According to provisional figures by the Finance Minister on the government’s fiscal operations for the first half of 2023, which show a slower pace of expenditure execution relative to income shortfall, the economy is back on track to a positive primary balance.
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In contrast to the 2023 first half budget deficit target of GH28.3 billion (3.5% of GDP), he claims that this has led to an overall budget deficit on a commitment basis of GH6.3 billion (0.8% of GDP)
The minister said the data on the economy indicated a corresponding primary balance (on commitment basis) of a surplus of GH8.8 billion (1.1% of GDP), compared to the target of a surplus of GH310 million. He was presenting the mid-year fiscal policy review of the 2023 Budget Statement and Economic Policy of the Government.
He added that it also showed a corresponding primary balance (on cash basis) of a surplus of GH 4,804 million (0.6% of GDP), against the first half of 2023 deficit target of GH 6,908 million (0.9% of GDP). He noted that the overall cash deficit of GH 10.3 billion (1.3% of GDP) was also posted as against the first half of 2023 budget target of GH 35,494 million (4.4% of GDP)
This development was mostly caused by an expansion in the services sector, which saw growth of 10.1% in the first half of 2023, the economist continued.
According to the Finance Minister, headline inflation progressively decreased from a peak of 54.1 percent in December 2022 to 42.5 percent in June 2023, falling to 53.6 percent in January 2023.
He went on to say that tightened monetary policy, relative exchange rate stability, and lower and steady ex-pump petroleum costs all contributed to the decrease in inflation.
He claims that overall, from July 17, 2023, to July 17, 2023, the Ghana Cedi appreciated by 22.1 percent vs the US dollar, compared to 21.1 percent during the same period in 2022.
Between February and July 17, 2023, the Cedi depreciated by an astounding 1.84%, subtracting the 20% depreciation in January 2023. Due to lower receipts from crude oil exports, total export revenues decreased by 7.9% to $8,178.56 million, he said.
According to the minister, a 21.4 percent drop in volumes and a 25.3 percent drop in pricing resulted in a 41.3 percent year-over-year decline in crude oil exports.
“Current account recorded a provisional surplus of US$849.16 million (1.1% of GDP), compared with a deficit of US$1,111.87 million (1.5% of GDP) for the same period in 2022,” Mr. Ofori-Atta said.
While this has been happening, the Minority Leader, Dr. Cassiel Ato Forson, has said that the administration has made Ghanaians’ problems worse over the past six months and that there is evidence to refute the Finance Minister’s claim that the country has “turned the corner.”
The Minority Leader reacted to Mr. Ofori-Atta’s presentation of the 2023 Mid-Year Budget Review yesterday in Parliament by claiming that the stability of the Ghana Cedi was caused by the government’s failure to pay its external debt.
According to his argument, the economic growth has been reduced from 2.8% of GDP to 1.5% of GDP, indicating a slower recovery than anticipated.
“The Minister remarked that we have reached a turning point. Unfortunately, the data in front of us indicates that he has really made things worse, according to Dr. Forson.
He recently informed us that he is downgrading economic growth from 2.8% of GDP to 1.5% of GDP, which is why I say this. He reiterated to us that he had borrowed GH5.5 billion from the T-Bill market between January and June.
“Mr. Speaker, this same Minister recently informed us that he will not borrow at all in 2023. And that he will borrow an additional GH 41 billion for the remaining months of the year, he hinted.
Aside from that, the Cedi’s current depreciation is primarily the result of our failure to make timely payments of principal and interest from outside sources. That is the reason the Cedi has lost value, he noted.
