Home | Goldstreet Business
Monday, June 16, 2025
  • Home
  • General News
    • Extractives
    • Auto
  • Business
    • Banking and Finance
    • AgriBusiness
    • Insurance
    • Mining
    • Oil and Gas
    • Real Estate/Housing
  • News
    • Top Stories
    • Agriculture
    • Maritime/Aviation
    • Energy
    • Education
    • Construction
  • Technology
    • ICT
    • Telecom
  • World
    • Africa
    • International
  • Editorial/Features
  • GSB Data Services
No Result
View All Result
  • Home
  • General News
    • Extractives
    • Auto
  • Business
    • Banking and Finance
    • AgriBusiness
    • Insurance
    • Mining
    • Oil and Gas
    • Real Estate/Housing
  • News
    • Top Stories
    • Agriculture
    • Maritime/Aviation
    • Energy
    • Education
    • Construction
  • Technology
    • ICT
    • Telecom
  • World
    • Africa
    • International
  • Editorial/Features
  • GSB Data Services
No Result
View All Result
Gold Business Logo
No Result
View All Result

Ghana’s expansionary fiscal policy for 2019 will deliver faster growth – stability hinges on ability to raise adequate tax revenue

December 5, 2018
in Uncategorized
0
Share on FacebookShare on Twitter

After a largely successful second year of implementing reforms to correct imbalances in the economy inherited in 2016, Ghana’s current administration aims to grow the economy faster in 2019.

The government has projected gross domestic product to expand 7.6% (using rebased data) in 2019 from a revised projection of 5.6% in 2018, which we think is largely attainable because of four main factors: a bigger though accommodative fiscal deficit target; higher oil output; a more liquid and resilient banking industry after the clean-up and recapitalization; and lastly a stable macroeconomic environment barring any serious hitch to revenue collection.

RELATED POSTS

Nurses and Midwives call off nationwide strike

Zoomlion Contract Will Not Be Renewed, Sweepers’ Fees to Increase—President Mahama

After changing the way it measures GDP, the Ghana Statistical Service in September said the Ghanaian economy was a quarter bigger than previously estimated, valuing the economy in 2017 based on the new data as 256.7-billion cedis (US$54.6-billion). After the available new information, the ministry of finance revised the 2018 growth forecast down to 5.6% from 6.8%. While change in the base data was a factor, this year was marked by government expenditure cuts as taxes fell short, a slowdown in loans amid a banking crisis and the attendant reduction in consumer spending.

Ghana is aiming for a budget deficit of 4.2% of the GDP next year from a projected 3.7% of the GDP this year. Given that this is being subjected to the expanded rebased GDP, it represents a significant proposed jump in government spend from the preceding year. It is worthy to note that as part of the spending plan for 2019, capital expenditure is rising by more than half to 8.5-billion cedis. This would play a major part in invigorating other sectors of the economy, jobs as well as consumption.

At the moment, we see oil production increasing next year as field operator Tullow Oil Plc plans to ramp up output at the country’s two main fields: Jubilee and TEN. While the two fields were producing a combined 170,000 barrels per day as of October 2018, Tullow sees it rising to 180,000 barrels by the end of December this year. We see the average daily output from these fields rising next year as Tullow plans to drill eight (8) new wells. There are no planned field shutdowns like this year when Jubilee was closed down three times to enable repair works related to the Turret Remediation Project on the Jubilee FPSO.

While field operator of the Sankofa-Gye Nyame field, Eni, has not made any announcement on expanding crude output next year from the current 25,000 barrels per day, next year marks a full year of gas production after starting operations in August 2018. Similarly the completion of the interconnection pipeline for gas import and export between the Jubilee and TEN fields in the first half of this year is expected to support increased gas production next year.

Ghana over the past one and a half years sought to clean up its banking industry, boosting liquidity and engendering stronger corporate governance. The move led to the close down of seven (7) privately-owned lenders found guilty of corporate governance and capital adequacy breaches. Since the central bank’s directive to lenders in September last year to increase the minimum capital to 400 million cedis from the current 120 million cedis by December 2018, there has been a substantial capital injection by banks ahead of the deadline. The government also injected the required capital to form a new bank which took over the liabilities and selected assets of five (5) of the failed lenders and committed 8-billion cedis worth of bonds to help meet the gap between the liabilities and assets of the seven.

These steps are helping to strengthen the once porous industry ridden with non-performing loans as the central bank disclosed that 20 banks have met the new minimum capital requirement already. The developments also point to a more liquid industry in 2019 – better armed to grow loans in a sustainable manner.

Credit growth, which slowed to an average 2.8% in the first six months of the year, recovered to 7.3% in July-October, according to central bank data. Non-performing loans also dropped to 20.1% at the end of October from 21.6% a year ago, the data showed.

