2017 BUDGET STATEMENT BY THE FINANCE MINISTER KEN OFORI-ATTA
FULL NOTES OF THE 2017 BUDGET STATEMENT BY THE FINANCE MINISTER
SECTION ONE: INTRODUCTION
1 . Rt. Hon. Speaker, Honourable Members of Parliament, on
the authority of President Nana Addo Dankwa Akufo-Addo, I beg
to move that this Honourable House approves the Financial Policy
of the Government of Ghana for the year ending 31st December
2017.
2. On the authority of the President, and in accordance with
Article 179 of the 1992 Constitution, permit me to present to this
august House, the maiden Budget of the President of the Republic
of Ghana.
3. This presentation is an abridged version of the 2017
Budget Statement and I would like to request the Hansard
Department to capture the entire Budget Statement and
Economic policy
4. I also submit before this august House the following
reports:
• The 2016 Annual Report on the Petroleum Funds, in
accordance with Section 48 of the Petroleum Revenue
Management Act, 2011 (Act 815), as amended;
• The 2016 Annual Debt Report, in accordance with Section
72 of the Public Financial Management Act, 2016
(Act 921);
and
• The 2016 Energy Sector Levies Report, in accordance with
Section 6 of the Energy Sector Levies Act, 2015
(Act 899).
5. Mr. Speaker, let me first thank you and the house for
approving my nomination as Finance Minister. My profound
gratitude to both sides of the isle. Thanks for the dry run of 3
hours 45 minutes; I pray that I will be let off sooner this time. Mr
Speaker, I also stand here humbled by the President’s courage
and confidence to elevate me to this very weighty and high office
of Finance Minister of the Republic of Ghana, a nation with a
manifest destiny for greatness, a nation with very high
expectations for President Akufo-Addo’s government, a nation
that is 60 years old, remains a diamond in the rough and therefore
needs more than a shine.
6. Mr. Speaker, it is at this providential point in our history that
I have been given this grave but exciting responsibility to
participate in sending Ghana beyond aid and to realise our birth
right as the Black Star of Africa. I, Mr. Speaker, accept this role
with all the solemnity and reverence that it deserves.
7. Mr. Speaker, I would like to assure this house as I also did
with the Finance Committee that I will work with members with
utmost candour and respect. You are first and foremost the
legislative, the representatives of our people and I have been
privileged to witness the sacrifices you have gone through to be
here. Ayekoo. Secondly, Mr. Speaker, I am standing in the rather
large size shoes of a legacy of family members such as Dr. JB
Danquah, Mr. William Ofori-Atta, Honourable Amoako-Atta, Dr.
Jones Ofori-Atta (my father), President Nana Addo Dankwa Akufo
-Addo and Honourable Atta Akyea. I have, Mr. Speaker, been
brought up to respect this house and I will also like to honour my
forbears. Finally Mr. Speaker, let me freely admit, that this battle
ahead is indeed the Lord’s and I humbly confess before this
august house and the nation, of my inability to accomplish this
enormous task without the help and the leading of the Almighty;
through Jesus Christ we can resolve these challenges and
establish a righteous and just Society for all.
8. Mr. Speaker, nine (9) days ago, the President presented the
State of the Nation Address to this august House. His address, in
addition to presenting the state of the economy, also broadly
outlined the vision and policy direction of his Government. A
vision of hope, of jobs and wealth creation, and of a robust
economy that supports a thriving private sector. With this Budget,
I present to you the policies, strategies and actions we will
undertake to deliver the President’s vision.
9. Mr. Speaker, let us acknowledge that we have inherited a
challenged economy in which we are all stakeholders in:
• considerable debt overhang and rising interest payments
caused by excessive borrowing;
• expenditure overruns and accumulated arrears caused by
excessive sole sourcing, lax fiscal policies and weak
commitment controls,
• revenue underperformance caused by leakages, loopholes
and tax exemptions;
• slowdown in economic growth caused by energy
challenges and a lack of an enabling environment for the
private sector;
• limited capital investment, among others, due to rigidities
from earmarking of revenues that severely limit the fiscal
space and undermines the prioritisation of government policies;
and.
• urgent need to collaborate with our work force and build a
shared partnership to enhance training and improve
productivity
10. The country’s debt stock has reached a level of about 73
percent of GDP at end-December 2016, which is in excess of the
debt sustainability threshold of 70 percent. This has resulted in
high debt service costs with interest payments alone taking up
nearly 42 percent of tax revenue. This, together with
Compensation of Employees and Statutory Payments, is more
than total domestic revenue, leaving no fiscal space for growth
enhancing policies/programmes/expenditures.
11. Total expenditures at end-December 2016 stood at 30.3
percent of GDP against a target of 26.4 percent of GDP, with an
outstanding stock of arrears of nearly GH¢7 billion. This is at
variance with the Performance Criteria on the non-accumulation
of arrears for the 2016 fiscal year under the IMF-supported
Extended Credit Facility (ECF) Programme.
12. Mr. Speaker, the large fiscal slippages resulted in a fiscal
deficit of 8.7 percent of GDP on cash basis and 10.3 percent on
commitment basis. This is a sharp deviation from the IMF
program fiscal target of 5.3 percent of GDP. We intend to reverse
this trend and restore fiscal discipline.
13. Mr. Speaker, the rate of economic growth has slowed down
in recent times, with 2016 growth estimated at 3.6 percent, the
lowest in over two decades. Of particular concern is the erratic
performance of the Agriculture Sector and the continuing energy
challenges which have negatively affected the industrial sector.
