By: Edzorna Francis Mensah
The budget statement and economic policy of the Government of Ghana for 2024 Financial Year, presented to Parliament by the Minister of Finance on 15th November pursuant to Article 179 of the 1992 Constitution of the Republic of Ghana and Section 21(3) of the PFM Act 2016 (of ACT 921) has shown that, Government expenditure will go beyond the total revenue for the year under review.
Moving the motion the House to approves the Financial Policy of the Government of Ghana for the year ending 31st December, 2024, “Resource Allocation for 2024”, the Sector Minister in paragraph 65 of the budget document said, the total expenditure thus government commitment is projected at GH¢226.7 billion representing 21.6 percent of the Gross Domestic Product (GDP).
According to him, “this projection reflects a reduction of 6.1 percentage points of GDP in total expenditures (commitment basis) relative to the outturn in 2022. This large decrease comes from the combination of fiscal consolidation efforts of 4.9 percentage points of GDP, reflecting an adjustment in revenue by 1.0 percentage point and primary expenditure by 4.0 percentage point of GDP. The potential interest rate saving from the ongoing external debt operation will further bolster public finance sustainability”.
But the under “Resource Mobilisation for 2024”, captured in paragraph 64 of the budget noted that, “Total Revenue and Grants is projected at GH¢176.4 billion (16.8 percent of GDP) and is underpinned by permanent revenue measures largely Tax revenue measures amounting to 0.9 percent of GDP”.
Under the “Budget Balances and Financing Operations for 2024”, noted in paragraph 66 of the same document added that, based on the estimates for Total Revenue & Grants and Total Expenditure (including arrears clearance), the overall Budget balance to be financed is a fiscal deficit of GH¢ 61.9 billion, equivalent to 5.9 percent of GDP, and “the corresponding Primary balance is a deficit of GH¢5.9 billion, equivalent to 0.6 percent of GDP”, he added.
The Finance Minister in paragraph 63 submitted that the 2024 and medium-Term fiscal framework has been prepared in line with the objectives and policy priorities of the 3-year IMF-Supported PCPEG.
“The Primary Balance on commitment basis is the fiscal anchor we are using to assess our fiscal effort. Over the medium-term, we plan to improve the primary balance (commitment) from a deficit of 4.3 percent of GDP in 2022 to a deficit of 0.5 percent of GDP in 2023. The primary balance is expected to improve further to a surplus at 0.5 percent of GDP in 2024 and to 1.5 percent of GDP from 2025 onwards”, he mentioned.