We think that the latest trend will persist and even improve throughout 2019 as banks refocus from raising capital to growing capital. This focus should significantly drive expansion of private companies across all the sectors including agriculture, industry and services.

We are of the view that the macroeconomic framework of the 2019 budget is favourable for business and will largely be attained, unless revenue collection significantly falls short of targets. So far as the fiscal gap target is concerned, the administration of President Nana Akufo-Addo has demonstrated (since taking over in January 2017) that they won’t disappoint come next year. The worst-case scenario would be for government to lean towards cutting spending, assuming that revenue would disappoint. The Minister of Finance, Ken Ofori-Atta, said the government in 2019 will seek to pass a law that caps the budget deficit at 5% of the GDP, while a fiscal council would be instituted to promote sustainable public finance. These proposals emphasize our belief that the government intends to stick to the deficit target.

Past experience in Ghana supports that its fiscal stance very much influences the rest of the macroenvironment such as developments in inflation, interest rates and performance of the local currency which are all critical determinants of private sector growth. Before the country’s GDP growth dropped to a 26-year low of 3.7% in 2016, the budget deficit had topped 10% of the GDP for a third year in 2014 and declined to still a high ratio of 6.7% of the GDP in 2015 and reversed drastically to 8.7% of the GDP in 2016.

The inflation rate over those periods were 17% in December 2014, 17.7% in December 2015 and 15.4% in December 2016. The ease came about because government had started implementing reforms under an International Monetary Fund bailout programme, agreed in April 2015 to help correct the economic environment. The cedi’s weakness against the US dollar reached 10% in 2016 and the central bank’s policy interest rate rose to a record high of 26%. Worth mentioning is that the country in 2016 recovered from a more than three-year power crisis with cuts that lasted as much as 24 hours. Businesses could not just perform and it therefore came as no surprise that the GDP growth fell to the lowest since 1990.

Following the resolve of the current administration (when it took over to bring down the fiscal deficit and keep it low as a matter of policy and legislation), the other macroeconomic indicators fell in line. These indicators showed that the government’s fiscal performance gives impetus to what becomes of inflation, interest rates and exchange rate in the Ghanaian economy. Government (under leadership of President Nana Akufo-Addo) reduced the budget deficit to 5.9% of the GDP in 2017 and further to 3% of rebased GDP (3.7% of the old GDP) in the first nine months of 2018 versus the target of 2.6% of rebased GDP (3.2% of old GDP).

Given these fiscal trends we’ve seen inflation fall to 11.8% at the end of December 2017 and further to 9.5% at the end of October – all within the Central Bank’s end of year target of 6 to 10 %. The Bank of Ghana therefore has reduced its policy interest rate at 17% after its meeting in November this year. The cedi’s depreciation against the dollar has eased, thanks also to the prudent monetary policy making of the Central Bank.

With our expectation that the government will continue to stick to fiscal targets even after the IMF programme comes to an end this year, and our belief that the Central Bank will continue to make monetary policies to steer inflation towards the bank’s target band, we forecast Ghana’s inflation to be in the upper single digit range by the end of December 2019. Given that at this juncture most investors might have priced-in the highest possible impact from the US Fed’s interest rate increase, we do not foresee significant external pressure on the local currency going forward.

For us the major risk in the outlook remains the ability of government to collect all the 58.9 billion cedis revenue and grant it is targeting for 2019. Total revenue and grants were 9.5% below target in the first nine months this year. Performance can very much improve next year if the government can go all out on its promise to enforce tax compliance.

About the author:
Victor Yaw Asante is the Head of Commercial, Corporate and Investment Banking ( CCIB) at First National Bank Ghana. Victor started his career at Unilever and has held several managerial roles in leading financial institutions in Ghana and elsewhere and has covered other key markets like London, Cameroun, Cote D’Ivoire, Gambia, Botswana and Sierra Leone. Victor holds an MBA in Marketing.

facebookShare on Facebook
TwitterTweet
ShareTweetShare

Related Posts

Nurses and Midwives call off nationwide strike

Nurses and Midwives call off nationwide strike

June 13, 2025
Zoomlion Contract Will Not Be Renewed, Sweepers’ Fees to Increase—President Mahama

Zoomlion Contract Will Not Be Renewed, Sweepers’ Fees to Increase—President Mahama

June 13, 2025
Ghana Nets Over $1.17 Billion in Forex from Goldbod Programme – Finance Minister

Ghana Nets Over $1.17 Billion in Forex from Goldbod Programme – Finance Minister

June 5, 2025
FDA boss elected first Director-General of African Medicines Agency

FDA boss elected first Director-General of African Medicines Agency

June 5, 2025
Importers and Exporters Association calls on President Mahama to terminate ‘wasteful’ SML contract

Importers and Exporters Association calls on President Mahama to terminate ‘wasteful’ SML contract

