2022 Budget: Spend wisely – Govt tells MMDAs

The government has asked Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal and District Assemblies (MMDAs) to spend prudently, as it prepares to expend about GH₵ 128.3 billion for the 2022 fiscal year.

Government is concerned that a GH¢40 billion revenue shortfall in 2020 would stifle national development.

Hence a call for prudent management of finances in the wake of the COVID-19 impact on the national purse as it explores avenues to shore up revenue.

The projected expenditure for 2022 represents approximately 25.8% of the country’s Gross Domestic Product (GDP).

This was contained in the 2022-2025 Budget Preparation Guidelines published on the website of the ministry.

The Budget Preparation Guidelines provide instructions on the processes and procedures for preparing the 2022-2025 Budget Estimates and indicative medium-term budget ceilings for MDAs and MMDAs.

On the issue of financial management, the ministry urged that “Internally Generated Funds (IGFs) and Development Partner (DP) Funds should be appropriately budgeted for, as failure to budget for such funds will result in the inability to utilise them during budget implementation.”

Additionally, ministers and chief executives of MMDAs have been charged to ensure that they allocate resources to strategic and critical programmes in their medium-term plans.

This is in response to the challenges posed by the COVID-19 pandemic and its implications on economic development, coupled with constraints in resource mobilisation.

The government has stated that it recognises the need to be at the forefront to promote the building blocks for an inclusive and sustainable recovery post-COVID-19.

As such, the focus of the 2022 budget and the medium term would be to create opportunities and provide solutions towards achieving sustainable and broad-based economic growth without harming leaving families in poverty.

This is expected to fulfil phase two of the Ghana COVID-19 Alleviation and Revitalisation of Enterprise Support (Ghana CARES) to revitalise and transform the economy.

Details of government’s 2022 expenditure

Per the 2022-2025 Budget Preparation Guidelines, the government’s total expenditure is projected to further expand to GH₵135.6 billion (24.1% of GDP) in 2023 and GH₵157.1 billion (22.1% of GDP) in 2025.

Combined resources available for Goods and Services, COVID-19-related expenditures and domestically financed Capital expenditure will amount to GH₵12.5 billion in 2022.

Also, payments to Independent Power Producers (IPPs) is projected at $1 billion per year.

Additionally, compensation of employees is projected to increase from GH₵31.5 billion (7.2% of GDP) in 2021 to GH₵34.6 billion (7.0% of GDP) in 2022 and further to GH₵38.5 billion (6.8% of GDP), GH₵42.3 billion (6.7% of GDP), and GH₵46.9 million (6.6% of GDP) in 2023, 2024, and 2025, respectively.

Goods and services is projected to hit GH₵5.2 billion (1.1% of GDP) in 2022, and then increase to GH₵4.9 billion (0.9% of GDP), GH₵5.4 million (0.9% of GDP) and GH₵6.7 million (0.9% of GDP) in 2023, 2024 and 2025, respectively.

Interest payments by the government is projected to reach GH₵37.2 billion (7.5% of GDP) in 2022, GH₵38.0 million (6.8% of GDP) in 2023, GH₵38.7 billion (6.1% of GDP) in 2024, and GH₵41.3 billion (5.8% of GDP) in 2025.

Capital expenditure is also projected to hit GH₵11.8 billion (2.4% of GDP) in 2022, increasing to GH₵12.2 billion (2.2% of GDP) in 2023, GH₵11.4 billion (1.8% of GDP) in 2024, and further to GH₵12.1 billion (1.7% of GDP) in 2025.

Meanwhile, the government’s projected total revenue and grants for the 2022 fiscal year is GH₵89.1 billion.

The projected total revenue for 2022 represents a nominal growth of 23 per cent over the projected outturn for 2021. It is expected to increase to GH₵100.6 billion (17.9% of GDP) in 2023, GH₵112.5 billion (17.7% of GDP) in 2024, reaching GH₵126.3 billion (17.7% of GDP) by 2025.

Of the 2022 projected revenue, gross non-oil Tax Revenue is estimated at GH₵70.5 billion (14.2% of GDP) and represents a per annum growth of 23.5 per cent. On a net basis (i.e. excluding tax refunds), non-oil Tax Revenue is estimated at GH₵66.96 billion (13.5% of GDP).

Non-oil Non-Tax revenues from MDAs that generate Internally Generate Funds (IGFs) will amount to GH₵8.41 billion in 2022 and increase by about 14.8% thereafter.

Grants disbursements will be project-related grants, and it is expected to dwindle from GH₵599.89 million in 2022 to GH₵157.71 million in 2025.

READ ALSO: 2021 Mid-Year Budget Review: No New Taxes, No Additional Expenditure