The effect of this is a struggling private sector and rising
unemployment.
14. Mr. Speaker, while inflation and interest rates have recently
been on the decline, we still have to fix the underlying
macroeconomic fundamentals to ensure that this trend is
sustainable.
15. Mr. Speaker, the economic challenges we face require
deliberate but urgent, well thought out strategic steps and the
backing and total support of the Ghanaian people. I am confident
that we have the human resource, especially in this House and in
our Diaspora Community, the experience, and most importantly
the resounding mandate of the people to guide and inspire us.
16. This budget presents a clear roadmap on how we will move
this economy from its current state into a full-fledged middle
income economy – a Ghana beyond Aid.
17. Mr. Speaker, our goal is to build the most business-friendly
and people-centred economy in Africa, which will translate into
job creation and prosperity for all Ghanaians. We will strike the
right balance between fiscal consolidation and growth, by making
credible policy choices that will create the fiscal space to
implement growth enhancing initiatives. Mr. Speaker, we intend to
build a partnership with labour that will result in a social contract
to mark an era of peace in which we will mutually enhance the
productivity of our labour force.
18. This commitment however, is hampered by five constraints
which we need to overcome:
• low revenue collection;
• expenditure overruns and corruption;
• high wage bill;
• rigidity of fiscal structure caused by heavy earmarking of
tax revenue; and
• high debt service payments.
19. This budget presents a proposal to address these issues
permanently and I hope I can secure the support of this august
House in that regard.
20. Revenue administration remains a challenge. To boost
revenue streams, we will strengthen tax administration, reduce
tax exemptions, plug revenue loopholes and leakages and combat
tax evasion especially at our ports. We will broaden the tax base
whilst reducing and abolishing some taxes and levies. The
National Identification Scheme, a priority project of this
administration, which we intend to re-launch this year, will support
our efforts to rope in the economically active but undocumented
citizens and the informal sector of the economy thereby
broadening the tax base and accelerating financial inclusion.
21. Mr. Speaker, we will adhere to and maintain good economic
governance principles of fiscal discipline, accountability and
transparency. To reiterate what the President said, we will protect
the public purse by guaranteeing value for money in all public
transactions, and exercising prudence and discipline in our fiscal
management to deliver on the aspirations of the Ghanaian people.
Inefficiencies and waste in government spending will not be
tolerated and there will be strict enforcement of all relevant laws
and regulations, especially the new Public Financial Management
Act, 2016 (Act 921).
22. Government will pursue an effective debt management
strategy to ensure debt sustainability. We will also adopt global
standards of risk and treasury management to ensure
accountability in the use of state resources. In addition, we will
work to reduce the amount of government borrowing and the
resulting crowding out of the private sector. Mr. Speaker, as an
example, In the 2016 budget statement, the entire allocation for
the Ministries of Roads and Highways, Trade and Industry, Food
and Agriculture, Water Resources, Works and Housing, Youth and
Sports and Ministry of Transport amounted to a total of GHC2.2
billion. Interest payments in 2016 (GHC10.8 billion) would be
nearly 5 times what was allocated to the six key ministries
combined. This is how pernicious our debt stranglehold is.
23. Mr. Speaker, the Budget will set the pace for job creation
and accelerated growth by empowering the private sector. To
accomplish this, we will shift the focus of economic
management from taxation to production. This will reduce the
cost of doing business and create a conducive climate for
investment and job creation. In this regard, a number of taxes
that impede growth will be reviewed, and if necessary,
abolished. Government will reverse the recent low growth trend
by boosting agriculture and industrial productivity.
24. Mr. Speaker, the 201 7 Budget will set in motion the
following key policy priorities and flagship projects:
• establishment of the Infrastructure for Poverty Eradication
Project (IPEP). Under this project, every constituency will be
allocated the cedi equivalent of US$1 million to combat poverty
and improve the lives of rural dwellers and deprived
communities;
•implementation of the “One District One Factory”
programme;
•establishment of the Zongo Development Fund to support
the provision of critical infrastructure and services;
•roll-out of the National Identification Scheme to facilitate
the efficient delivery of public and private services and help
formalise the economy;
•roll-out free SHS to ensure equal opportunities for all and
enhancement of human capital for the country;
•roll-out of a national digital addressing system to provide
unique addresses for all properties in Ghana; and
•restoration of teachers and nurses training allowances.
25. Mr. Speaker, despite significantly missing the 201 6 the set
targets, I want to assure my fellow Ghanaians, investors and
external stakeholders that we are committed to continue with the
Extended Credit Facility (ECF) Programme with the IMF. We will,
however, review some of the targets and structural reform
benchmarks to accommodate our priorities of tax reliefs and
other positive measures to boost the private sector.
26. Mr. Speaker, Government will implement measures that will
unleash the creative abilities of Ghanaians, and facilitate
increased economic activity which will lead to the improvement in
people’s lives.
27. Mr. Speaker, there are exciting times ahead and there is
every good reason to be optimistic that our country is ready to
work again. Our government looks forward to a partnership of
progress with our honourable colleagues across the aisle.
