2024 Budget By Hon.Ken Ofori Atta
Hey there
Inflation is expected to remain within the IMF programme’s Monetary Policy Consultation Clause (MPCC) of 29.4 percent, with a symmetric band of 4.0 percent at the end of 2023, an end year target of 15% in 2024 and trend further down to the medium-term target band of 8±2 percent by end-December 2025. A tight monetary policy stance, favourable base drifts, relative stability on the foreign exchange market, and a favourable food harvest are expected to outweigh inflationary pressures over the near-term.
The Bank of Ghana has maintained the tight monetary policy stance to firm up the disinflation process. Among other measures, the Bank has further raised the monetary policy rate by a cumulative 300 basis points (bps) in the year to September 2023 to 30 percent. In the outlook, monetary policy in 2024 and the medium-term will aim to regain price stability.
Non Oil Real GDP is projected to slow down from an estimated 2.8 percent in 2023 to 2.1 percent in 2024 and pick up to 5 percent by 2027 giving an average growth rate of 4.1 percent over the 2024-2027 period.
- In the real sector, we expect Overall Real GDP growth to increase from an expected 2.3 percent in 2023 to 2.8 percent and reach 5 percent by 2027. This yields an average growth rate of 4.3 percent over the 2024-2027 period.
In the difficult economic challenges, we paid 15 percent 19 Cost of Living Allowance (COLA) for 6 months in 2022 to cushion 949,122 workers, some 50 percent more than 2016. All workers were paid full wages and salaries and on time, even when revenues plummeted during the COVID-19 Pandemic.
As a Government, we have always been committed to protecting the quality of life of our people. Total Wages and Salaries for workers has increased from GH¢14.7 billion in 2016 to GH¢37.5.
Government recognises the constraints our medical personnel face in providing health care for our citizens. With the passage of the Exemptions Act, Government will engage the Ghana Medical Association on waivers for importation of vehicles to ease the transportation burden of our doctors. This policy will enable them to deliver quality and timely healthcare.
The Tripartite Committee has concluded negotiations on the National Daily Minimum Wage. The tax-free portion of the Individual Income Tax rates will accordingly be adjusted to take care of the change.
This approach will make it easier for taxpayers to fulfil their tax obligations to the State. A simplified tax return will be introduced as a means of promoting voluntary compliance as part of the modified taxation scheme for individuals in the informal sector. The bands subject to ad valorem taxes will be expanded while the specific rates will be reviewed upwards.
The Stamp Duty Act, 2005 (Act 689) has not been reviewed since its enactment in 2005. To realign the rate with current economic realities, Government, in 2024, will review the rates and fees for stamp duties.
To address the negative externalities of plastic waste and pollution, Government will review and expand the Environmental Excise Duty to cover plastic packaging, and industrial and vehicle emissions.
A VAT flat rate of 5 percent to replace the 15 percent standard VAT rate on all commercial properties will be introduced to simplify administration.
Grant exemptions on the importation of agricultural machinery equipment and inputs and medical consumables, raw materials for the pharmaceutical industry; Grant import duty waivers for raw materials for the local manufacture of sanitary pads; Zero rate VAT on locally produced sanitary pads; Extend zero rate of VAT on locally assembled vehicles for 2 more years; Waive import duties on semi-knocked down and completely knocked down Electric vehicles imported by registered EV assembly companies in Ghana for a period of 8 years; Waive import duties on import of electric vehicles for public transportation for a period of 8 years; The following reliefs have been prioritised for implementation: Extend zero rate of VAT on locally manufactured african prints for two (2) more years;
However, I assure this August House, that we have heard, we believe in lower taxes for industry, and we are working at this aggressively with the GRA and to be cemented with the standing committee of the Mutual Prosperity Dialogue.
In that regard, it is difficult to implement all the structural reforms and tax reliefs needed to immediately lower and/or eliminate certain tax handles.
It is important to note that in the short-term, fiscal sustainability requires that we improve our tax ratios significantly otherwise, our long-term competitiveness will be eroded. As we all know, our country’s 13 percent tax-to-GDP ratio is far below our peers. Our target is 18-20% and we are on course.
Our approach to tax policy since 2017 was to give significant relief to the private sector until expenditure pressures from 2020 required a more aggressive approach.
To address these challenges, Government is reviewing the overall structures and processes to determine the optimal way forward. In the interim, Districts will resume collection until these challenges are resolved.
