In broad terms, the mid-year review has revealed that the government is very much on track to delivering the many initiatives the Asempa budget introduced and most importantly returning the “paltry” economy it inherited to glory. The actual 2016 macroeconomic outturn of; GDP growth of 3.5 percent, fiscal deficit of 9.3 percent of GDP, the deficit on commitment basis is 10.9 percent of GDP bears witness to the deleterious path the economy was before the assumption of office of the NPP. And so, to resuscitate an economy as that would require thoughtfulness, tactical planning and to a large extent some long term architectural modifications. Such a paradigm shift could not have occurred under six months.
However, there are some glaring gains the economy has seen namely;
1. The fiscal position of the economy is much better than the same period last year albeit the concern that we could have done more especially on revenue mobilisation. Many of the domestic revenue slippages are entirely not contained. Total revenue mobilised amounted to date is GH¢17.5million falling short of the target of Gh¢20.5million. The government have subsequently, revised revenue and expenditure projections downward. The difficulty with expenditure rationalisation is that there isn’t much room for manipulation expect for Capital Expenditure and Goods and Services. The big cost items of compensation of employees and interest payments are statutory and get not affected.
2. The other developments one cannot lose sight of is the various taxation regimes which got rationalised. The development is a healthy one for the different segments of the economy. The full benefits would manifest by the close of the year.
3. There is greater transparency in the reportage of government economic data. Since January this year, the Ministry of Finance has published numerous economic statistics many of which are a novelty (http://www.mofep.gov.gh/?q=reports). The openness in the report of economic data ultimately imbues investor confidence. Equally important is the proposed numerical fiscal rule of thumb (limit of a budget deficit of 3 to 5 percent of GDP each financial year in line with the PFM Act). It will go down in history as one significant policy measure that would ameliorate the recursive fiscal deterioration the economy experiences routinely.
4. Again, many of the flagship programmes have seen some amount of progress i.e. the National Innovation and Entrepreneurship Plan, the establishment of three Zonal Development Authorities, the National Identification System, the Free SHS, One District, One Factory, etc. A full assessment of impact could only be done at the end of the fiscal year.
Despite the significant achievements so far; job creation, the electricity challenges and depreciation of the cedi persist. Finding solutions to these would bring a deep respite to many Ghanaians who have hinged hopes on the Asempa budget.
Author: Henry KYEREMEH