28. Mr. Speaker we must as a nation come together to confront
our reality. The President did mention nine days ago that he
was in a hurry… Mr. Speaker, we must all be in a hurry, we must
trigger a national sense of urgency to deal with our deficit. It’s
continual presence curtails our capacity to leverage our many
opportunities and resources that we have as a nation. Let me
stress, Mr. Speaker, we cannot borrow our way out of these
challenges. This will be tantamount to creating and sharing
poverty, which only leads to a loss of our fiscal sovereignty; so
like the President, we must all be in a hurry to grow our way
into Prosperity. This budget, Mr. Speaker, seeks to do this.
29. Mr. Speaker, my presentation today will follow this outline:
•I will present a short brief on how the Global economy
performed in 201 6, the medium-term outlook and the
expected impact on the Ghanaian economy;
•This will be followed by the Macroeconomic Performance
for 201 6 against the target sets;
•I will then present the President’s Macroeconomic Targets
for 201 7 and the Medium-Term Targets;
•In addition, I will briefly talk about some key sector
deliverables for 201 7;
•And then provide you with the key policy initiatives for 201 7;
and
•I will finally conclude with highlights of the key messages in
the Budget.
GLOBAL ECONOMIC PERFORMANCE AND OUTLOOK
Global Output
30. Mr. Speaker, the global economy is expected to witness
some improvement in growth in 201 7 and the medium term
after a lackluster performance in 201 6. The January 201 7
Update of the IMF’s World Economic Outlook (WEO) projects a
global growth of 3.1 percent in 201 6. This is expected to
improve marginally to 3.4 percent in 201 7 and further to 3.6 in
201 8.
31 . For emerging markets and developing economies growth
is expected to remain unchanged at 4.1 percent in 201 6, and is
projected to recover to 4.5 percent in 201 7 and further to 4.8
percent according to the WEO.
32. The downside risks to the global outlook, according to WEO,
include, increased restrictions on global trade and migration
and its negative impact on productivity. In addition, high
corporate debt, declining profitability, weak bank balances, and
thin policy buffers in emerging market economies may lead to
capital flow reversals and depreciation of the local currency.
Commodity Prices
33. Mr. Speaker, oil prices have picked up in recent weeks
resulting mainly from an agreement among major producing
countries to reduce supply. Crude oil prices are expected to
average $55 per barrel in 201 7, about 28 percent increase over
the 201 6 levels.
34. Gold prices are expected to decline from an average of
US$1 ,249 per fine ounce in 201 6 to US$1 ,21 9 in 201 7 due
largely to an expected strengthening of the US dollar.
According to the Commodity Markets Outlook by the World
Bank, Cocoa price is projected to average about US$2,940 per
tonne in 201 7 up from US$2,850 in 201 6.
Implementation of ECOWAS Common External Tariff (CET)
35. Mr. Speaker, Ghana joined nine other member state to
implement the ECOWAS Common External Tariff (CET)
effective 1 st February, 201 6. The ECOWAS CET is considered a
major platform for the establishment of Customs Union that
will facilitate free trade and advance greater economic
integration within the region. The tariff is expected to help
address problems such as cross-border smuggling and
dumping in the sub-region. Government is currently monitoring
and evaluating the impact of the new regime on various sectors
of the economy.
Implications of Global Developments for Ghana’s Economy
36. Mr. Speaker, we address the risk of commodity price
volatility, Government will work towards diversifying the
economy. We will add significant value to our exports and
support local manufacturing of imported goods, which can be
produced locally in partnership with the private sector.
MACROECONOMIC PERFORMANCE FOR 201 6
Growth
37. Mr. Speaker, growth has remained subdued over the period.
The 201 6 GDP, based on the provisional outturn for the first
three quarters of the year, is estimated at 3.6 percent, with the
non-oil real GDP estimated at 4.6 percent, same as target. At
the sectoral level, the Industry Sector, specifically, mining and
quarrying underperformed due to a contraction in upstream
petroleum output, which constitutes the bulk of the Mining and
Quarrying Subsector. All the subsectors in the Agriculture
Sector, however, recorded positive growth rates. The Services
Sector continues to dominate the sectors with a share of 54.3
percent in 201 6.
Inflation
38. Mr. Speaker, inflation, which remained elevated for most
part of 201 6, began to slow-down towards the end of the year.
Inflation began the year at 1 9.0 percent, peaked at 1 9.2 percent
in March and ended the year at 1 5.4 percent.
Monetary and Credit Developments
39. Mr. Speaker, the key monetary aggregates and credit to the
private sector recorded slower growth in 201 6, in line with the
tight monetary policy stance. The broad money supply (M2+),
at the end of December 201 6, recorded an annual growth of
22.0 percent compared with 26.1 percent in the same period of
201 5. This was mainly driven by a moderate growth of 1 9.5
percent in Net Domestic Assets (NDA) and a Net Foreign
Assets (NFA) growth of 29.8 percent in December 201 6.
40. Growth in total outstanding credit to the public and private
institutions moderated further in December 201 6, a reflection
of a higher incidence of non-performing loans and the tight
monetary policy stance. The annual growth in total credit
slowed to 1 7.6 percent at the end of December 201 6 from 24.9
percent recorded in 201 5.
Stock Market Developments
41 . Mr. Speaker, annual changes in the Ghana Stock Exchange
Composite Index (GSE-CI) remained negative, generally
reflecting investor preference for higher yielding money market
instruments. The GSE Composite Index (GSE-CI) lost 1 5.3
percent (305.82 points) year-on-year in December 201 6 to
close at 1 ,689.09 points from 1 ,994.91 points in December
201 5. Total market capitalization stood at GH¢52,690.99
million at the end of December 201 6, showing a year-on-year
decline of 7.8 percent.
