Finance Minister Ken Ofori-Atta has announced significant downward revisions in key macroeconomic indicators.

The overall real gross domestic growth and inflation rates for the end of the 2023 fiscal year have been revised to 1.5 percent and 31.3 percent, respectively. This is down from the initial projections of 2.8 percent for GDP growth and a sub-20 percent target of 18.9 percent for inflation.

Despite the revisions, inflation remains at more than three times the central bank's upper band target of 10 percent.

The minister made this announcement during his presentation of the mid-year budget review to lawmakers in Accra.

These revisions were made to align with market expectations and adhere to the targets of the International Monetary Fund (IMF)-supported Policy Coordination and post-COVID-19 Programme for Economic Growth (PC-PEG).

During the presentation before parliament, the minister emphasized the need for these revisions, citing factors such as a broad economic slowdown across various sectors due to the fiscal consolidation plan and challenging global economic conditions.

“All these developments, together with the need to align with targets of the IMF-supported PC-PEG, warrant a revision of the macroeconomic framework. This was necessary because the framework was guided by the September 2022 data that underpinned the 2023 budget in November 2022. The revisions of the macro-fiscal framework generally seek to align the 2023 mid-year fiscal policy review with the IMF-ECF supported PC-PEG,” he explained.

Similarly, there have been revisions in several key non-oil real GDP growth rate, primary balance, and gross international reserves indicators. The non-oil real GDP growth rate has been adjusted to 1.5 percent, a reduction from the previous target of 3 percent. The primary balance on a commitment basis now reflects a deficit of 0.5 percent of GDP, in contrast to the initial plan of a 0.7 percent surplus. Additionally, the target for gross international reserves has been adjusted to cover at least 0.8 months of imports of goods and services by the end of 2023, significantly lower than the prudential threshold of three months.

Regarding the fiscal framework, Mr. Ofori-Atta emphasized that it now fully aligns with the fiscal objectives of the IMF programme, encompassing primary balance, revenue path, and trajectory of primary expenditures.

Various factors have contributed to these realignments, including fiscal developments between January and June 2023, changes in base pay, and disbursements from the IMF ECF Programme. The revised primary balance on a commitment basis now stands at a deficit of 0.5 percent of GDP, aligning with the fiscal consolidation path supported by the IMF's PC-PEG program.

“The revisions of the 2023 fiscal framework are driven by several factors… There was an increase in the base pay on the Single Spine Salary Structure, which was set at 30 percent instead of the previously assumed 20 percent for the 2023 Budget. Third, there was a partial restoration of capped transfers to the National Health Insurance Scheme (NHIS) and Ghana Education Trust Fund (GETFund).

“Fourth, the completed Domestic Debt Exchange Programme (DDEP) had an impact on both debt service costs and revenue mobilisation,” he explained.

“Additionally, there were disbursements from the International Monetary Fund (IMF) Extended Credit Facility (ECF) Programme amounting to US$1.2billion for 2023, along with other catalytic financing including US$530million from the World Bank (US$300million from Development Policy Operations and US$230million from Emergency Projects), and an expected disbursement of US$103million from the African Development Bank (AFDB). These various factors collectively influenced the revisions made to the fiscal framework for the year 2023,” the finance minister added.

The finance minister also addressed the modification of petroleum receipts, pointing to a decline in the demand for crude oil in light of recent developments in the world economy. In order to predict petroleum revenues for 2023, the average crude oil price was changed from US$88.55 per barrel to US$74.0 per barrel. As a result, the overall petroleum receipts were reduced by 32%, from US$1.48 billion to US$1.08 billion.

The finance minister, however, projected a recovery in GDP growth over the coming years and was upbeat about the future.

“Overall GDP growth is projected to rebound to 2.8 percent, 4.7 percent, and 4.9 percent in 2024, 2025 and 2026, respectively. This is a result of implementing growth-oriented and structural transformation strategies in the PC-PEG,” he stated, while highlighting the importance of developing an enhanced Growth Strategy supported by private domestic and foreign investments to further boost growth and create job opportunities