Ghana’s government has recently revised its macroeconomic framework for 2024 in light of both domestic and global economic developments, including its debt restructuring programme with external and domestic creditors.
This revision aims to reflect the nation’s adaptive strategies and expectations for economic stability and growth.
The Minister of Finance, Dr. Amin Adam, announced key revisions to the macro-fiscal targets for 2024. These include an upward revision of the overall real GDP growth rate from 2.8% to 3.1%, and non-oil real GDP growth rate from 2.1% to 2.8%. However, the growth in the GDP deflator has been scaled down from 20.2% to 17.5%. Despite these adjustments, the primary balance on a commitment basis is projected to remain unchanged, maintaining a targeted surplus of 0.5% of GDP.
Dr. Adam further explained that the nominal overall GDP has been revised from GH¢1.05 trillion to GH¢1.02 trillion, and the non-oil GDP from GH¢979 billion to GH¢977 billion. The end-period headline inflation is expected to remain stable at 15%. Additionally, gross international reserves, which include oil funds and encumbered/pledged assets, are anticipated to cover at least three months of imports, providing a buffer against external economic shocks.
Fiscal Framework For The Year
The fiscal framework for the year has also undergone significant revisions. Total revenue and grants have been revised upwards by 0.5%, from GH¢176.4 billion (16.8% of GDP) to GH¢177.2 billion (17.4% of GDP). This increase is primarily driven by an expected rise in non-oil non-tax revenue, which has been adjusted from GH¢14.8 billion (1.4% of GDP) to GH¢15.6 billion (1.5% of GDP), largely due to dividends from interest accrued in the Energy Sector Levy Act (ESLA) accounts.
Conversely, total expenditure on a commitment basis has been revised downward by 2.1%, from the original projection of GH¢226.7 billion (21.6% of GDP) to GH¢219.7 billion (21.5% of GDP). This reduction is mainly attributed to a downward revision in interest payments by GH¢7.9 billion, reflecting the impact of the external debt restructuring on external interest payments.
The overall fiscal balance on a commitment basis has been revised from a deficit of GH¢50.3 billion (4.8% of GDP) to GH¢42.5 billion (4.2% of GDP). The cash deficit of GH¢54.1 billion (5.3% of GDP) is expected to be financed through a combination of foreign and domestic sources.
Dr. Adam disclosed that net foreign financing would amount to GH¢15.2 billion (1.5% of GDP), representing 28.1% of the total financing for 2024. This foreign financing includes disbursements from the second and third tranches of the International Monetary Fund (IMF) programme and the World Bank Development Policy Operation (DPO) funding.
On the domestic front, financing is projected to amount to GH¢38.9 billion (3.8% of revised GDP), accounting for 71.9% of the total financing for 2024. This is expected to be sourced from the issuance of debt in the short-term domestic market and inflows from Ghana Petroleum Funds.
These comprehensive revisions underscore the government’s commitment to maintaining economic stability and fostering growth despite the challenges posed by debt restructuring and external economic pressures. By adjusting its fiscal and macroeconomic targets, Ghana aims to create a more resilient economy capable of sustaining growth and development in the face of both domestic and global uncertainties. The revised framework also highlights the importance of diversified revenue streams and prudent fiscal management in achieving these goals.
Dr. Adam’s announcements reflect a strategic approach to economic governance, emphasizing the need for adaptive policies and continuous assessment of economic conditions. As Ghana navigates the complexities of debt restructuring and economic reform, these revisions provide a roadmap for achieving sustainable growth and financial stability in 2024 and beyond.
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