Interest Rate
42. Mr. Speaker, interest rates in 201 6 exhibited mixed
performance. The Bank of Ghana Policy Rate was kept at 26
percent until October 201 6 as risks to inflation and growth
were assessed as balanced. The policy rate, however, was
reduced to 25.5 percent, as inflation pressures eased while
domestic growth conditions continued to deteriorate. Yields on
short-term Government securities decreased, while those of
medium to long-term GOG bonds increased in line with
Government’s policy to properly align the yield curve and
extend the maturity profile.
Exchange Rate
43. Mr. Speaker, the Ghana cedi remained relatively stable
against the major currencies in the currency market, on
account of tighter monetary policy and improved foreign
exchange inflows. However, this trend was reversed in the run-up to the December elections, as demand pressures mounted.
The Ghana cedi recorded a cumulative depreciation of 9.6
percent and 5.3 percent against the US dollar and the euro,
respectively, but appreciated by 1 0.0 percent against the pound
sterling in the interbank market in 201 6.
External Sector
44. Mr. Speaker, the balance of payments (BOP) turned surplus
for the first time since 201 1 due to improved current account
balance. Accordingly, there was a build-up in gross foreign
assets, which supported the relative stability in the exchange
rate. The BOP surplus was US$247 million, compared to a
deficit of US$1 29 million in 201 5. The trade balance improved
from a deficit of US$3.1 bn in 201 5 to a deficit of US$1 .7bn in
201 6 due to increased exports receipts by 7.2 percent and a
decline in imports by 5.3 percent.
45. The gross foreign assets at the end of December was
estimated at US$6, 1 61 .80 million, from US$5,884.70 million at
the end of December 201 5, representing a build-up of
US$277.07 million. This was sufficient to provide cover for 3.5
months of imports of goods and services, same as in
December 201 5.
Fiscal Developments
46. Mr. Speaker, the main objective of fiscal policy, as
envisioned in the 201 6 Budget, was to consolidate
Government’s finances by reducing the fiscal deficit from 6.3
percent of GDP in 201 5 to 5.0 percent of GDP in 201 6.
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47. Provisional data for 2016, however, indicates that the
envisioned fiscal consolidation was not achieved. As a result,
total domestic revenue and grants was 11.1 percent below
target (an actual of GH¢33.7 billion, against a target GH¢37.9
billion), while total Expenditure (including outstanding
expenditure claims) exceeded the target by 16.2 percent.
These slippages resulted in a fiscal deficit on commitment
basis of 10.3 percent of GDP. On cash basis, the fiscal deficit
was 8.7 percent of GDP against a target of 5.0 percent of GDP.
The primary balance for the period, recorded a deficit of 1.4
percent of GDP, against a targeted surplus of 1.2 percent of
GDP.
48. Mr. Speaker, the shortfall in total Revenue and Grants was
broadly attributed to the impact of energy challenges on
households and firms, lower than anticipated receipts from oil
due to both lower-than-programmed benchmark crude oil price
and production, and non-realisation of proceeds from both tax
and non-tax categories. In addition, tax compliance was
relatively weak.
49. Mr. Speaker, total expenditures (incl. outstanding
obligations) amounted to GH¢51.1 billion at end-December
2016. Outstanding obligations of GH¢5 billion, comprise MDA
obligations with MoF, which had not yet been captured on the
GIFMIS as well as outstanding payments to Statutory Funds.
The outstanding obligations relate mostly to Compensation of
Employees, Goods and Services, and domestically financed
Capital Expenditure..
Petroleum Receipts in 2016
50. Mr Speaker, in 2016, GNPC lifted six parcels of crude oil
(consisting of the 31st to 35th Jubilee and 1st TEN liftings) on
behalf of the State, and exported a total of 21,580 MMscf of
gas to Ghana National Gas Company (GNGC). Total crude lifted
was 5,856,921 barrels of oil (4,860,462 barrels of Jubilee oil
and 996,459 barrels of TEN oil). Receipts from crude oil liftings
for 2016 included revenues from the sale of 4,824,417 barrels
of oil from the 30th (lifted in December 2015) and the 34th
Jubilee liftings, which amounted to US$207.79 million
(GHȻ811.68 million). The proceeds from the 35th Jubilee and
1st TEN liftings in December 2016 were received in the first
quarter of 2017. Mr. Speaker, actual petroleum receipts for
2016 fell short of the 2015 performance by 29.1 percent due to
the continuous decline in crude oil prices, the decline in Jubilee
production and lower TEN production.
Public Debt Development
51. Mr. Speaker, total public debt stock as at end 2016 stood at
almost 73 percent of GDP up from 71.63 percent in 2015. This
was due to the larger than expected fiscal deficit and financing
requirement in 2016. Domestic and external debt stood at 31.7
percent of GDP and 40.8 percent, respectively. In nominal
terms, the public debt stock as at end 2016 stood at GH₵122.3
billion (US$29.2 billion), with domestic and external debt of
GH₵53.4 billion (US$12.8 billion) and GH₵68.9 billion (US$16.5
billion), respectively.
52.
Energy Sector Levies
53. Mr. Speaker, the Energy Sector Levies Act, 2015 (Act 899)
was enacted to “consolidate existing energy sector levies to
ensure efficient utilisation of proceeds generated from the
levies, impose a price stabilisation and recoveries levy to
facilitate sustainable long term investments in the energy
sector, and to provide for other related matters”.
