Our Economy Is Suffering From Structural Weakness- Prez Akufo-Addo

President Akufo-Addo has indicated that Ghana’s economy is currently suffering from another structural weakness, which must be addressed with urgency.

According to him, Ghana has the second largest economy in West Africa, but with the lowest tax-to-GDP ratio of some twelve percent (12%), within the context of an average of eighteen percent (18%) in the ECOWAS Region.

“It is essential for our future, if we are to realize our goal of a Ghana Beyond Aid, that we make rapid strides to meet the eighteen percent (18%) and even higher target, to strengthen our self-reliance and our capacity to finance our development”.

President Akufo-Addo who said this when speaking at the 38th National Farmers Day Celebration in Koforidua, the Eastern Regional capital added that “It is in this light that I am calling strongly for support for the measures that the Minister for Finance outlined in the budget proposals, which will enhance significantly revenue mobilization. It should be obvious to all of us by now that we can only rely on ourselves to build the Ghana we want”.

Speaking further, he called on Ghanaians, in these difficult times, to support these fiscal measures that the Government has proposed for approval by Parliament, to enable us to achieve the goal of restoring macroeconomic stability and promoting inclusive growth, whilst protecting the poor.

He also appealed to Organised Labour, to help the government to build a strong Ghanaian economy, to continue its dialogue with its Social Partners to find rapidly an acceptable solution to the ongoing salary negotiations, a solution that is realistic and fair.

He added that the 2023 Budget presented to Parliament by the Minister for Finance seeks to address these economic challenges through several very difficult, but necessary measures.

“These measures include a debt operation to address our fiscal and debt sustainability concerns. Debt operations alone will not be enough to address the debt sustainability concerns,” he stated.

He also noted that “it’s for this reason why we are complementing the debt operations with fiscal adjustments, through improvement in revenue collection and expenditure rationalization measures, to promote debt and fiscal sustainability. This is why the Minister for Finance outlined several revenue and expenditure measures for the consideration and approval of Parliament”.

He added that these revenue measures include a proposed increase in VAT rate by 2.5%, the review of the e-Levy rate from 1.5 percent to 1 percent and removal of the one hundred cedis (GH¢100) threshold; removal of selected VAT exemptions; implementation of the VAT e-invoicing system; revision of selected excise taxes; complete removal of discount on benchmark values; implementation of the unified property rate collection; and review of the National Fiscal Stabilisation Levy (NFSL) to include all entities which are critical in supporting the fiscal consolidation process”.

President Akufo-Addo also outlined that the fiscal adjustment envisaged is not only on the revenue side but also on the expenditure side.

He said Government is proposing significant expenditure rationalization measures, including a lowering of the cap on transfers to earmarked funds from 25 percent to 17.5 percent; a review of Government flagship programs to reflect relevance, promote efficiency, and ensure value for money; continuing with the thirty percent (30%) cut in the salaries of him and his appointees, to manage the public sector wage negotiations and hiring within budgetary constraints; and integrate the public procurement approval processes with GIFMIS and budget allocation.

He said other key public expenditure measures seek to demonstrate the government’s burden-sharing in addressing the economic challenges facing us.

He concluded that his government is optimistic that all these fiscal measures, together with the debt operations and the implementation of key structural reforms will eliminate the structural bottlenecks in the economy outlined in the 2023 Budget, which will go a long way to address the economic challenges.