The African Development Bank (AfDB) has signed a 102.59 million-dollar grant with Ghana to support the country’s budget.
The grant, which falls under the Fiscal Consolidation and Economic Recovery Program, (FISCERP), also known as General Budget Support, will be used to address pressing economic challenges, foster sustainable growth, enhance fiscal consolidation, and promote inclusivity within the Ghanaian society.
Speaking at a brief signing ceremony in Accra, Deputy Minister of Finance, Mrs. Abena Osei Asare, reiterated government’s commitment to harnessing the potential of the agreement for the benefit of all citizens.
“We acknowledge that the success of this program hinges on effective collaboration among our Government, Development Partners, the Private Sector and Civil society,” she stated.
Mrs. Osei Asare extended an open invitation to all stakeholders to emulate the confidence demonstrated by the African Development Bank and put their hands to the wheel as government strives towards the achievement and successful execution of the program.
Country Manager of AfDB, Fasika Eyerusalem said Ghana’s economy has been stressed by global developments, including the effects of the COVID-19 pandemic and global financial tightening.
She said the grant sourced from the African Development Fund, therefore, is to enhance fiscal consolidation measures and contribute to increasing resource mobilisation to create more financial capacity for government’s investments.
“Currently, the Bank Group’s active country portfolio in Ghana consists of 20 operations (15 public and 5 private), with a total commitment of 726 million USD across various sectors- the transport sector accounts for the largest, followed by agriculture,” she said.
“The portfolio also involves projects in economic governance, energy, water and sanitation, and human capital development,” she added.
As of September this year, Ghana’s public debt had increased to GH₵575.5 billion as of June 2023, representing 71.9% of Gross Domestic Debt (GDP).
This is a marginal rise of GH₵6.3 billion compared to the GH₵569.2 billion recorded in April 2023.
According to the Bank of Ghana’s Summary of Economic and Financial Data for September 2023, the country’s public debt has increased by GH₵27.7 billion since January 2023.
In dollar terms, the total debt stock stood at US$52.3 billion as of June 2023.
External debt accounted for GH₵328.6 billion (US$29.9 billion), while domestic debt accounted for GH₵246.9 billion ($30.8 billion).
While the external debt went up by GH₵ 7. 3 billion compared to April 2023 figure of GH₵321.3 billion that of domestic debt however saw a slight fall from GH₵ 247.9 billion to GH₵ 246.9 billion for the same period.
Nominal GDP, on the other hand, remained at GH₵800.9 billion as of June 2023, a figure that has not seen any increase since January 2023 but has gone up from the GH₵610.2 billion recorded in June 2022.
In a related development, Civil Society Organisations have devised and presented to the Ministry of Finance collated strategic inputs to be considered for the 2024 budget, which will be read by the sector Minister Ken Ofori-Atta before parliament on November 15, 2023.
In a press forum to share more insight with the media, the CSOs described the measures developed as future-proven and solution-oriented prepositions that, incorporated into the 2024 budget, will chart a new path for development in the country and salvage the economy from further decline.
The collated inputs by the Civil Society Organisations for the 2024 budget cover five thematic areas, which include macro-fiscal, which are the revenue expenditures to be considered for the budget; extraction and energy; health and education; governance and anti-corruption; and agriculture.
These thematic areas capture prudent fiscal policies and actions, which is expected to promote growth and development in the key sectors of the economy. Some fiscal policies captured under the thematic areas include the following
MACRO FISCAL
The CSOs called for its inclusion in the 2024 budget under Macro Fiscal, the increase of E-commence Tax from 3% to 6%, the doubling of property tax, high net worth taxation, the taxing of professional bodies, the establishment of an independent fiscal council, and the scrapping of the COVID-19 levy.
GOVERNANCE AND ANTI CORRUPTION
The CSOs urged the government to consider in its budget the need to strengthen anti-corruption institutions, ensuring public procurement reform, funding for audit institutions, and implementing measures of asset declaration and verification.
In agriculture, the CSOs want the government to consider the need to invest 10% of the IMF Extended Credit Facility in the agriculture sector.
In education and health, the CSOs want an increase in the capitation grant to 60 million cedis, increase in school feeding allocation per unit from 1.2 cedis to 3 cedis, clearance of the ICG arrears, and the development of a health contingency plan for the future.
In the energy sector, the CSOs want government to ensure the need to measure and report on tariff adjustment effectiveness in the power sector.