54. Mr. Speaker, the law requires the utilisation of the energy
sector levies mainly for the clearance of legacy debts of SOEs
operating in the energy sector, to support power generation
and power sector infrastructure, subsidy for premix fuel, and
the stabilisation of petroleum prices.
55. A total amount of GH¢3.2 billion was programmed to be
collected as total Energy Sector Levies (ESL) for the year 2016.
Actual collections at the end of the year was GH¢3.3 billion. A
breakdown of the utilization of the levies is provided in this
Budget Statement.
56. Mr. Speaker, a few challenges have been encountered in
the utilization of the proceeds and we will have to come to this
august House for an amendment of the Act.
MACROECONOMIC TARGETS FOR 2017 AND THE MEDIUM TERM
57. Mr. Speaker, Government’s policy objectives for the
medium term among others will be to:
•build the most business-friendly and industrialized
economy in Africa, capable of creating decent jobs and
prosperity for all Ghanaians;
•modernize agriculture, improve production efficiency,
achieve food security, and profitability for our farmers with
special emphasis on value-addition;
•develop leadership skills, quality education,
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entrepreneurship, job skills and creative skills; and
•ensure a functioning social protection system which
addresses the needs of the weak, marginalized, vulnerable
and socially excluded; among others.
58. Mr. Speaker, to achieve our broad macroeconomic
objectives, our policy direction will be to:
•restore and sustain macroeconomic stability;
•shift the focus of economic management from taxation to
production;
•manage the economy competently; and
•make the machinery of government work to deliver the
benefits of progress for all Ghanaians.
59. Mr. Speaker, prudent monetary and external sector policies
will also be pursued by the Bank of Ghana to complement the
fiscal policy stance to ensure price and exchange rate stability.
60. Mr. Speaker, we are confident that the above highlighted
policies which are discussed in detail in the Budget Statement
will contribute to the achievement of the following
macroeconomic targets for 2017:
•overall real GDP growth of 6.3 percent;
•non-oil real GDP growth of 4.6 percent;
•end-year inflation of 11.2 percent;
•average inflation of 12.4 percent;
•overall fiscal deficit of 6.5 percent of GDP;
•primary surplus of 0.4 percent of GDP; and
•Gross Foreign Assets to cover at least 3 months of imports
of goods and services.
61. Mr. Speaker, we believe strongly that our medium-term
policies, anchored on fiscal discipline, a broadened tax base,
elimination of wasteful expenditures, prudent debt
management strategies, complementary monetary policy, and
sustainable external balance will ensure even better
macroeconomic outcomes in the medium-term. Consequently,
the macroeconomic targets for the medium-term (2017-2019)
include the following:
•overall real GDP growth to average 7.4 percent;
•non-oil real GDP growth to average 5.6 percent;
•inflation to be within the target band of 8±2 percent in the
2018-2019 period;
•overall fiscal deficit to reduce to 3 percent by the end of
2019;
•current account deficit projected to decline to 4.8 percent
of GDP in 2018 and further to 2.7 percent of GDP in 2019;
and
•Gross Foreign Assets to cover not less than 3.5 months of
import of goods and services in the medium-term.
62. Mr. Speaker, consistent with Section 16 of the PFM Act,
2016 (Act 921), we have also set the following targets on
primary and secondary fiscal indicators to monitor the fiscal
health of the economy towards the achievement of our fiscal
policy objectives in 2017:
•non-oil primary deficit of 0.8 percent of GDP;
•public debt stock equivalent to towards trend 70.9 percent
of GDP;
•capital spending of 12.6 percent of total expenditures; and
•(domestic) revenue-to-GDP ratio of 21.4 percent
Resource Mobilization for 2017
63. Mr. Speaker, total Revenue and Grants, including
programmed receipts from petroleum for the 2017 fiscal year,
is estimated at GH¢44.9 billion (22.1 percent of GDP),
indicating a 33.5 percent increase over the provisional outturn
in 2016. Total non-petroleum Revenue and Grants is estimated
at GH¢42.6 billion (21.4 percent of non-oil GDP) representing
29.2 percent increase over the provisional outturn in 2016.
64. Mr. Speaker, total receipts from petroleum is estimated at
1.2 percent of GDP and amounts to GH¢2.4 billion, representing
a 231.2 percent increase over the outturn in 2016.
65. Domestic revenue is estimated at GH¢43.4 billion or 21.4
percent of GDP and is expected to be 33.5 percent higher than
the provisional outturn in 2016.
66. Mr. Speaker, total tax revenue is estimated at GH¢34.4
billion, representing 6.9 percent of GDP. Of this amount, nonpetroleum tax revenue is estimated to grow by 32.4 percent
and this amounts to GH¢33.8 billion equivalent to 16.9 percent
of non-oil GDP.
67. Taxes on Income and Property is estimated to increase by
47.7 percent to GH¢13.4 billion in 2017, accounting for 39.1
percent of total tax revenue. Of this amount, Royalties from
petroleum is estimated at GH¢616.8 million.
68. Taxes on Goods and Services are estimated at GH¢13.9
billion, representing 13.3 percent increase over the provisional
outturn in 2016 and 40.3 percent of the estimated total tax
revenue for 2017.
69. International Trade taxes, are estimated at GH¢7.1 billion,
representing 3.5 percent of GDP and 20.6 percent of total tax
revenue. This estimate represents a 61.1 percent increase over
the provisional outturn for 2016.
