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Finance minister to present mid-year budget on July 24

Ghana's Finance Minister Set to Deliver Mid-Year Budget Review on July 24

In a significant development for Ghana's economic landscape, the Finance Minister, Dr. Mohammed Amin Adam, is scheduled to present the mid-year fiscal policy review of the 2024 budget to Parliament on July 24, 2024. This announcement, made by the Majority Leader and Leader of Government Business in Parliament, Alexander Afenyo-Markin, underscores the government's commitment to transparency and accountability in managing the nation's finances. The presentation is not just a routine procedural step but a critical juncture where the administration will provide updates on the country's economic performance, fiscal strategies, and any necessary adjustments to ensure sustainable growth amid ongoing global and domestic challenges.

The mid-year budget review is mandated by Section 28 of the Public Financial Management Act, 2016 (Act 921), which requires the Finance Minister to present a comprehensive assessment of the budget's implementation halfway through the fiscal year. This legal framework ensures that Parliament and the public are kept informed about the government's fiscal health, allowing for timely interventions if deviations from the original budget projections occur. Dr. Amin Adam, who assumed the role of Finance Minister earlier this year following a cabinet reshuffle, will be making his debut in this capacity, adding an element of anticipation to the event. His presentation is expected to cover a wide array of topics, including the performance of key revenue streams, expenditure patterns, debt management strategies, and the impact of external factors such as global commodity prices and geopolitical tensions on Ghana's economy.

Ghana's economy has been navigating a complex terrain in recent years, marked by the aftermath of the COVID-19 pandemic, inflationary pressures, and the lingering effects of debt restructuring under the International Monetary Fund (IMF) program. The original 2024 budget, presented late last year by the then-Finance Minister Ken Ofori-Atta, outlined ambitious targets for economic recovery, including a projected GDP growth rate of around 2.8% for the year, with efforts focused on fiscal consolidation, revenue mobilization, and social protection programs. However, mid-year reviews often reveal the realities on the ground, such as shortfalls in tax revenues due to slower-than-expected economic activity or unexpected expenditures arising from natural disasters or social unrest.

One of the focal points of the upcoming review will likely be the government's progress on its IMF-supported Extended Credit Facility (ECF) program, which Ghana entered into in May 2023. This $3 billion bailout package aims to restore macroeconomic stability, enhance debt sustainability, and promote inclusive growth. Dr. Amin Adam is expected to update Parliament on the outcomes of recent IMF reviews, including any disbursements received and the fulfillment of program benchmarks. For instance, the first review in January 2024 led to the release of a $600 million tranche, and subsequent assessments have been positive, with the IMF commending Ghana's efforts in fiscal discipline. However, challenges persist, such as high inflation rates, which peaked at over 50% in 2022 but have since moderated to around 23% as of mid-2024, and a depreciating cedi against major currencies.

Revenue performance will be another critical area of discussion. The 2024 budget anticipated significant inflows from taxes, including value-added tax (VAT), income tax, and excise duties, alongside non-tax revenues from sources like mining royalties and oil production. With Ghana being a major producer of gold and cocoa, fluctuations in global prices for these commodities directly impact fiscal outcomes. Recent reports indicate that gold prices have remained robust, potentially boosting export earnings, while cocoa production has faced setbacks due to adverse weather and smuggling issues. The mid-year review could reveal whether these factors have led to revenue surpluses or deficits, prompting possible revisions to spending plans.

On the expenditure side, the government has prioritized investments in infrastructure, education, health, and social welfare programs like the Livelihood Empowerment Against Poverty (LEAP) initiative. However, rising debt service costs, which consume a substantial portion of the budget, remain a thorn in the side. Ghana's public debt stood at approximately 88% of GDP at the end of 2023, and ongoing negotiations with external creditors under the G20's Common Framework for Debt Treatments are crucial for long-term sustainability. Dr. Amin Adam may outline any new measures to control expenditures, such as rationalizing subsidies or enhancing public procurement efficiency, to align with fiscal targets.

The presentation also comes at a politically charged time, with Ghana gearing up for general elections in December 2024. The ruling New Patriotic Party (NPP) government, led by President Nana Addo Dankwa Akufo-Addo, will be keen to highlight achievements in economic management to bolster its electoral prospects. Opposition parties, particularly the National Democratic Congress (NDC), have been vocal critics of the administration's handling of the economy, pointing to issues like unemployment, high living costs, and perceived fiscal mismanagement. The mid-year budget could serve as a platform for the government to counter these narratives by showcasing data on job creation, poverty reduction, and infrastructure projects, such as the Agenda 111 hospitals initiative or road construction programs.

Beyond the numbers, the review will address broader economic policies, including monetary policy coordination with the Bank of Ghana. The central bank has maintained a tight stance, with the policy rate at 29% to curb inflation, but this has implications for borrowing costs and private sector growth. Dr. Amin Adam might discuss strategies to stimulate sectors like agriculture, manufacturing, and digital economy, aligning with the government's Ghana CARES (Obaatanpa) program aimed at post-COVID recovery.

Stakeholders across the board are eagerly awaiting this presentation. Business leaders, represented by groups like the Ghana National Chamber of Commerce and Industry, hope for policies that ease the tax burden and improve the ease of doing business. Civil society organizations, such as the Institute for Fiscal Studies, emphasize the need for greater inclusivity and transparency in budget processes. International partners, including the World Bank and African Development Bank, will be monitoring the review for signs of continued reform commitment.

In preparation for the July 24 event, Parliament has scheduled the necessary sessions, with debates and approvals expected to follow. The Majority Leader, Afenyo-Markin, assured that the House would reconvene promptly to facilitate this, highlighting the importance of legislative oversight in fiscal matters. This mid-year review is more than a statutory obligation; it is a reflection of Ghana's resilience and determination to build a prosperous future. As Dr. Amin Adam takes the floor, all eyes will be on how the government plans to navigate the remaining half of 2024, balancing immediate needs with long-term economic stability.

The implications of this budget review extend beyond the parliamentary chambers. For ordinary Ghanaians, it could mean adjustments to fuel prices, utility tariffs, or social support mechanisms. For investors, it provides insights into the country's risk profile and growth potential. Historically, mid-year budgets in Ghana have led to supplementary appropriations or policy shifts, such as the introduction of new taxes or spending cuts. For example, in 2023, the mid-year review addressed revenue shortfalls by enhancing electronic VAT systems and cracking down on tax evasion.

Looking ahead, the success of this review will depend on its ability to foster confidence among citizens and international partners. With global economic uncertainties, including potential recessions in major economies and climate change impacts, Ghana's fiscal prudence will be tested. Dr. Amin Adam, with his background in energy economics and previous role as Minister of State at the Finance Ministry, brings a wealth of expertise to this task. His approach is likely to emphasize data-driven decisions, stakeholder engagement, and innovative financing solutions, such as green bonds or public-private partnerships.

In conclusion, the July 24 mid-year budget presentation represents a pivotal moment for Ghana's economic narrative. It offers an opportunity to recalibrate strategies, address emerging challenges, and reinforce the path to recovery. As the nation watches, the hope is that this review will not only meet legal requirements but also inspire optimism for a brighter economic future. Whether through enhanced revenue measures, prudent spending, or bold policy reforms, the government's actions in the coming months will shape the trajectory of Ghana's development story. (Word count: 1,128)

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