In the wake of the unprecedented challenges faced by Ghana in 2023, the nation has emerged stronger and more resilient than ever. The year 2023 tested the mettle of the cocoa producing West African nation grappling with a confluence of economic, social, and global tribulations. However, the unveiling of the 2024 budget marked a turning point, signalling Ghana’s economic rebirth and heralding a renaissance that promises to reshape the nation’s destiny.
Ghana, like the rest of the world, was not immune to the trials that marked 2023. The Russia-Ukraine war continues to cast its long shadow, disrupting oil supply chains, and causing economic downturns. Addition- ally, the nation faced internal challenges, including inflationary pressures, depreciation, debt overtures and fiscal concerns.
However, the unveiling of the 2024 budget became a beacon of hope for Ghanaians as widely touted by the government communication machinery, as it outlined a comprehensive roadmap for economic recovery and revitalization, aided by the IMF deal. As stipulated by the Finance Minister of Ghana, Ken Ofori-Atta, the government’s commitment to addressing the challenges head-on was evident in the bold initiatives and strategic investments proposed in the budget.
Recognizing the importance of a robust healthcare system, the budget allocates significant resources to bolstering health care infrastructure. New hospitals, medical research facilities, and the enhancement of existing healthcare institutions are at the forefront of the government’s strategy to ensure the well-being of its citizens.
The rejuvenation of Ghana’s economy hinges on robust infra- structure. The budget allocates substantial funds for the development of roads, bridges, and public transportation, fostering connectivity and catalyzing eco- nomic activities across the nation.
The government, moreover, cognizant of the need for fiscal responsibility, has outlined a series of reforms aimed at improving transparency, accountability, and efficiency in public spending. These measures are designed to create a conducive environment for economic growth and attract foreign investment.
Ghana, a nation standing at the crossroads of challenges and opportunities, is poised for an economic renaissance, as revealed by the comprehensive 2024 budget statement. Owing to the 2024 budget statement, the economy, is set to undergo a transformative rebirth that seeks to address fiscal imbalances, catalyze growth, and foster resilience in the face of global uncertainties.
2024 GDP Growth
The trajectory of Gross Domes- tic Product (GDP) growth be- comes a compass, guiding the nation through the currents of progress and challenges. The first half of 2023 witnessed a commendable surge, with Real GDP growth averaging 3.2%, outpacing the 2.9% recorded during the same period in 2022.
The driving force behind Ghana’s impressive Real GDP growth in the first half of 2023 was the robust performance of the Services and Agriculture sectors, posting impressive growth rates of 6.3% and 6.2% respectively. The Services sector, encompassing finance, telecommunications, and technology, showcased a remarkable ability to not only weather economic storms but also contribute significantly to overall economic growth. The compass of economic navigation points towards a projected average Real GDP growth rate of 2.8% over the 2024–2027 period. While this reflects a pru- dent outlook, signalling an anticipation of continued economic expansion, it also recognizes the need for a measured approach in the face of global uncertainties.
The projection for Non-Oil Real GDP growth, standing at an average rate of 2.1% over the same period, signifies a commitment to diversification and reducing dependence on volatile oil markets. This strategic move aligns with the broader goal of building a resilient and sustainable economy.
In the intervening time, Ghana’s projected GDP growth of 2.3% in 2023 is juxtaposed against the backdrop of the estimated global GDP growth of 2.6%, as per the Economic Intelligence Unit (EIU). While Ghana’s growth rate remains slightly below the global average, it is crucial to recognize the unique challenges and opportunities that shape the nation’s economic landscape.
The overarching projection of an average GDP growth rate of 4.28% per annum from 2024 to 2027 underscores Ghana’s commitment to sustained and robust economic development. This ambitious vision calls for strategic planning, investments in key sectors, and a steadfast commitment to economic reforms.
Revenue and Expenditure
The heartbeat of any economic revival lies in its financial underpinnings. The 2024 budget forecasts a robust Total Revenue & Grants of GHS 176.4 billion (16.7% of GDP) compared to the 2023 mid-year budgeted revenue of GHS 134.9 billion, a staggering 30.8% increase over the 2023 mid-year budgeted revenue. This is a testament to the government’s commitment to bolstering its financial resources and steering the nation towards a path of economic resurgence.
However, this optimism is tempered by the projected Total Expenditure of GHS 226.7 billion, reflecting a 19.4% increase over the 2023 mid-year budgeted expenditure. The allocation of resources reflects a strategic focus on key sectors, with a notable 28% earmarked for employee compensation, showcasing a commitment to human capital development.
The robust growth in revenue signals a multifaceted approach, incorporating enhanced tax collection, diversified revenue streams, and, potentially, a favorable economic environment. It showcases the government’s proactive stance in propping up the financial foundations necessary for sustained economic growth.
