Highlights of 2016 budget statement
On theme: “Consolidating Progress towards a Brighter Medium Term,” explained that the consolidation agenda hinges on Government’s commitment to promoting fiscal discipline based on enhanced domestic revenue mobilization, prudent public expenditure management, improved debt management and the implementation of reforms in key areas of the economy.
On Public Financial Management Reforms; the PFM strategy was developed and approved by Cabinet, to further enhance the efficiency, transparency and accountability of the Public Financial Management Systems.
A new PFM Bill is being drafted to be passed into law in 2016 to provide a stronger regime for budget planning and formulation, execution and monitoring.
On Fiscal Policy the Minister said it created additional fiscal space for sustainable budget expenditures and enhance efficiency in tax administration, compliance and increase tax revenue.
TAX POLICY AND ADMINISTRATION
- Rollout fully the excise tax stamp project.
- Implement measures to address revenue leakages
- Introduce policies to rationalise and streamline the exemption policy.
- Re-imposition of Excise duty on Cider beer
- Review of Income Tax and VAT Threshold Bands.
- Wean-off Commissions, Agencies and Authorities into Companies including Driver and Vehicle Licensing Authority (DVLA); Environmental Protection Agency (EPA); and Energy Commission (EC).
EXPENDITURE MANAGEMENT INITIATIVES
- Manage the impact of the compensation bill through payroll management
- Strengthen the cash management system to include the B-Tracking, e-Travel Card, e-Fuel Card, and the Treasury Single Account.
SUSTAINABLE DEBT MANAGEMENT
- Progress is being made to ensure loan contracted with on-lending agreements by SOEs are recovered.
- Strengthen public debt management and operations.
- Limit the use of sovereign guarantees and encourage ring-fencing.
INFRASTRUCTURE DEVELOPMENT INITIATIVES
- Develop a draft National Infrastructure Plan
- Adoption of a new approach through Public-Private-Partnerships for infrastructure development
- Ghana Infrastructure Investment Fund (GIIF)
- Job Creation/ Youth Employment Initiatives: 100,000 youth will be engaged under the Community Improvement Programme.
- Green House Project: train farmers, youth, women and agricultural graduates in commercial and modern greenhouse vegetable production in the country.
MACROECONOMIC PERFORMANCE FOR 2015
Provisional real GDP is expected to grow by 4.1 percent in 2015, representing a slight increase from the revised figure of 4.0 percent recorded in 2014 and the revised 2015 Mid-Year GDP growth target of 3.5 percent.
Provisional data shows the Industry Sector will be the highest growth performers among the main sectors in 2015, with an expected growth out-turn of 9.1 percent.
The Services Sector is expected to achieve a growth out-turn of 4.7 percent, whilst that of Agriculture is expected to be 0.04 percent.
Annual inflation increased from 16.4 percent in January 2015 to 16.6 percent in March and to 17.9 percent in July, 2015. It however declined to 17.3 percent in August but rose marginally to 17.4 percent in October, 2015.
Monetary Sector Developments
Broad Money Supply (M2+) grew at 23.3 percent year-on-year in September 2015, compared to a growth of 33.6 percent in September 2014
Credit to Public and Private Sector: Total outstanding credit to the public and private sectors stood at GH¢28,730.7 million at the end of September 2015.
This represents a year-on-year growth in credit of 20.9 per cent in September 2015, compared with a growth of 50.6 percent in September 2014. The private sector accounted for 82.4 per cent of total outstanding credit at the end of the review period.
Interest rates: The Bank of Ghana Policy Rate was increased from 21 percent in December 2014 to 25.0 percent in September 2015.
- The Rates on the 91-day T-Bill declined from 25.8 percent in December 2014 to 25.2 percent in September 2015; and
- The 182-day Bill declined from 26.4 percent in December 2014 to 25.9 percent in September 2015.
Exchange Rate: Developments in exchange rate over the first nine months showed a general weakness in the Ghana cedi against the major trading partners:
- The Ghana cedi depreciated cumulatively by 14.8 per cent, 12.6 per cent and 7.8 per cent against the US dollar, the Pound sterling and the Euro in the interbank market, respectively.
External Sector Development
The provisional trade balance for the first nine months of 2015 showed a deficit of US$2,340.30 million.
This is expected to register a end year deficit of US$3,537.0 (9.8% of GDP) and a current account deficit of US$2,927.0 (8.1 per cent of GDP).
Gross Foreign Assets (GFA) stood at US$4,521.0 million (2.8 months of imports) at the end of September 2015. This is projected to rise to US$6,469 million at the end of 2015, sufficient to cover 4.0 months of import of goods and services.
Fiscal Sector Developments for 2015
Total revenue and grants for the first three quarters of 2015 amounted to GH¢22,693.3 million, equivalent to 16.9 percent of GDP, against a target of GH¢21,918.4 million, equivalent to 16.3 percent of GDP.
Total expenditure, including payments for the clearance of arrears and outstanding commitments for the first three quarters of the year amounted to GH¢29,438.2 million (22.0 percent of GDP) against a target of GH¢29,501.8 million (22.0 percent of GDP).
The overall budget balance on cash basis registered a deficit of GH¢6,744.9 million, equivalent to 5.1 percent of GDP. This was against a deficit target of GH¢7,583.4 million, equivalent to 5.7 percent of GDP.
Domestic Financing amounted to GH¢4,680.4 million, against a target of GH¢2,905.7 million, while Foreign Financing of the deficit was GH¢2,064.5 million, against a target of GH¢4,677.7 million.
GNPC lifted five parcels of crude oil (i.e. the 25th–29th liftings) on behalf of the State between January and September 2015. This involved 4,781,972 barrels of oil, down from 4,824,715 barrels in the corresponding period in 2014.
Total petroleum receipts (i.e. proceeds from Jubilee liftings and other petroleum receipts) as at the end of the third quarter of 2015 was US$341.50 million (GHȻ1,243.65 million).
Allocation of 2015 Petroleum Receipts
Out of the total petroleum revenue of US$341.50 million received in the first nine months of 2015,
- US$98.30 million was allocated to GNPC (the NOC) as its share of Equity Financing Cost (US$38.66 million) and Net Carried and Participating Interest (US$59.64 million).
- A total of US$16.60 million (GHȻ67.06 million) was transferred into the GPF, of which US$4.98 million or GHȻ20.17 million was transferred to the GHF while US$11.62 million or GHȻ46.89 million was transferred to the GSF.
Total ABFA amounted to US$227.47 million (GH¢834.76 million) between January and September 2015, of which US$39.81 million was transferred to the Ghana Infrastructure Investment Fund (GIIF).