Finance Minister, Ken Ofori-Atta on Wednesday, November 13 presented government’s Financial policy statement for the year 2020.
The Ghana Report source reveals the budget is estimated to be over ¢80 billion, it is also expected to cover the cost of government flagship programmes, including Free Senior High School and Planting for Foods and Jobs.
Read full statement below:
INTRODUCTION
1. Right Honourable Speaker, Honourable Members of Parliament, on the authority
of His Excellency the President Nana Addo Dankwa Akufo-Addo, I beg to move
that this august House approves the Financial Policy of the Government of Ghana
for the year ending 31st December, 2020.
2. Mr. Speaker, on the authority of His Excellency the President, and in keeping with
the requirement of Article 179 of the 1992 Constitution of the Republic of Ghana,
and Section 21(3) of the PFM Act 2016 (ACT 921), may I respectfully present the
Budget Statement and Economic Policies of Government for 2020 to this
Honourable House.
3. I also submit before this august House, the 2019 Annual Report on the Petroleum
Funds, in accordance with Section 48 of the Petroleum Revenue Management Act,
2011 (Act 815), as amended, and a Report on the African Union 0.2 percent Import
Levy.
4. Mr. Speaker, in substance, 2019 has been a very good year for Ghana. This is the
year that one can confidently say that God’s blessing of the hard work is beginning
to manifest, putting us on a positive trajectory for a proper lift. I say so because:
• We have won some painful but necessary battles for God and country;
• We have quietly but incontestably achieved significant structural changes for
the economy;
• We have stabilized greatly the macro-economic turbulence that was all too
regular a feature in the management of the national economy;
• We have delivered on our flagship programmes;
• Mr Speaker, the gains made so far are significant.
5. It is proper to put this budget into perspective to understand how far we have come.
On Thursday, 2nd March 2017, I had the honour and privilege to present the first
budget of President Akufo-Addo to this House. At that time, as you may recall, the
economy was in a very bad shape, suffocating under a mixed weight of debts,
arrears, very high cost of living, high youth unemployment and the worst growth
rate since 1994. Moreover:
• Growth in agriculture was declining;
• Industry growth was in the negative;
• Interest rates were high;
• The banking system was weak;
• Unemployment was rising; and
• Businesses and households were working mainly to pay off their utility bills.
6. Mr. Speaker, this poor state of public finances, weak policy implementation and
lack of policy credibility resulted in Ghana requesting an IMF bailout in August
2014. The economic model being practised at the time was a simple, unexamined
formula of tax, borrow and spend without a focus on production. The previous
government resorted to some draconian fiscal measures; notably the increase in
the tax burden on many items and activities, including condoms, cutlasses as well
as ‘kayayie’.
7. Mr. Speaker, a freeze was imposed on the public sector from employing people.
There were cuts to a number of areas of spending, most notably were cuts to
research allowances for lecturers, nursing training, and teacher training
allowances. Yet, the government then was awarding billions of cedis worth of
contracts without knowing about how to pay for them. It was a case of living for
today and leaving tomorrow to take care of itself.
8. President Akufo-Addo’s maiden State of the Nation Address captured the situation
and his Government’s attitude towards it succinctly: “Too much time, energy and
resources were spent in the past, in my view, without a deliberate, conscious
assessment of their impact on jobs, and whether or not we were spending wisely
to improve the lives of the people, communities and businesses. But, I was not
elected by the overwhelming majority of the Ghanaian people to complain. I was
elected to get things done. I was elected to fix what is broken and my government
and I are determined to do just that.”
9. Mr Speaker, that is exactly what we have done within the last three years. The
President had set out his vision and programmes in clear language in his maiden
address. He said this within the context of an economy that was seriously
challenged; the full extent of which we were yet to discover. And yet, by January
2017, the nation was hopeful because change had come. In the 2017 Budget, we
illustrated the NPP Government’s expectations, aspirations and hope for Ghana’s
future, using the miracle of Jesus when he fed 5,000 people with 5 loaves of bread
and two fish. We also declared that the budget was going to “sow the seeds for
growth and jobs”.
10. Mr Speaker exactly 2 years, 8 months and 12 days later, I stand before you to
declare that indeed God has been gracious. His favour has shone on our nation
and it is because, in my humble view, we, their new leaders, choose to serve His
people rightly and sincerely.
11. Quite apart from the fragile structural policy and worsening macro-fiscal situation
passed on to us, this Government had to also address serious contractual
commitments. The exorbitant energy bill from expensive, difficult-to-explain ‘take
or pay’ of Power Purchase Agreements; a pile up of unpaid arrears and
outstanding commitments, mostly accrued from contracts awarded without the
slightest care for the public purse.
12. Mr. Speaker, if you add the cost of cleaning the financial sector challenges to the
long list of legacy bills that the Akufo-Addo government had to settle, the cost to
the Ghanaian tax payer is around GHȼ33 billion.
13. Mr. Speaker, thankfully, we came in with a plan, stayed focused, kept our
discipline, kept our promises and managed to strike a balance between
maintaining fiscal discipline and supporting businesses and households with tax
reliefs, yes, we dared to abolish all manner of nuisance taxes. Despite the limited
resources at our disposal, we implemented our plan which included the
introduction of stimulus packages for some viable but struggling businesses;
increasing spending significantly on social services, and implemented our flagship
programmes.
14. Prof K A Busia said, “The concept of poverty… should be seen not only in terms
of cash or the scarcity or underdevelopment of material resources but also in
human conditions, in disease, ignorance, lack of training, and education [and[…
[t]he first essential requirement for progress is the development of the human
being.” That is why, Mr Speaker, President Akufo-Addo would never shy away from
the responsibility of investing to prepare our children for their own future.
15. As a result of us introducing the necessary combination of focus, discipline,
integrity, creativity, compassion and competence, in just 32 months in office, Mr.
Speaker, the Lord has blessed our efforts. The economy has seen a miraculous
turnaround, moving now in the right direction. I speak to the data, Mr. Speaker:
• Economic growth rate has doubled under President Akufo-Addo, rebounding
strongly from 3.4 percent in 2016 (the lowest GDP growth rate since 1994);
averaging 7%;
• Inflation rate has fallen from 15.4 percent in December 2016 to 7.6 percent
(new series) in September 2019, registering the lowest rate in 27 years; which
makes 2019 the year with the slowest ever rise in the prices of goods and
service in Ghana in the entire history of the Fourth Republic–– Yes, Mr
Speaker, 2019 has been good for Ghana because when inflation slows down
everybody benefits;
• The banking sector is on the rise again, recording by mid-year, a year-on-year
after tax profit of GHȼ1.67 billion, or 36 per cent, in 2019. This is good for Ghana
because when the banks are strong the economy is strong;
• The 91-day treasury bill rate fell steadily from nearly 17 percent in December
2016 and now stands at 14.7 percent. This is good for Ghana because when
the cost of borrowing is low businesses expand, jobs are created and spending
rises;
• We have contained the fiscal deficit below 5 percent of GDP for three
consecutive years, the end-September 2019 deficit amounted to 4.5 percent of
GDP;
• On the external front, the trade deficit has improved from US$1.8 billion in 2016
to a surplus of US$2.6 billion in August 2019. This is good for Ghana as it helps
to keep our currency stable and our economy strong.
The 2020 budget statement and economic policy is under the theme “Consolidating the gains for growth, jobs and prosperity for all”.
Read the full statement below