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Accra, November 15, 2017//-The government of Ghana has set another ambitious macroeconomic targets for its medium term (2018-2021).
The targets are consistent with its medium-term development policy framework of the government.
The Minister of Finance, Ken Ofori-Atta who announced the targets in Parliament today when he delivered the 2018 Budget.
He said the government intends to grow the economy by 6.8 percent of GDP, while in real GDP to grow at an average rate of 6.2 percent between 2018 and 2020.
He also pegged inflation which stands at 12% to stay within the target band of 8±2%; while overall fiscal deficit to remain within the fiscal rule of 3-5 percent.
Mr Ofori-Atta added: “Primary balance expected to improve from a surplus of 0.2 percent of GDP in 2017 and remain around 2.0 percent in the medium term; and Gross International Reserves to cover at least 4 months of imports”.
He said based on the government policy objective of ensuring macroeconomic stability, and growing the economy for job creation, whilst protecting social spending.
Macroeconomic targets are set for the 2018 fiscal year:
- Overall GDP growth rate of 6.8 percent;
- Non-oil GDP growth rate of 5.4 percent;
- End period inflation rate of 8.9 percent;
- Average inflation rate of 9.8 percent;
- Fiscal deficit of 4.5% percent GDP;
- Primary balance (surplus) of 1.6 percent of GDP; and
- Gross Foreign Assets to cover at least 3.5 months of imports of goods and services.
Fiscal sector 2018
He said moving into 2018, the government’s fiscal programme is firmly anchored on the ongoing fiscal consolidation.
“Our prime focus is to ensure that the fiscal deficit, which remains our principal fiscal anchor, is programed to decline to 4.5 percent of GDP from the projected 2017 end-year estimate of 6.3 percent. Over the medium term, the fiscal deficit is expected to stabilizearound 3-5 percent of GDP”, Mr Ofori-Atta told Members of Parliament (MPs).
Achieving this objective, according to him is not only critical but necessary if they are to maintain the healthy primary balance surplus required to eventually reduce the rate of debt accumulation.
However, some critical issues must be addressed in the process. “Domestically, we are faced with rising expenditures over the short to medium term, as we invest more in programmes that will stimulate economic growth and generate jobs. We will, therefore, need to boost domestic revenue through innovative channels that will not place undue burden on the entire populace”.
“Mr. Speaker, we must make these decisions in good time to ensure that our future generations will be bequeathed with a priceless inheritance of a sustainable fiscal environment, for as the saying goes, “let us build the roof before it rains”. We are studying all the available feasible options carefully”.
In this vein, optimizing resource mobilization through improved tax compliance and efficient and effective revenue administration remains an important part of our fiscal strategy to boost domestic revenue mobilization for 2018 and the medium term.
Consequently, in addition to empowering the Ghana Revenue Authority (GRA) to bring to book tax evaders, the government is equally investing in programmes and infrastructure to widen the tax net.
“This will include the implementation and rollout of a National Digital Address System (to help us track tax payers especially in the informal sector), an acceleration of the implementation of the National Identification Programme, deployment of Electronic Point of Sale devices (to ensure that vendors are not under declaring VAT), and special audits, among others”, the finance minister noted.
” At the same time, this Budget also takes bold steps to start mobilizing revenue by making concrete changes in the tax policy framework, especially in tax exemptions.
At the appropriate time, we will return to this august House with our proposed legislative amendments to pave the way for the execution of our programmes”.
Other tax measures being considered for the 2018 fiscal year include:
- Review of the Suspense regimes;
- Implementation of the Excise Tax Stamp policy
- Extension of the requirement to produce Tax Clearance Certificates for large private sector contracts; and
- Improving Property Rate collection.
On the expenditure front, Mr Ofori-Atta said the government has shown its commitment to eliminate expenditure overruns and would remain committed to continue with the design and implementation of the Public Financial Management (PFM) reforms with the aim of eliminating inefficient and ineffective allocation of resources.
Currently, “the wage bill poses the single major risk to our budget implementation. The entire Human Resource personnel management within the public service would need to be revisited. We will be considering our options carefully within the broader framework of the new Public Sector Reform Strategy (PSRS)”.
Other expenditure measures he mentioned include: streamline the Ghana Integrated Financial Management Information System (GIFMIS) Business process to facilitate and expedite payments to eliminate arrears build-up to service providers; strengthening and enforcingcommitment control; and payroll reforms.
These reforms, according to him would generate fiscal space to support priority spending programmes, boost growth, improve the societal welfare of our citizenry, and guarantee the achievement of our goal of debt sustainability.
African Eye Report