By Elorm Desewu
The Bank of Ghana, (BoG), is very optimistic that the economy would soon recover as the government has spelt out measures that will put the fiscal on the path of consolidation.
According to the Governor of Bank of Ghana, Dr Ernest Addison, the government’s revenue enhanced measures such as the VAT increase of 2.5 percent, the complete removal of benchmark values on imports, and the review of the E-Levy should help improve the revenue outlook.
The lower capping on transfers to earmarked funds from 25 to 17.5 percent, and the reduction of budgetary allocation to goods and services, as well as rationalisation of executive compensation would help contain expenditures in 2023.
Dr Addison explained that the concerns being expressed in the public domain relating to high government expenditures have been addressed in the SLA and reflected in the 2023 Budget adding that “we must have faith and trust in the economy”.
The Staff Level Agreement (SLA) is also contingent on the Domestic Debt Exchange Programme and external debt restructuring, which when concluded and the necessary financial commitment obtained, will allow the presentation of the SLA to the IMF Board.
This, the governor believes will help restore fiscal and debt sustainability and bring down inflation as well as help stabilise the currency.
He said the central bank would remain vigilant and moderate liquidity in the system to underpin macroeconomic adjustments taking place to drive inflation on a downward path.
The domestic growth conditions softened in 2022 and is projected to moderate further and remain below potential over the near-term, based on the elevated inflation levels. The updated CIEA showed continued dip in economic activity, despite the slight improvement in consumer and business sentiments from the latest surveys.
Economic activity for the first three quarters of 2022 was within projections, albeit at a moderated pace than a year earlier. The latest data from the Ghana Statistical Service showed that real GDP expanded at an annual rate of 3.6 percent during the first three quarters of 2022 relative to 4.8 percent during the corresponding period in 2021. Non-oil GDP growth also moderated to 4.3 percent from 4.7 percent over the same comparative period. The observed growth outturn was driven by the services and agriculture sectors.
