Never again - Ken Ofori-Atta vows, as Ghana exits IMF programme in Dec

As the government exits the programme in December 2018, Mr Ofori-Atta said these measures were to ensure that never again would the country approach the Bretton Woods institution for a bailout.

“We are grateful to the IMF and are determined to maintain a combination of economic discipline and vibrancy that will ensure that we will not have to be rescued in that manner in the future,” he said.

Presenting the 2019 budget in Parliament, he said the measures would include the legislation of a fiscal responsibility rule to cap the fiscal deficit to not more than five per cent of Gross Domestic Product (GDP); strictly enforce the PFM Act to promote efficient and effective public financial management; and continue with the zero central bank financing arrangement with the Bank of Ghana.

He said the government would also maximise domestic resource mobilisation and increase tax revenue-to-GDP ratio to levels in line with its peer Lower Middle-Income countries; implement expenditure efficiency and rationalisation measures to increase efficiency in public spending; and enforce the Public Procurement Act to ensure sole sourcing was minimised.

“We will also institute a risk management framework to mitigate macro- fiscal risks. In view of this, a Fiscal Risks Unit has been established at the Ministry of Finance,” he stated.

The Finance Minister pointed out that the government was on course to exit the programme by the end of this year.

“It has been a collective effort by all of us; government, for exercising the kind of macro-economic competence and discipline that was evidently lacking; and the people for their patience, understanding and keeping faith with their government,” he stated.

He said the programme might have had its critics because of the constraints it imposed but it was a necessary pill because by 2014, the government then had lost its fiscal discipline and had very little choice but to seek the bailout.

As a member in good standing, he said the country would continue its productive policy and technical collaborations with the IMF.

“Ghana will continue to engage the IMF through Article IV consultations and other arrangements even after its exit from the current Extended Credit Facility Programme,” he said.

Sharing his fiscal outlook for 2019, Mr Ofori-Atta said overall GDP was projected to grow by 7.6 per cent while non-oil GDP was projected to grow at 6.2 per cent.

In terms of sectorial growth, the agriculture sector is expected to grow by 7.3 per cent, the industry sector 9.7 per cent, and the services sector by 6.1 per cent.

Total revenue and grants for 2019 is estimated at GH¢58.9 billion, which represented 17.1 per cent of the rebased GDP, up from a projected outturn of GH¢46.8 billion, representing 15.7 per cent of rebased GDP in 2018.

Domestic revenue is estimated at GH¢57.8 billion, representing an annual growth of 25.5 per cent over the projected outturn for 2018.

Grants disbursements from development partners are estimated at GH¢1.1 billion, up from the projected outturn of GH¢773.2 million in 2018.

Total Expenditure (including clearance of arrears) is estimated at GH¢73.4 billion, equivalent to 21.3 per cent of GDP, representing a growth of 27.0 per cent above the projected outturn for 2018.

Expenditure on wages and salaries is forecasted at GH¢19.4 billion representing about 26.5 per cent of total expenditure.

The wage bill is anticipated to reduce to 5.6 per cent of GDP from the 5.9 per cent projected outturn for 2018.

Expenditure on goods and services is projected at GH¢6.3 billion, representing 1.8 per cent of GDP.

A total amount of GH¢18.6 billion has been estimated for interest payments of public debt. Of this amount, domestic interest payments will constitute about 77.8 per cent and amount to GH¢14.5 billion.

Capital Expenditure is projected at GH¢8.5 billion, equivalent to 2.5 per cent of GDP and a growth of 55.7 per cent over the 2018 projected outturn.

Of this amount, domestically financed capital expenditure is estimated at GH¢3.2 billion or 0.9 per cent of GDP.

 Based on the estimates for total revenue and grants and total expenditure, the 2019 fiscal operations will result in an overall budget deficit of GH¢14.5 billion, equivalent to 4.2 per cent of GDP.

Financing of the fiscal deficit will be from both domestic and foreign sources.

Net foreign financing will amount to GH¢9.7 billion, including a planned sovereign bond issuance of GH¢9.6 billion.

Total domestic financing is estimated at GH¢4.8 billion. This will result in a primary surplus of 1.2 per cent of GDP. — GB