of the impact of the debt exchange programme on individuals and was working hard towards a faster economic recovery to ameliorate the impact on their welfare.
NO SUPPLEMENTARY
The finance minister did not ask for a supplementary budget because the appropriation has been revised from GH₡227.7 billion as approved in November 2022 to GH₡206.0 billion.
He explained that it had been revised because oil revenues have fallen short of expectations due to changes in global prices. Also, there is a lower domestic interest payment and amortization as a result of the DDEP and the reduction in foreign-financed CAPEX.
“Mr. Speaker, we will, therefore, not require a supplementary budget,” he said.
