KPMG 2024 Mid-Year Budget Highlights

The global economy continues to face elevated geopolitical uncertainty, with nearly half of the world’s population voting or heading to the polls this year.

According to the KPMG Global Economic Outlook, global growth is forecasted to slow from 2.7% in 2023 to 2.5% in 2024 and rebound to 2.7% in 2025. Inflation is cooling, though the unwinding process remains protracted. Sub-Saharan Africa is forecasted by IMF to experience a slight uptick in growth, from 3.4% in 2023 to 3.8% in 2024 and 4.0% in 2025. This positive trajectory is driven by the reversal of weather-related shocks and improved supply conditions. For Ghana, these global challenges translate into significant economic impacts. The nation remains vulnerable to external shocks, such as high inflation, trade tensions and exchange rate volatility. These factors and many others  continue to affect economic stability.

On Tuesday, July 23, 2024, the Minister for Finance, Hon. Dr. Mohammed Amin Adam, MP for Karaga Constituency, presented the Mid-Year Fiscal Policy Review to Parliament.

In reviewing macroeconomic indicators for the year, the budget highlighted a turnaround in the negative trends experienced over the past two years. This is as a result of measures embarked on by the Government in an effort to rebound the economy to a sustainable path. One of which is the IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG). This has been a key step in restoring economic confidence. Significant progress has been made under this programme, with the IMF Executive Board approving the 2nd review on July 28, 2024 and subsequently disbursing US 360 million, bringing the total disbursement to about US 1.6 billion.

The 2024 Mid-Year Budget also outlined several revenue measures, such as engaging in tax dialogues with relevant stakeholders to implement the Medium-Term Revenue Strategy (MTRS) for 2024-2027. Other measures include: developing a framework for re-introducing road and bridge tolls, partnering with the private sector, especially the extractive industry, to support strategic road construction projects through tax credits.

The Government’s has re-emphasized its commitment to expenditure control especially in an election year which is inundated with high risks of expenditure overruns and fiscal volatility. As outlined in the 2024 Budget, additional measures include reducing imports by public institutions by 50% and enforcing the purchase of locally produced substitutes, amending the Fiscal Responsibility Act, 2018, to reinstate fiscal deficit of 5% of GDP and establishing a Fiscal Council with operational autonomy. Maintaining fiscal discipline is critical going into the 2024 elections.

Ghana’s medium-term macroeconomic and financial outlook remains positive, despite a challenging global environment. The revised 2024 macroeconomic framework reflects a response to recent economic developments, both domestic and international. Although the economic recovery has yet to fully benefit households due to market dynamics, the revisions demonstrate that Ghana is on a promising path toward enduring growth.

There is optimism that Ghana will navigate its economic challenges successfully. To this end, a collective effort is essential. KPMG remains committed to supporting the government with our expertise and advice. We are ready to collaborate closely in guiding the country toward achieving its short, medium, and long-term development goals.