As the highly anticipated 2023 mid-year fiscal policy review approaches, sources indicate that government is confident in its ability to maintain economic stability and foster growth without the need for a supplementary budget.

Set for presentation to parliament next week, the review is expected to focus on solidifying economic measures in line with the Post-COVID-19 Programme for Economic Growth (PC-PEG), supported by the 3-year Extended Credit Facility agreement with the International Monetary Fund (IMF).

Government’s commitment to comprehensive structural reforms outlined in the PC-PEG is seen as a vital pillar in achieving its economic objectives. These reforms encompass crucial areas such as tax policy and administration, expenditure control and arrears clearance, debt management, financial stability, governance and corruption, and reformation of the energy and cocoa sectors.

The 2023 mid-year fiscal policy review aims to entrench economic stability and promote growth through fiscal consolidation, revenue enhancement and structural measures, in line with our Post COVID-19 Programme for Economic Growth, without seeking supplementary budget or compromising our commitment to strong structural reforms

Provisional budget execution data from January to May 2023 from the Bank of Ghana indicate encouraging progress in government’s fiscal consolidation efforts. A broad cash deficit of 1.8 percent of GDP was recorded during this period, significantly below the targetted 4.0 percent of GDP.

Additionally, the primary balance – with a deficit of GH¢1.2billion (0.1 percent of GDP), performed better than the expected deficit of GH¢6.7 billion (0.8 percent of GDP). While total revenue and grants fell short of the target at GH¢44.9billion (5.6 percent of GDP), total expenditure was tightly controlled at GH¢59.5billion (7.4 percent of GDP) – well below the target of GH¢82.8billion (9.5 percent of GDP). To finance the cash deficit, GH¢11.7billion was sourced from domestic channels.

Despite the challenges posed by revenue underperformance, government implemented measures to control expenditures; thus ensuring fiscal stability. Government remains vigilant in managing financing risks and seeks to enhance revenue mobilisation while aligning expenditures with incoming revenues, all aimed at advancing fiscal consolidation efforts.

This approach is intended to foster credibility, restore confidence, support the disinflation process and solidify the emerging economic stability.

While persistent revenue shortfalls remain a concern, stringent expenditure controls -particularly through interest savings from the debt and debt service suspension and external debt restructuring, have allowed government to maintain fiscal consolidation.

Notably, a significant portion of the expenditure control can be attributed to interest savings from the initial domestic debt exchange programme in 2023, amounting to GH¢34billion. The ongoing restructuring of domestic dollar bonds and external debt is expected to yield further interest savings; bolstering the fiscal position and aiding in arrears clearance. Additionally, government anticipates positive revenue impacts in the second half of 2023 from the implementation of three new revenue measures effective May 1, 2023.

Confident in the combined efforts, government remains optimistic about sustaining fiscal consolidation momentum – thus contributing to the restoration of fiscal and debt sustainability. Analysts however call for continued vigilance and careful execution of fiscal policies to ensure longevity of the economic stability achieved so far.

With all eyes on the upcoming 2023 mid-year fiscal policy review, expectations are high for government to deliver on its commitment to promote growth, achieve economic stability, and avoid the need for a supplementary budget.

Lawmakers are eagerly awaiting the review and government’s detailed plan to navigate the current economic landscape in the latter half of the year. If government’s projections hold true, it could mark a significant milestone in the country’s economic recovery – fostering increased confidence among investors and citizens alike.