Despite these achievements, the initiative has encountered some challenges thus making it difficult for the relevant bodies including the Metropolitan, Municipal and District Assemblies to have access to their share of the property rate collections on time.
Bills are currently available online for properties that have been successfully identified.
Similarly, the identification of registered persons and entities associated with billable properties has increased by 831 percent, from 186,542 to 15.68 million. The number of billable properties has seen a substantial increase, with a pre-2023 count of 1.3 million properties escalating to 12.42 million representing an 856 percent surge in properties identified that can now be properly billed.
The objective was to develop a unified common platform capable of billing, collecting, and reporting property rates nationwide. Acting through the Ghana Revenue Authority (GRA) as per Section 4 of the Ghana Revenue Authority Act, 2009 (Act 791), introduced the property rate reform project.
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.
The potential interest rate saving from the ongoing external debt operation will further bolster public finance sustainability. 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.
Total Expenditure (commitment) is projected at GH¢226.7 billion (21.6 percent of GDP). This projection reflects a reduction of 6.1 percentage points of GDP in total expenditures (commitment basis) relative to the outturn in 2022.
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.
The disruptions in energy and food prices, and efforts to combat record-high inflation through tightening global monetary policies, have considerably slowed down economic activity globally.
Global economic recovery remains sluggish primarily due to a confluence of setbacks, including the lingering effects of supply-chain disruptions and geopolitical events, and the increasing cost of living across many economic blocs.
That is the promise of this Budget. And we will keep our eyes firmly fixed on the future and build lasting prosperity for this and the next generation.
As the agreed host of the Climate Vulnerable Forum (CVF) Secretariat, we are galvanising the coalition of 68 nations and 1.7 billion people to shape the climate discourse and secure resources for a just energy transition. Today, our country hosts the headquarters of the AfCFTA. We also have a privileged position in leading the climate change charge.
We are also positioning a generation of Ghanaians to secure our leadership in the global arena. Ultimately, our ambition remains to build an entrepreneurial nation and create an additional minimum of 1 million jobs for the Ghanaian youth over the near-term. We have done this before with 2 million jobs in years, but we must move faster. Office space has already been secured. Our goal is to realise Ghana’s potential to become a global BPO powerhouse, employing over 250,000 Ghanaians over the next few years.
YEA is about concluding negotiation with CCI, the business process outsource (BPO) operator in sub-Saharan Africa for the establishment of a call centre that can see the direct creation of 20,000 local jobs for our young graduates.
In this view the Ministry has teamed up with MIDA and in committing GH¢1 billion to ensure that our Enclave project for import substitution is successful.
Indeed, given the potential to upscale and the multiplier effects that our small and medium-sized businesses possess, Government intends to scale up support to young entrepreneurs and fledgling businesses, with a singular aim to create sustainable jobs across all communities.
We will, through the Ghana Mutual Prosperity Dialogue, be intentional about collaborating with the private sector and our development partners to support local businesses attract FDI and enhance the economic prospects of our people.
We will continue to invest in on-going projects, and on the external front, we will conclude negotiations with the Official Creditor Committee to ensure that work on eligible externally funded projects resume.
Ghana has paid its dues, has turned the corner, and getting back on track. Despite these successes, we have to do more to reinforce our stability and guarantee decent jobs with good pay for the young people. As such, through the 2024 Budget, we will deliver even more investment across the real sector to place our economy on a firm growth trajectory that will create more jobs, safeguards our climate prospects and deeply entrench Ghana as the seed country for Africa’s development renaissance.
THe government has also invested GH¢1.7 billion in the National Identification Scheme to ensure that 17.5 million eligible Ghanaians acquire security-sensitive ID Cards. This has laid the foundation for a prosperous future where digitalisation provides more convenience, introduces an added layer of efficiency in delivering public services, and enhances our ability to safeguard Ghana’s national interests.
The 2024 Budget will set out the broad medium-term policy framework underpinning our approach towards recovery and stability with growth.
We will cross the GH¢1 trillion Gross Domestic Product (GDP) mark for the first time in our economic history. Ghana’s economy under President Akufo-Addo’s final year in office is projected to be valued over GH¢1 trillion in 2024 from the GH¢219.5 billion in 2016.
Nov – 15 – 2023 , 13:22
Below are key highlights of the 2024 Budget, which seeks to advance Ghana on the path toward fiscal consolidation, macro stability and growth All workers were paid full wages and salaries and on time, even when revenues plummeted during the COVID-19 Pandemic.
Source: Graphics online