70. Mr. Speaker, the significant growth of this tax type
emanates mainly from additional GH¢1.0 billion in tax measures
that will be realised as savings from the reduction in the amount
of import exemptions that will be granted in the 2017 fiscal year.
71. Mr. Speaker, Non-tax revenue, is estimated at GH¢6.7
billion (3.3 percent of GDP), representing 15.3 percent of
domestic revenue. An amount of GH¢3.4 billion is expected to be
retained by MDAs for the funding of their activities and the rest
lodged into the Consolidated Fund. Of the total amount estimated
for Non-tax revenue, an amount of GH¢1.7 billion is estimated as
non-tax petroleum revenue.
72. Mr. Speaker, grants from Development Partners is
estimated at GH¢1.5 billion, equivalent to 0.8 percent of GDP.
Resource Allocation for 2017
73. Mr. Speaker, total expenditure, including provision made for
the clearance of arrears and outstanding commitments in 2017 is
estimated at GH¢58.1 billion, equivalent to 28.6 percent of GDP.
The estimated expenditure for the year represents a 13.7 percent
increase over the provisional outturn for 2016. Of this amount,
GH¢3.7 billion, equivalent to 1.8 percent of GDP and 6.4 percent
of total expenditure will be used for the clearance of arrears and
outstanding commitments.
74. Mr. Speaker, provision has been made for the clearance of
up to 20 percent of the outstanding claims from previous years
whiles we await the outcome of a special forensic audit of these
outstanding claims.
75. Mr. Speaker, Compensation of Employees is estimated at
GH¢16.0 billion (7.9 percent of GDP). Of this amount, GH¢14.0
billion, equivalent to 6.9 percent of GDP.
76. Expenditure on Goods and Services is estimated at GH¢3.5
billion, representing 1.7 percent of GDP.
77. Total Interest Payment estimated at GH¢13.9 billion,
represents 23.9 percent of total expenditure and is equivalent to
6.9 percent of GDP. Of this amount, domestic interest payment
constitutes 80.5 percent of the total Interest Payment and
amounts to GH¢11.2 billion.
78. Mr. Speaker, the existing legislation that have underpinned
the estimation of Grants to other Government units over the years
is being reviewed to break the cycle of rigidities in the Budget.
Consequently, Grants to other Government units, comprising
statutory payments into the National Health Insurance Fund,
Ghana Education Trust Fund, the District Assemblies Common
Fund, Road Fund, Energy Fund, transfer to the Ghana National
Petroleum Company, retention of internally-generated funds by
MDAs and other earmarked Funds has been constrained to a
ceiling of 25 percent of tax revenues. The total allocation for
grants to Other Government Units is GH¢9.7 billion.
79. Mr. Speaker, in addition to the significant tax incentives
granted in this year’s Budget, an amount of GH¢241.2 million has
been budgeted in Social Benefits to assist lifeline consumers of
electricity and transfers for social protection.
80. A total amount of GH¢7.1 billion has been allocated for
capital expenditure. Of this amount, 38.9 percent will be financed
from domestic sources and the remaining from foreign sources.
Overall Budget Balance and Financing for 2017
81. Mr. Speaker, based on the revenue and expenditure
estimates, the 2017 budget will result in an overall budget deficit
of GH¢13.2billion, equivalent to 6.5 percent of GDP.
82. Financing of the deficit will be from both domestic and
foreign sources. Net Domestic Financing is estimated at GH¢14.6
billion, equivalent to 7.1 percent of GDP, and includes financing
from divestiture proceeds of GH¢1.8 billion. Net foreign financing
is estimated to constitute a net repayment of GH¢1.3 billion,
equivalent to 0.6 percent of GDP. An amount of GH¢300.7 million,
equivalent to 0.1 percent of GDP is estimated to be saved in the
Ghana Petroleum and Contingency Funds while the Sinking Fund
is expected to be drawn-down by GH¢716.1 million.
Projection of 2017 Petroleum Receipts and allocation
83. Mr. Speaker, the estimated Benchmark Revenue (BR) price
for crude oil is US$56.142 per barrel for 2017 with a benchmark
output of 43,875,920 barrels (120,208 bopd) and 32,512,497
MMBtu for oil and gas, respectively.
84. The petroleum revenue for 2017 is estimated at US$515.64
million, with BR projected at US$242.08 million.
85. Mr Speaker, the second 3-year cycle for the review of the
petroleum revenue distribution formula, as stipulated in the PRMA,
has elapsed. We would like to request this august House to
maintain the existing distribution formula as follows:
• 30 percent of the net Carried and Participating Interest
to GNPC;
• 70 percent of net receipts (after GNPC’s) to the ABFA;
• 30 percent of net receipts (after GNPC’s) to the Ghana
Petroleum Funds;
• 30 percent of the amount allocated to the Ghana
Petroleum Funds to the Ghana Heritage Fund; and
• 70 percent of the amount allocated to the Ghana
Petroleum Funds to the Ghana Stabilisation Fund.
86. We would also like the House to approve the following
priority areas for the spending of the ABFA for 2017-2019, in line
with the PRMA:
• Agriculture;
• Physical Infrastructure and Service Delivery in
Education;
• Physical Infrastructure and Service Delivery in Health;
and
• Road and Rail Infrastructure Development.
The Medium Term Debt Strategy and Debt Sustainability Analysis
87. Mr. Speaker, the debt strategy for the medium term would
be to manage the public debt at the lowest cost and at prudent
levels of risk to bring our debt to GDP ratio to 65 percent over the
medium term.
