The Finance Minister, Dr. Mohammed Amin Adam, on Tuesday, July 23, delivered the 2024 Mid-Year Budget to Parliament.
The Minister emphasised that the government has tightly controlled expenditures to remain within the 2024 Budget Appropriation.
Dr. Amin Adam also revealed that the government surpassed its mid-year revenue target by 0.2 percent by the end of June 2024.
According to the sector minister, the country is rebounding stronger than anticipated.
He attributed the economic growth to the stabilisation of the exchange rate, decline in inflation, and boost in gross international reserves.
Dr Amin Adam stressed that the deliberate policies implemented by the government were yielding results, hence the declining inflation rate.
However, in the aftermath, some financial, economic and market stakeholders have highlighted some salient areas the budget review failed to address.
Here are 7 key areas that the the budget failed to address as presented by the Finance Minister.
Positive economic indicators fail to translate into gains for businesses
The President of the Ghana Hotels Association Dr. Edward Ackah-Nyamike Jnr has said the government is scoring positive points with some economic indicators like inflation, but it does not translate into gains for businesses.
He said the reality on the ground is that the economic environment is eroding the profit of businesses.
He said despite the sustainability the Finance Minister spoke about during his presentation of the Mid-year budget review in Parliament on Tuesday, July 23, “there is a mismatch between what is happening on the macro level and the ground.”
“Even when you try to get those macro figures right, we are still dealing with variables like the exchange rate because a lot of our hotels import several kinds of stuff as they are not available here.
“You have to deal with import duty, exchange rate and the cost of borrowing and other factors. When you compare this and what is being said about the bigger picture, there is a mismatch.”
No update on the National Cathedral project
In the Finance Minister’s presentation on July 23, there was no mention or update on the National Cathedral Project which has become a subject of national concern.
Announced in March 2017 as a symbol of Ghana’s self-perception as a ‘Christian nation’, the national cathedral project was welcomed by many Ghanaians, including most church leaders.
President Nana Addo Dankwa Akufo-Addo announced the national cathedral amidst celebrations marking Ghana’s 60 years of independence from British colonial rule.
For the president, the national cathedral was the fulfilment of a personal promise to God, made during the election campaign: if he won the 2016 presidential election, he would build a national cathedral.
The cathedral, which was originally scheduled for commissioning on March 6, 2024, as stated by former Finance Minister Ken Ofori-Atta in the 2021 budget statement, has become a point of criticism.
This is particularly true among minority MPs who are unhappy with the project’s expenditure.
No tax cut
The Ghana Union of Traders’ Association (GUTA) president, Dr. Joseph Obeng, says the cost of doing business in the country is still high because of the numerous taxes.
The Finance Minister failed to register any course of tax cut in his mid-year review presentation.
Businesses expected a review of the COVID-19 levy, petroleum levy and the growth and sustainability levy which was recently introduced as part of the government’s conditions to access the IMF bailout.
The businesses are of the view that abolishing some of these taxes or lowering the tax rates may initially reduce tax revenue, but likely to positively impact consumption and expenditure and thus, ultimately enhance tax revenue.
They revealed that currency depreciation, high inflation, high interest rates and the tax environment have had significant negative impacts on business performance in 2024.
For GUTA, “the status quo remains the same, especially with taxes. Even though new taxes were not announced, we still have to contend with the taxes we pay, and that is impacting negatively on our business.”
Regarding the exchange rate’s “seeming stability, we plead that whatever measures they put in place to stem the high rise of the dollar should still be adopted so that we can sustain this gain.”
No Reduction in Utility Tariffs
Many have called for a reduction in utility tariffs which pose a burden to households and businesses alike.
On July 1, 2024, the cost of electricity went up by 5.8 percent and water by 5.1 percent following a tariff adjustment approved by the Public Utilities Regulatory Commission for residential use.
The PURC attributed the increment to several factors including the cedi depreciation, inflation, cost of fuel, and electricity generation mix.
In its May 31 statement, PURC noted that tariffs for lifeline consumers will see a 3.45% increase.
“There will be a 3.45% increase in electricity tariffs for lifeline consumers (0-30kWh); 5.84% increase for all other residential consumers who are not part of the lifeline category bracket (31 kWh and above) as well as the non-residential category,” the PURC said.
However, the Association of Ghana Industries (AGI) appealed to the government to reduce the utility tariffs for manufacturing companies and industries producing and contributing to the development of the country.
AGI explained that Ghana was one of the few nations in the world where industry paid more in electricity costs than home enterprises.
They pointed out that taxes and power accounted for 30% of production expenses, making it difficult for manufacturing firms to prosper and compete globally.
There was no mention of downsizing of government
Another ground for contention has been the IMF’s insistence that the government needs to reduce its size and consequent spending in tandem with substantial increases in public revenues from taxes.
In a bid to drive home this demand, the Minority caucus in Parliament boycotted the vetting of Herbert Krapah as the Minister of State at the Energy Ministry.
They questioned the need for a Minister of State at the Energy Ministry when a substantive Minister is already in place.
The Minority vowed not to participate in the vetting process, which they believe is designed to exclude public participation and perpetuate the bloated size of the government.
No mention of scrapping e-levy
Businesses and individuals alike have called for the government to scrap the E-levy and review some tax laws in the country.
Businesses and individuals identified the e-levy as the number one tax that needed to be scrapped or reviewed.
The e-levy which was introduced in May 2022, imposed a 1.5 per cent charge on all electronic and mobile money transactions over ¢100 per day.
In January 2023, the government reduced the rate of the tax from 1.5 percent to 1 percent.
Betting tax and emissions levy
The government, on February 1, 2024, introduced a new tax policy on carbon dioxide equivalent emissions on internal combustion engine vehicles.
Key stakeholders, including the Ghana Private Road Transport Union (GPRTU), kicked against the move by the government, but their efforts were proved futile.
The Institute of Economic Security(IES) described the tax as a nuisance in the sense that it is going to create additional costs for Ghanaians.
According to IES, the construction of more roads and ensuring traffic moves will help reduce the emissions tax.
The government introduced a betting tax that will see a 10% tax applied to betting and lottery winnings in 2023.
The Ghana Revenue Authority (GRA) outlined that this withholding tax will be automatically deducted at the point of payout for all betting, games, and lottery wins.
However, the tax initiative has faced criticism from the younger generation, who argue that betting and lottery winnings often serve as alternative income sources for the unemployed.