2023 Mid-Year Budget Review Highlights
The Ghanaian economy has experienced rippling negative impacts from the COVID-19 pandemic, global financial tightening, and Russia-Ukraine conflict, which worsened Ghana's fiscal and debt vulnerabilities. This was further worsened by the downgrade of credit rating and loss of international market access by the end of 2022. This, in turn, constrained domestic financing options, forcing the country to rely heavily on the central bank for funding, which has remained inadequate.
To achieve a turnaround, GoG a year ago in July 2022, announced its decision to request support from the International Monetary Fund (IMF) to implement its Post-COVID-19 Programme for Economic Growth (PC-PEG) in support of GoG’s fiscal consolidation and inclusive growth agenda. Ghana's budget for 2023 introduced some intense tax revenue and expenditure measures, which among others included removal of selected VAT exemptions, complete removal of discount on benchmark values for specific items and E-Levy reforms to close loopholes/ leakages. To further improve patronage and enhance yield, implementation of the unified property rate collection, introduction of the Growth and Sustainability Levy (GSL), implementation of the VAT E-Invoicing system to enhance compliance, increasing VAT rate from 12.5% to 15%, revision of excise taxes for selected items, revision of income-based taxes were also intensified to restore macroeconomic stability and achieve debt sustainability among others.
Though the highlighted measures were implemented earlier in 2023, a successful implementation of the budget depended on securing a US$3 billion 36-month extended credit facility from the IMF. A staff-level agreement was reached in December 2022 between GoG and IMF, but full support was subject to concrete commitments to reduce the net present value of public debt to GDP ratio from 71.3% in 2022 to 55% by 2028.
On Monday, 31 July 2023, the Minister of Finance, Mr. Ken Ofori- Atta, presented the 2023 Mid-year Budget Review (“the Budget”) to Parliament on behalf of the President. This sets the tone for Government’s reviewed activities to achieve fiscal consolidation and pursue growth agenda.
The 2023 mid-year budget review is focused on revenue and tax administration enhancement measures for economic recovery following the pandemic and other global economic vulnerabilities. This is important to ensure effective management of tax expenditure and enhance revenue mobilisation.
It is worth noting that GoG’s plan to ensure fiscal consolidation and pursue significant economic growth cannot be realised without effective and innovative tax administration strategies.