Budget Deficit & Debt to GDP
The overall budget deficit on a commitment basis for the year 2023 fell to a 5-year low of 2.10% of GDP in August 2023. This was bench- marked against a target deficit of 4.6% of GDP for the year 2023. The Government largely views this outcome as an improvement in the country’s revenue mobilisation and slower execution of expenditure.
At the end of December 2022, total gross public debt has been revised from GHS 435.3 billion to a provisional figure of GHS 446.3 billion due to an update to the reported domestic debt in the wake of the DDEP to include liabilities of some government special purpose vehicles, ESLA Plc., and Daakye Plc. This expansion represents a growth of 2.5% in public debt levels.
The provisional total public debt at the end of September 2023 stood at GHS 567.3 billion, representing a growth of 27.1% from the now revised previous year’s debt figure of GHS 446.3 billion as of December 2022.
External Debt to GDP rose from 54.0% as of the end of December 2022 to 57.6% as of September 2023 due to the ongoing debt restructuring. Funds from the IMF-ECF and World Bank Development Policy Objectives (DPO) will support the external financing resources for the 2024 budget. The ECF and DPO will be disbursed in trenches to address the budgetary and external financing gaps.
Domestic debt grew by 17.1% from GHS 205.4 billion as of December 2022 to GHS 240.6 billion as of September 2023. External debt also increased by 35.6% from GHS 240.9 billion to GHS 326.7 billion during the same period. This trend in debt accumulation is largely due to the effects of the domestic debt exchange program.
Inflation and Exchange Rate
Inflation, a key economic indicator, is projected to slow down to 15.0% by the end of December 2024, a significant improvement from the 35.2% recorded in October 2023. The government’s success in reducing inflation by 18.9 percentage points within the year reflects prudent fiscal measures and effective economic management.
In September 2023, the Cedi declined by 22.9%, 24.1%, and 22.4% against the US Dollar, the Pound, and the Euro respectively. The prior period saw the Cedi depreciate 53.8%, 45.7%, 46.9% to the USD, GBP and Euro respectively. This is evident that measures taken to stabilize the currency are proving to be effective. The government’s commitment to managing exchange rates is critical for fostering investor confidence and maintaining economic stability.
Sectoral Dynamics
Ghana’s economic narrative in the first half of 2023 unfolded against a backdrop of sectoral shifts, where the Services and Agriculture sectors emerged as stalwart pillars of growth, demonstrating resilience amidst challenges. The Services sector, a cornerstone of Ghana’s economic activity, took centre stage with an impressive growth rate of 6.3% in the first half of 2023. This marked a notable uptick from the 5.0% recorded during the same period in 2022. The sector’s ability to not only withstand the headwinds of a challenging year, but also register accelerated growth, speaks volumes about its adaptability and inherent strength.
Key contributors to this growth include financial services, telecommunications, and the burgeoning technology subsector. The services sector’s robust performance played a pivotal role in cushioning the broader economy and creating a foundation for future expansion.
In tandem with the Services sector, the Agriculture sector played a crucial role in Ghana’s economic resilience, showcasing a growth rate of 6.2% in the first half of 2023. This represented a significant jump from the 4.3% recorded in the same period of 2022. The sector’s ability to weather challenges and maintain a steady growth trajectory underscores its importance in sustaining livelihoods and contributing to national prosperity.
The growth in agriculture is attributed to favorable weather conditions, increased mechanization, and government interventions aimed at supporting farmers. As a vital component of the economy, the agriculture sector continues to serve as a key driver of employment and a source of raw materials for various industries.
While the Services and Agriculture sectors flourished, the industry sector faced headwinds, contracting by 2.2% in the first half of 2023. This downturn was fueled by contractions across all subsectors, except for
Mining and Quarrying. The industry sector’s performance marked a departure from the 1.9% growth recorded during the same period in 2022.
The challenges faced by the industry sector were multifaceted, including supply chain disruptions, energy constraints, and global economic uncertainties. Despite these setbacks, the Mining and Quarrying sub- sector demonstrated resilience, mitigating the overall contraction and signaling pockets of strength within the broader industry landscape.
Ghana’s 2024 budget serves as a blueprint for economic rebirth, blending foresight, resilience, and strategic investments. As the nation sails across the intricacies of global challenges, the budget stands as a tribute to Ghana’s determination to emerge stronger, more prosperous, and resilient in the face of adversity. The project- ed economic renaissance, if supported by prudent fiscal measures, strategic investments, and a long-term vision, paints a promising picture of Ghana’s trajectory in the post-2023 era. In this regard, Ghanaians will be waiting with baited breath to see how 2024 unfolds.