According to Ken Ofori-Atta, the Minister of Finance, the government has reduced the overall gross domestic product (GDP) growth rate for this year from 5.8 percent to 3.7 percent.
On Monday (25 July), Ofori-Atta delivered the 2022 Mid-Year Budget Review to Parliament. He said, “Furthermore, based on developments for the year’s first half and prognosis for the balance of the year, we have amended the macro-fiscal targets for 2022 as follows:
3.7 percent overall GDP growth rate, down from 5.8 percent.
“End period inflation of 28.5 percent up from 8 percent, non-oil GDP growth rate fell to 4.3 percent down from 5.9 percent.”
Ofori-Atta continued, “The overall budget deficit of 6.6 percent of GDP down from 7.4 percent.”
According to him, preliminary Q1-2022 National Accounts Statistics released by the Ghana Statistical Service (GSS) in June 2022 indicate that the first quarter of 2022’s real GDP growth was 3.3 percent rather than the 3.6 percent reported in 2021.
Non-oil GDP increased by 3.7 percent in the first quarter of 2022 compared to 5.3 percent in the same period in 2020.
Ofori-Atta stated, “As I have already explained, the macroeconomic situation has drastically changed, forcing the reform of the macroeconomic framework,” in reference to the 2022 Macroeconomic Framework.
Ofori-Atta stated that the overall revenue and grants have now been reduced from the 2022 Budget objective of GHC100,517 million (20.0 percent of GDP) to GHC96,842 million (16.4 percent of GDP), indicating a 3.7 percent reduction.
According to him, the overall expenditure (including payments for the clearance of arrears) has also been lowered downward from the initial budget projection of GHC137,529 million to GHC135,742 million (22.9 percent of GDP) (27.4 percent of GDP).
The administration is committed to staying within the allocated amount for 2022, the finance minister stated, despite the challenges in meeting the necessary revenue projections.
“Mr. Speaker, we have seen some major shifts in our budget assumptions compared to November, 2021, when we presented the Budget. These changes have led to reduced revenues, increased interest payments and changes in interest rates and exchange rates. However, we are committed to staying within the appropriation for 2022.”
We are not asking for more money in this mid-year review, despite the weak external headwinds and underwhelming revenues, Ofori-Atta stated.
We are resolved to make up for our income shortfall and aggressively boost our revenues even as we rationalize expenditures by effectively using the windfall from the upstream petroleum sector.