Ghana’s Ministry of Finance has announced that it will update its Gross Domestic Product (GDP) projections and debt sustainability analysis (DSA) for 2022 to reflect positive economic developments in 2021 and recent policy decisions.
According to the Ministry of Finance, the revision will capture the medium-term projections of the economy based on the official provisional 2021 fourth quarter and overall 2021 annual GDP data released by the Ghana Statistical Service (GSS) this month.
On 20th April, 2022, the official provisional 2021 fourth quarter and overall 2021 annual GDP data were released by the Ghana Statistical Service (GSS). According to the GSS, real GDP expanded by 7.0 percent in the fourth quarter of 2021 compared to the 4.3 percent growth recorded in the corresponding period of 2020. Similarly, non-oil real GDP in the fourth quarter of 2021 expanded by 7.6 percent compared to 5.7 percent for the same period in 2020.
“As such, the Ministry of Finance will update its debt sustainability analysis (DSA) and revise its GDP projections for 2022 and the medium-term to reflect the positive developments in 2021 as well as recent policy decisions which have a bearing on sustaining the momentum towards robust economic growth.
“These developments are positive and confirm the fact that, the economy is rebounding post-COVID-19, the rate of debt accumulation is tapering off, and there is a slowdown in fiscal expansion with Ghana on track to return to the Fiscal Responsibility Act deficit threshold of 5 percent of GDP by 2024”.
Ministry of Finance
2021 growth exceeds government projections
On an annual basis, the provisional real GDP growth for 2021 showed a positive outturn of 5.4 percent, exceeding the 4.4 percent 2021 projected outturn by 1 percentage point and the SSA average growth by 0.9 percentage points. This, the Ministry believes, “is a clear confirmation that the economy is on the rebound post COVID-19 pandemic” after recording “a revised growth rate of only 0.5 percent in 2020”.
Similarly, the non-oil real GDP expanded from 1.0 percent in 2020 to 6.9 percent in 2021 (the highest non-oil real GDP growth rate since the rebasing was done in 2013), exceeding the target of 5.9 percent for the period.
The Nominal GDP for 2021 is estimated at GH¢459,130.9 million, over GH¢18 billion more than the projected outturn of GH¢440,869.4 million for the period, up from GH¢391,940.7 million recorded in 2020. The Non-oil nominal GDP for 2021 is GH¢437,975.2, up from GH¢378,147.9 million in 2020.
“The major implication of this higher-than-projected GDP outturn for 2021 is that all economic indicators expressed as a ratio of GDP will change to reflect the updated GDP data. These ratios include the debt to GDP ratio, a key factor in determining debt sustainability, the fiscal deficit to GDP ratio, and Revenue to GDP ratio. The new GDP data also has implications for the nominal 2022 GDP target and the growth rate as it is based on the 2021 GDP data which have now been updated”.
Ministry of Finance
The Ministry of Finance stated in a press release that the fiscal deficit (including energy and Finsec payments) is now showing a decline (as a percent of GDP) from 15.0 percent to 14.7 percent of GDP for 2020. Similarly, the fiscal deficit for 2021 has reduced from 11.7 percent to 11.4 percent, per the ministry’s new estimations.
The Ministry of Finance further disclosed that Ghana’s public debt stock expressed as percentage of GDP now stands at 76.6 percent of GDP at the end of 2021 compared to the earlier reported 80.1 percent. Similarly, the statement from the Ministry indicated that the 2020 debt stock has also reduced from 76.1 percent to 74.4 percent, a further confirmation that the rate of debt accumulation has slowed to pre-pandemic levels. The ministry of finance however, did not state the exact date it will undertake its forecast for the year.
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