88. Consequently, in accordance with the requirement of the
Public Financial Management Act, 2016 (Act 921), my Ministry will
conduct and publish a Debt Sustainability Analysis (DSA) and
update the MTDS to guide the borrowing plan and operations. The
reports will inform policy decisions, leading to the reduction in the
debt burden and insulation against other fiscal vulnerabilities.
SECTORAL PERFORMANCE AND OUTLOOK
89. Mr. Speaker, the sectoral policies are designed to achieve
our broad objectives of jobs and wealth creation and
macroeconomic stability while ensuring compliance with the
PFM Act. Permit me to update this august House on the
performance of some key sectors of the economy and the
outlook for 2017 and the medium term. I will begin with this
August House;
PARLIAMENT OF GHANA
90. Mr. Speaker, Parliament continued to discharge its
mandate through the consideration of 181 Papers including 25
Bills, four Legislative Instruments (L.Is), eight Constitutional
Instruments (C.Is), 19 Loan Agreements and 39 Committee
Reports. Out of the 25 Bills laid, 18 were passed into law.
91. Parliament also facilitated the establishment of the
Scrutiny Office to provide expert analysis of policy measures
on Bills, the budget, loan agreements and international financial
transactions brought before the House for approval. In 2017,
the Office will be strengthened to undertake pre-legislative
scrutiny of bills through research and information pursuant to
the PFM Act.
92. Mr. Speaker, Parliament will complete the review of its
Standing Orders to open up committee meetings to the public
and empower committees to undertake independent
investigations, and summon witnesses and government
officials to appear before it.
93. The Parliamentary Training Institute established in 2016
will be strengthened to undertake and promote research in
parliamentary democracy. A Strategic Plan for the take-off of
the Institute will be developed in 2017.
AGRICULTURE
94. Mr Speaker, the government recognizes agriculture as the
main anchor of the country’s economy. Unfortunately we have
witnessed a steady decline in the sector and production levels
have fallen consistently over the years. In the medium term, we
intend to modernize the sector to improve productivity and
achieve food security and profitability for our farmers.
95. Mr Speaker, in 2017 government will launch the “Planting
for Food and Jobs” campaign.
96. The campaign is designed to encourage all citizens (both
urban and rural) to take up farming as a full or part-time activity.
It is intended to structure it along the lines of the erstwhile
“Operation Feed Yourself” (OFY) programme in the 1970s. The
campaign will involve the production of maize, rice, soybean,
sorghum and vegetables. Other crops will be adopted in
subsequent years.
97. The campaign will be anchored on five pillars namely:
• Provision of improved seeds;
• supply of fertilizers;
• provision of dedicated extension services;
• marketing and
• E-Agriculture and Monitoring.
98. This initiative is expected to increase the production of
maize by 30 percent from current production levels, rice by 49
percent, soybean by 25 percent and sorghum by 28 percent.
This will create 750,000 jobs in both direct and indirect
employment.
99. The Ministry will import improved seeds to augment any
shortfall for the “Planting for Food and Jobs” campaign.
100. Mr. Speaker, in 2017, the Ministry will continue the Fertilizer
Subsidy Programme to help increase the productivity of
farmers. To this effect, we intend to distribute nationwide, an
expected 180 thousand metric tonnes of subsidized fertilizer.
FISHERIES
101. Mr. Speaker the fisheries subsector employs a significant
number of our people especially along the coastal areas. Over
the past years, efforts have been made to also boost both
marine and inland fishing and support aquaculture
development. However we believe that we need to modernize
the artisanal fishing methods to ensure sustainable fishing and
also improve production levels.
102. To modernize and transform the industry, the Ministry will
complete phase one of the Anomabo Fisheries College to
enhance research and knowledge-base in fisheries technology
for all operators. It will also collaborate with relevant
institutions and the private sector to develop modern landing
sites and storage facilities at James Town, Cape Coast, Axim
and Mumford.
TRADE AND INDUSTRY
103. Mr. Speaker the country’s industrial sector faces significant
challenges. The principal ones of which are lack of access to
finance, high interest rates, inadequate and poor quality raw
materials for industrial processing, poorly developed domestic
trade and an unreliable and expensive power source.
104. The goal of government over the medium term is to
address these challenges in ways that enable industry to thrive
and become a major source of jobs especially for the youth. A
number of major policy interventions will be initiated this year
as part of this strategy.
105. In 2017, the Ministry will roll out its district level component
of the National Export Strategy to develop one export
commodity in every district.
106. In 2017, the Ghana Commodities Exchange (GCX) project
will establish a state-of-the-art, transparent, and professional
market institutions to create an orderly, transparent and ready
market for goods that are produced by farmers in the country.
TOURISM, CULTURE AND CREATIVE ARTS
107. Mr. Speaker, Tourism, Culture and Creative Arts remains
one of the most underdeveloped sectors in our economy
despite the immense growth potential and opportunities for job
creation.
108. When developed, the sector can positively impact the lives
of many individuals, families, communities and small
enterprises in our country and providing needed jobs for our
teeming youth. Our objective is to transform the country into a
major Meeting, Incentive Conference and Exhibition center
(MICE). To facilitate this we will aggressively develop our
tourist sites to bring them to world class standards.
