2019 Budget: We abolished 7 taxes, reduced inflation to 9.8% & grew Gross International Reserves to US$7.3 billion

Finance Minister; Ken Ofori-Atta

Despite some Ghanaians complaining about the number of taxes slapped on them with some claiming its led to poor sales, the Finance Minister; Ken Ofori Atta in presenting the 2019 budget has submitted that nearly 9 taxes were abolished, the margins on two taxes were reduced as well as growth recorded in 4 sectors.

He stated the 2018 “Adwuma” Budget built on the 2017 “Asempa” Budget’s achievements which stimulated the economy to grow leading to job creation and improvement in the lives of Ghanaians.

Mr. Ofori Atta assures the ‘Adwuma” Budget is a budget that delivers on the hopes and expectations of Ghanaians; speaks to the needs of hardworking Ghanaians; enables citizens to face the future with confidence; reflects Government’s commitment to building human capital through improvements in health and education; delivers on job creation; provides opportunity for wealth creation; protects the public purse; supports small businesses while entrenching Ghana’s commitment to the Sustainable Development Goals (SDGs).

Below are interventions he says government made to make life bearable for citizens.

  • Abolished excise duty on petroleum;
  • Reduced special petroleum tax rate from 17.5 percent to 15.0 percent and further reduced to 13 percent, converted from ad valorem to specific tax. Petroleum taxes as a percentage of the total price build up for petroleum prices reduced from 40.0 percent in March 2017 to 26.0 percent today;
  • We abolished levies imposed on ‘kayayei’ by local authorities;
  • Abolished the 1 percent Special Import Levy;
  • Abolished the 17.5 percent VAT/NHIL on domestic airline tickets;
  • Abolished the 17.5 percent VAT/NHIL on financial services;
  • Abolished the 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally;
  • Abolished the 5.0 percent VAT/NHIL on Real Estate sales;
  • Abolished import duty on the importation of spare parts;
  • Reduced National Electrification Scheme Levy from 5.0 percent to 2.0 percent and
  • Reduced Public Lighting Levy from 5.0 percent to 3.0 percent.

He adds after 22 months of disciplined economic management, the results have been quite remarkable:

  • Economic growth increased from 3.7 percent in 2016 to 8.5 percent in 2017;
  • Agriculture growth increased from 3.0 percent in 2016 to 8.4 percent in 2017;
  • Industry growth rose from negative 0.5 percent in 2016 to 16.7 percent in 2017;
  • Services Sector grew at 4.3 percent in 2017 compared to 5.7 percent in 2016;
  • The fiscal deficit was reduced from 9.3 percent of GDP in 2016 to 5.9 percent of GDP in 2017 (the first time since 2006 that a government has met the deficit target), it is at 2.8 percent of GDP in June 2018 within the target of 4.5 percent of GDP in December 2018;
  • Inflation declined from 15.4 percent in 2016 to 11.8 percent in 2017 and now stands in single digits at 9.8 percent (September);
  • The Bank of Ghana Monetary Policy Rate saw a year-on-year reduction from 25.5 percent by end-2016 to 20 percent by end- 2017 and currently stands at 17 percent. This is the longest 18- month reduction in the monetary policy rate since 2001;
  • Interest rates on the 91-day treasury bills declined from 16.8 and now stands at 13.4 percent;
  • Ghana’s trade position with the rest of the world has strengthened. The trade account recorded a deficit of US$1.4billion in June 2016, improved significantly to a surplus for the first time in two decades to US$1.1 billion as at June 2017 and another surplus of US$1.1 billion as at June 2018;
  • Our gross international reserves increased from $6.2 billion in December 2016 (3.5 months of imports) to US$7.3 billion as at June 2018 (3.9 months of imports);
  • Ghana’s debt to GDP ratio which increased from 32 percent in 2008 to 73.1 percent in 2016 declined for the first time since 2007 from 73.1 percent of GDP in 2016 to 67.3 percent in June 2018; and
  • For the first time in almost a decade, Standard and Poor’s (S&P) upgraded Ghana’s Sovereign Credit rating from B negative to B with a stable outlook, in September 2018.

Ken Ofori-Atta also informed the house, this budget will be the first in Africa and second in the world, after Mexico to fully integrate the SDGs framework, enabling the state to track its financial performance in order to ensure progress.

Michael Eli Dokosi/goldstreetbusiness.com