The Minister for Finance, Ken Ofori Atta, has given that Ghana would not return to the doom days which led her to seek refuge at the International Monetary Fund (IMF), under the watch of former President John Mahama’s National Democratic Congress (NDC).
The Minister used ‘Egypt’ figuratively to describe the country as becoming more or less slaves to the IMF. In the old testament of the Bible, Israelites were enslaved in Egypt by King Pharaoh, and only got their freedom after many years.
The NDC took Ghana to the IMF, which decided whether the Civil Service could employ people, just to mention few of the conditions.
According to the Finance Minister, the experience at the IMF, which controlled the fiscal space of the country for three years, was a necessary bitter pill, looking at the state of the economy then.
As if the IMF conditionalities were not enough, the country, the Minister said, also experienced four years of power outages, which was a thorn in the flesh of businesses, as well as households.
However, over the last 22 months, since the NDC government was changed, there has also been a change in the weak financial sector, a change in the procurement system, and a change in tariff reductions.
Mr Ken Ofori Atta took time to chronicle some of the steps taken by the Akufo-Addo led government to restructure what it termed as bad a economy, to one that gives hope to the Ghanaian people.
The IMF programme created no fiscal space for government policies to thrive, thereby making it difficult for the it to go all out to improve the living conditions of its people, as promised in its manifesto, the present government noted.
However, presenting the 2019 budget statement and economic policy of the government to the Legislature yesterday, the Finance Minister said Ghana would part ways with the IMF by end of this year.
Thanking the IMF for playing its part, the Minister quoted President Akufo-Addo, and said that “never again,” adding, “we shall not return to Egypt again.”
Resource Allocation for 2019
According to Ken Ofori-Atta, the total expenditure on resource allocation for the year 2019 is estimated at GH¢73.4 billion, equivalent to 21.3 percent of Gross Domestic Product (GDP). The amount, he said, includes clearance of arrears.
Breaking down on the allocations, He noted that wages and salaries would drain a forecasted amount of GH¢19.4 billion, representing about 26.5 percent of Total Expenditure.
“Expenditure on Goods and Services is projected at GH¢6.3 billion, representing 1.8 percent of GDP. The annual growth of 38.8 percent reflects a full provision made to cater for the government’s priority programmes, including the flagship Free SHS policy.
“A total amount of GH¢18.6 billion has been estimated for Interest Payments of public debts. Of this amount, domestic interest payments will constitute about 77.8 percent and amount to GH¢14.5 billion,” he stressed.
Also contained in the budget, the government, in 2019, will continue to implement the Earmarked Funds Capping and Realignment Act, 2017 (Act 947) to reduce budget rigidities and create fiscal space to fund growth enhancing expenditures.
The Finance Minister explained to Parliament that in that regard, transfers to Statutory Funds as well as all other earmarked funds, are estimated at GH¢13.8 billion.
Capital Expenditure, he also said, is projected at GH¢8.5 billion. He further added that of this amount, domestically financed Capital Expenditure is estimated at GH¢3.2 billion.
Again, an amount of GH¢5.3 billion has been budgeted for Foreign Financed Capital Expenditure, and this will be funded by a combination of Project Grants and Loans.
According to the Minister, overall GDP is projected to grow by 7.6 percent in the year under review, while non-oil GDP is projected to grow at 6.2 percent. Also, in terms of sectoral growth, the Agriculture Sector is expected to grow by 7.3 percent, the Industry Sector (9.7 %), and the Services Sector (6.1 %).
Resource Mobilisation for 2019
Mr Ken Ofori-Atta announced that total revenue and grants for 2019 are estimated at GH¢58.9 billion, 17.1 percent of the rebased GDP, up from a projected outturn of GH¢46.8 billion, 15.7 percent of rebased GDP in 2018.
He also said domestic revenue is estimated at GH¢57.8 billion, representing an annual growth of 25.5 percent, over the projected outturn for 2018.
He added that of this amount, non-oil Tax Revenue will constitute about 74.2 percent of domestic revenue and amount to GH¢42.9 billion. This estimate reflects the impact of expected improvements in tax compliance and reforms in revenue administration.
“Non-Tax Revenue, excluding oil, will amount to GH¢6.5 billion (1.9 percent of GDP) in 2019, equivalent to 11.3 percent of Total Domestic Revenue. Of this amount, GH¢4.4 billion is expected to be retained by institutions as internally generated funds (IGF). In addition, as a result of the IGF capping, an amount of GH¢282.2 million is expected to be paid into the Consolidated Fund,” among others.