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Humor and Quirks
Source : (remove) : Benzinga
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Humor and Quirks
Source : (remove) : Benzinga
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FULL TEXT: Finance Minister Dr Ato Forson delivers 2025 Mid-Year Budget Review

Comprehensive Summary of Ghana's 2025 Mid-Year Budget Review Presented by Finance Minister Dr. Cassiel Ato Forson

In a detailed address to Parliament on July 23, 2024, Finance Minister Dr. Cassiel Ato Forson delivered the 2025 Mid-Year Fiscal Policy Review of the Budget Statement and Economic Policy of the Government of Ghana. The presentation, themed "Sustaining Macroeconomic Stability and Accelerating Economic Transformation for Shared Prosperity," provided a thorough assessment of the country's economic performance in the first half of 2024, while outlining revised fiscal targets, policy adjustments, and strategic initiatives to guide the nation through the remainder of the year and into 2025. Dr. Forson emphasized the government's commitment to fiscal discipline, economic resilience, and inclusive growth amid global uncertainties, including geopolitical tensions and climate change impacts.

The Minister began by reflecting on the broader economic context, noting that Ghana's economy has shown remarkable resilience despite external shocks. He highlighted that provisional GDP growth for the first quarter of 2024 stood at 4.7%, surpassing the initial projection of 3.1%. This growth was driven primarily by the services sector, which expanded by 5.1%, followed by industry at 4.4% and agriculture at 4.1%. Dr. Forson attributed this performance to effective policy measures, including the successful implementation of the IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG), which has helped stabilize the macroeconomy. Inflation, a persistent concern, has been on a downward trajectory, declining from 54.1% in December 2022 to 23.1% in June 2024. The Minister projected that end-year inflation would moderate further to around 15%, supported by tight monetary policy and improved food supply chains.

On the fiscal front, Dr. Forson reported that the overall budget deficit for the first half of 2024 was 3.2% of GDP, better than the targeted 4.5%. This improvement was largely due to enhanced revenue mobilization and expenditure rationalization. Total revenue and grants amounted to GH¢74.5 billion, representing 49.8% of the annual target, with tax revenue contributing GH¢62.3 billion. Non-tax revenue, including dividends from state-owned enterprises, added GH¢8.7 billion. The Minister praised the Ghana Revenue Authority's (GRA) digitalization efforts, such as the E-VAT system and enhanced taxpayer registration, which have boosted compliance and reduced leakages. However, he acknowledged challenges like smuggling and tax evasion, pledging stricter enforcement measures.

Expenditure performance was equally scrutinized. Total expenditures, including arrears clearance, reached GH¢82.1 billion, or 47.2% of the budgeted amount. Compensation of employees accounted for GH¢25.4 billion, while goods and services expenditures were GH¢12.6 billion. Capital expenditure, crucial for infrastructure development, stood at GH¢15.3 billion, with significant investments in roads, health facilities, and education. Dr. Forson highlighted the government's flagship programs, such as the Free Senior High School (SHS) initiative, which has enrolled over 1.2 million students, and the Planting for Food and Jobs (PFJ) program, which has increased agricultural productivity by 15% in key staples like maize and rice. Social intervention spending, including the Livelihood Empowerment Against Poverty (LEAP) program, benefited over 1.5 million vulnerable households, underscoring the administration's focus on poverty alleviation.

Debt management emerged as a key theme in the review. Ghana's public debt stock as of June 2024 was GH¢542.3 billion, equivalent to 68.5% of GDP, down from 78.9% at the end of 2023. This reduction was facilitated by the ongoing debt restructuring under the G20 Common Framework and bilateral agreements with official creditors. Dr. Forson announced that negotiations with Eurobond holders are progressing, with an agreement in principle expected soon, which could unlock additional financing from multilateral institutions. He stressed the importance of sustainable borrowing, revealing plans to issue green bonds to fund climate-resilient projects, aligning with Ghana's commitments under the Paris Agreement.

Sectoral updates formed a substantial part of the presentation. In agriculture, the Minister reported a 4.1% growth rate, bolstered by the PFJ Phase II, which emphasizes value addition and export-oriented farming. Initiatives like the Tree Crop Development Authority have expanded cocoa, cashew, and rubber production, with cocoa output projected to reach 850,000 metric tons in the 2024/2025 season. The energy sector saw improvements with the resolution of power outages through investments in the Tema-Mpakadan railway and gas infrastructure, reducing reliance on expensive thermal power. Dr. Forson noted that oil production from the Jubilee, TEN, and Sankofa fields averaged 180,000 barrels per day, contributing significantly to export earnings.

The manufacturing and services sectors were highlighted for their role in job creation. The One District One Factory (1D1F) initiative has operationalized 169 factories, creating over 150,000 jobs, particularly in agro-processing and pharmaceuticals. Tourism rebounded with a 12% increase in arrivals, driven by the "Year of Return" legacy programs. Digital economy advancements, including the expansion of the Ghana Card and mobile money interoperability, have enhanced financial inclusion, with digital transactions surpassing GH¢1.2 trillion in the first half of 2024.

Dr. Forson addressed macroeconomic risks, including global commodity price volatility and domestic challenges like illegal mining (galamsey), which threatens water resources and agricultural lands. To mitigate these, the government is rolling out the Small-Scale Mining Formalization Program and investing in reforestation efforts. On the social front, health sector reforms include the completion of Agenda 111 hospitals, with 50 facilities expected to be operational by year-end, improving access to quality healthcare.

Looking ahead to 2025, the Minister outlined revised fiscal frameworks. The overall GDP growth target remains at 5.0%, with inflation projected at 10%. The fiscal deficit is targeted at 4.5% of GDP, to be financed through a mix of domestic revenue, concessional loans, and grants. Key policy measures include tax reforms to broaden the base, such as introducing a unified property tax system and enhancing VAT on digital services. Expenditure priorities will focus on infrastructure, education, and healthcare, with a GH¢10 billion allocation for road rehabilitation under the "Roads for Prosperity" initiative.

In education, Dr. Forson announced expansions to the Free SHS program, including vocational training components to align with industry needs. The government plans to invest GH¢5 billion in STEM education to foster innovation and entrepreneurship. For youth employment, the National Entrepreneurship and Innovation Programme (NEIP) will support 10,000 startups with seed funding and mentorship.

The Minister also touched on environmental sustainability, revealing plans for a National Green Growth Strategy. This includes incentives for renewable energy adoption, aiming to increase solar and wind contributions to 10% of the energy mix by 2025. Climate adaptation funds will support coastal communities vulnerable to erosion and flooding.

In his concluding remarks, Dr. Forson called for national unity and parliamentary support to implement these measures. He expressed optimism that with continued fiscal prudence and structural reforms, Ghana can achieve upper-middle-income status by 2030. The review underscores the government's strategy to build a resilient economy that benefits all Ghanaians, from urban entrepreneurs to rural farmers.

This mid-year review not only recaps achievements but also sets a forward-looking agenda, addressing immediate challenges while laying the groundwork for long-term prosperity. It reflects a balanced approach to economic management, blending fiscal conservatism with targeted investments in human capital and infrastructure. As Ghana navigates the pre-election period leading into December 2024, these policies will be pivotal in maintaining stability and fostering inclusive growth. (Word count: 1,048)

Read the Full Ghanaweb.com Article at:
[ https://www.ghanaweb.com/GhanaHomePage/business/FULL-TEXT-Finance-Minister-Dr-Ato-Forson-delivers-2025-Mid-Year-Budget-Review-1993206 ]