Government’s decision to keep existing taxes in Mid-Year Budget provides respite for businesses – Deloitte

The decision by the government to maintain existing tax handles in the Mid-Year Budget Review presents some respite for businesses and individuals as a further increment in taxes could hamper productivity of the private sector, Deloitte Ghana has disclosed in its analysis of the 2024 Mid-Year Review Budget.

According to the professional services firm, the business environment is already characterised by relatively high inflation and exchange rate depreciation, and therefore such decision is necessary to alleviate the sufferings of businesses.

The debt restructuring together with the International Monetary Fund proragmme has reduced the country’s interest payment from GH5.9 billion (largest expenditure item) to GH¢48.0 billion (second largest expenditure item).

This, Deloitte said, should create the needed ­fiscal space to implement key government programmes to revitalise and transform the economy.

The Government of Ghana projects an increase in capital expenditure investments from 2.5% of Gross Domestic Product in 2023 to 2.8% of GDP in 2024.

Deloitte pointed of that the forecast signals a strong focus to improve social infrastructure and other key amenities amidst the fiscal consolidation programme, adding, “Allocation of such spending to priority sectors can spur strong economic performance in the medium to long term”.

In the 2024 Mid-Year Budget Review, the government revised total Revenue & Grants for this year upward to GH¢177.2 billion compared to the 2024 budgeted of GH¢176.4 billion, representing a 0.5% increase.

Total Expenditure for 2024 was also revised downward to GH¢219.7 billion compared to the 2024 budget of GH¢226.7 billion, a 3.2% decrease.

The decline in total expenditure, the professional services firm, indicated is expected to result from savings on interest payment from GH¢55.9 billion to GH¢48.0 billion, owing to government’s completion of external debt restructuring (in respect of bilateral, multilateral and Eurobond debts).