June 5, 2025
Next Post

Uber Ghana & Old Mutual offer drivers & riders insurance cover

Huawei ICT Training Centre open to universities and industry players

Archives

<
June 2025
  • June 2025
  • May 2025
  • April 2025
  • March 2025
  • February 2025
  • January 2025
  • December 2024
  • November 2024
  • October 2024
  • August 2024
  • July 2024
  • June 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
▼
>
MonTueWedThuFriSatSun
      1
2345678
9101112131415
16171819202122
23242526272829
30      
   1234
567891011
12131415161718
19202122232425
262728293031 
       
 123456
78910111213
14151617181920
21222324252627
282930    
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
     12
3456789
10111213141516
17181920212223
2425262728  
       
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
    123
45678910
11121314151617
18192021222324
252627282930 
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
   1234
567891011
12131415161718
19202122232425
262728293031 
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
     12
3456789
10111213141516
17181920212223
24252627282930
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
   1234
567891011
12131415161718
19202122232425
26272829   
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
  12345
6789101112
13141516171819
20212223242526
27282930   
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
    123
45678910
11121314151617
18192021222324
252627282930 
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
   1234
567891011
12131415161718
19202122232425
2627282930  
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
     12
3456789
10111213141516
17181920212223
24252627282930
       
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
  12345
6789101112
13141516171819
20212223242526
2728     
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
   1234
567891011
12131415161718
19202122232425
262728293031 
       
 123456
78910111213
14151617181920
21222324252627
282930    
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
   1234
567891011
12131415161718
19202122232425
2627282930  
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
  12345
6789101112
13141516171819
20212223242526
27282930   
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
    123
45678910
11121314151617
18192021222324
252627282930 
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
 123456
78910111213
14151617181920
21222324252627
28      
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
1234567
891011121314
15161718192021
22232425262728
2930     
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
  12345
6789101112
13141516171819
20212223242526
27282930   
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
   1234
567891011
12131415161718
19202122232425
262728293031 
       
 123456
78910111213
14151617181920
21222324252627
282930    
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
   1234
567891011
12131415161718
19202122232425
2627282930  
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
1234567
891011121314
15161718192021
22232425262728
       
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
      1
2345678
9101112131415
16171819202122
23242526272829
30      
   1234
567891011
12131415161718
19202122232425
262728293031 
       
 123456
78910111213
14151617181920
21222324252627
282930    
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
1234567
891011121314
15161718192021
22232425262728
2930     
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
  12345
6789101112
13141516171819
20212223242526
27282930   
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
     12
3456789
10111213141516
17181920212223
242526272829 
       
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
    123
45678910
11121314151617
18192021222324
252627282930 
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
      1
2345678
9101112131415
16171819202122
23242526272829
30      
   1234
567891011
12131415161718
19202122232425
262728293031 
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
     12
3456789
10111213141516
17181920212223
24252627282930
       
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
1234567
891011121314
15161718192021
22232425262728
2930     
       
    123
45678910
11121314151617
18192021222324
25262728293031
       
    123
45678910
11121314151617
18192021222324
25262728   
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
     12
3456789
10111213141516
17181920212223
24252627282930
31      
   1234
567891011
12131415161718
19202122232425
2627282930  
       
1234567
891011121314
15161718192021
22232425262728
293031    
       
     12
3456789
10111213141516
17181920212223
24252627282930
       
  12345
6789101112
13141516171819
20212223242526
2728293031  
       
      1
2345678
9101112131415
16171819202122
23242526272829
3031     
    123
45678910
11121314151617
18192021222324
252627282930 
       
 123456
78910111213
14151617181920
21222324252627
28293031   
       
      1
2345678
9101112131415
16171819202122
23242526272829
30      
   1234
567891011
12131415161718
19202122232425
262728293031 
       

RECOMMENDED

Nurses and Midwives call off nationwide strike

Nurses and Midwives call off nationwide strike

June 13, 2025
Zoomlion Contract Will Not Be Renewed, Sweepers’ Fees to Increase—President Mahama

Zoomlion Contract Will Not Be Renewed, Sweepers’ Fees to Increase—President Mahama

June 13, 2025

MOST VIEWED

Plugin Install : Popular Post Widget need JNews - View Counter to be installed
  • Energy
  • Health
  • Auto
  • International
  • Subscription Form
  • Staff Webmail
  • About Us
  • Contact Us
Call us: +233 24 432 0902 | info@goldstreetbusiness.com

© Copyright © 2020 goldstreetbusiness.com. All Rights Reserved.

No Result
View All Result
  • Homepages
    • Homepage Layout 1
    • Homepage Layout 2
  • World
  • Business
  • Technology
  • Health

© Copyright © 2020 goldstreetbusiness.com. All Rights Reserved.

Login to your account below

Forgotten Password?

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.