Mr. Courage Boti, the Research lead and Economist of GCB Capital ltd during a forum deliberated on key topical issues relating to the revenue receipts and expenditure allocation outlined in the 2023 budget.
To initiate the program, Mr. Courage Boti., the Research lead and Economist of GCB Capital ltd, shared his thought on some of the budget policy proposal and its high impact on the capital market.
Mr Boti revealed that, the global context of 2022 has been a turbulent. There has been a global inflation, aggressive monetary policy normalization as well as geopolitical tensions leading to energy crises and increasing risk of recession, he added.
Not limited to that, he also indicated that, pertaining to the regional context there has been an increase of portfolio reversals, volatile commodity prices resulting in growing food insecurity and a high rate of poverty due to the rise in the average prices of goods and services.
Speaking on the revenue receipts and expenditure allocation for this year, Mr Boti disclosed that, the country has raised about GHc65.4 billion revenue while there has been an underperformance on the expenditure side.
According to him, almost all the expenditure items exceeded their period target. It appears that fiscal controls were non-existent in the year 2022 hence resulting in an expenditure of about GHc99.57 billion as at September, he stated.
However, Mr. Boti further revealed that, almost all these have resulted in high inflation, distortion in the market and disrupting of asset prices which have affected bonds. “Some of the expenditure control measures that were put on board were not adhered to leading to the excesses,” he stated.
Expectations Of The 2023 Budget
According to Mr. Boti, he expected the Minister of Finance, Ken Ofori to give more highlight on expenditure rationalisation with much focus on growth and measures to restore debt fiscal sustainability.
“In 2023 budget, we could not see some decisive fiscal consolidation measures anchored on revenue growth and expenditure controls. I was hoping there would be a more realistic revenue growth with emphasis on expanding the resource basket. I am also looking forward to Expenditure rationalisation with focus on growth expenditure, priority spending and social protection in relation to the 2023 budget read.
“I was looking for some decisive steps to restore fiscal debt sustainability, restore market confidence and measures to reduce external sector vulnerabilities to re-anchor exchange rate stability. The 2023 budget should seek to reform targeting the revenue administration, industrialization and building resilience shocks that could position us in a better place in case we are faced with issues like Covid-19.”
Mr. Courage Boti
According to Mr. Boti, the 2023 budget predicted a deficit for the year 2023 to be 7.7%. This has led to the distortion of the fiscal consolidation agenda. The fiscal rule was suspended in 2020 when there was an emergence Covid -19. The plan was to gradually restore it to the threshold of 5% of Gross Domestic Product (GDP) by 2024.
“With the 2023 budget projecting the fiscal part for 2023, 2024, 2025, there is an actual expectation of the threshold to be around 5.4 % in 2025 before getting below 5% in 2026 as expected.”
Mr. Courage Boti
Touching on the Revenue aspect, Mr Boti stated that, there has been a new revenue measures which is expected to bring in about 1.35% of GDP, hence giving a GDP projections of about ghc800 billion for 2023 if the country succeeds in implementing its revenue measures.
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