109. In 2017, the Government will kick start the Marine Drive
Tourism Investment Project covering the over 240 acres of
land from Osu Christiansborg Castle to the Arts Center. This
project will transform the beach area into a tourism enclave to
create jobs for our teeming youth.
110. The Ministry will partner the private sector to develop the
Efua Sutherland Park into an ultra-modern world class Park.
Specifically for 2017, Mr. Speaker, we will use IT to promote
and market tourism via the single portal window.
111. Mr. Speaker, the Ministry will also undertake a food festival
to showcase the diverse rich Ghanaian foods through cooking
competition throughout the country.
ENERGY
112. Mr. Speaker, this government intends to ensure that
Ghanaians enjoy reliable, efficient and affordable power to
provide comfort in their homes and support the development
and growth of their businesses.
113. In 2016, significant efforts were made to address some of
the challenges in the sector. This include an increase in the
total installed generation capacity by 880MW. In 2017,
Government will continue to increase the installed generation
capacity of the country to meet the growing demand for
electricity. A total of 1227MW of installed capacity scheduled
to be added include: 370MW AKSA project, 107MW GPGC
project, 350MW CenPower Project and 400MW Early Power
Project among others.
114. Mr. Speaker, ECG and NEDCO will continue with system
upgrade projects to improve the quality of power supply to
customers. Furthermore, steps would be taken to ensure that
outstanding issues surrounding the implementation of the
Ghana Compact II are addressed, to allow for its
implementation, in order to achieve the desired objectives.
115. Mr. Speaker with regards to oil and gas, Government will
work with the Jubilee Partners to address the shortfall in oil
and gas production resulting from the 2016 damage on the
turret bearing on FPSO Kwame Nkrumah and will adopt a three
phase approach to convert the FPSO Kwame Nkrumah to a
permanently spread-moored. First gas from the TEN field to the
Gas Processing Plant (GPP) is expected in the first half of 2017.
GNPC is engaging with the partners to develop an integrated
technical and commercial schedule that will target gas start-up
in the 2nd quarter of 2018.
Railway Development
116. Mr. Speaker, this government believes that rail will be a
major catalyst to drive the growth that we envisage in the
coming years. Rail transportation provides safer, cheaper and
faster way of moving goods and people to facilitate trade and
support economic activity. Our vision is to open up the country
and provide new opportunities to our people to do business
and trade among themselves.
117. In that regard, government will complete the Sekondi to
Takoradi via Kojokrom section and continue with the section
from Kojokrom to Tarkwa through Nsuta. This will help improve
the operational performance and revenue of Ghana Railway
Company Limited (GRCL) and enable the Company wean itself
from Government support. In addition, it will enhance the
performance and competitiveness of the manganese mine
located on the corridor.
118. Work will commence on The Western Line which starts
from Takoradi and terminates at Kumasi having two branch
lines namely; Dunkwa to Awaso and Kojokrom to Sekondi,
covering a distance of 340km. The corridor when completed,
will facilitate the haulage of manganese, bauxite, cocoa and
other bulk commodities. The Feasibility Studies and Front End
Engineering Design (FEED) have already been done on the Line.
119. We will also initiate discussion to secure funding for other
major projects, such as, the Central Spine which stretches from
Kumasi to Paga covering a distance of 700km. The corridor is a
greenfield and will be developed in sections. The sections are
Kumasi to Buipe and Buipe to Paga. A prefeasibility study was
undertaken on the line, and in 2017, we plan to undertake full
feasibility studies to enable the Ministry to invite developers
and source funding for the development.
120. The Eastern Railway Line will cover a distance of 330km
and starts from Accra to Kumasi with a branch line from
Achimota to Tema. When the line becomes operational, it will
decongest the port and facilitate the movement of cargo and
passengers to Kumasi and its environs.
121. The Central Railway Line will cover a distance of 200km
and spans from Kotoku on the Eastern Line to Huni Valley on
the Western Line. It will have a branch line from Achiase to
Kade and we plan to undertake feasibility study on the line and
extend it to Kibi.
HOUSING
122. Mr. Speaker, government recognizes that the dream of all
Ghanaians, is to own a home or at least to have decent rental
accommodation. There are, however, major constraints to this
dream. These include:
• The high cost of buying and renting a home;
• Undersupply of annual requirements of housing units;
• Lack of long term financing for real estate
development; and
• Lack of appropriate financing arrangement.
123. To reduce the housing deficit, government will use
appropriate mix of public policy and public private investment
to deliver quality, affordable, housing solutions that meets the
needs and financial capacity of ordinary Ghanaians.
Water and Sanitation
124. Mr. Speaker, major water project to be undertaken in 2017
would include, the continuation of the Greater Accra
Metropolitan Area (GAMA) water extension projects as well as
those of Kumasi and Cape Coast. The Kpong, Akim Oda and Ho
water expansion projects, Tono Water Treatment project for
the Upper East Region in Navrongo, as well as those of the
Yendi and Damongo will be undertaken whilst the Wa project
will be completed. Preparatory works for the Sunyani and
Techiman as well as the Sekondi-Takoradi water supply
projects will be finalized.
125. In addition, Mr. Speaker, will complete the ongoing 1,000
boreholes projects and also initiate the construction of at least
2,000 boreholes across the country as part of the drive to get
us closer to the desired goal of ‘Water for All’.
126. In 20I7, the Ministry will pursue a Comprehensive Sludge
Management Programme (CoSMaP) targeted at constructing
2No. Faecal Sludge Treatment Plants in Sekondi-Takoradi and
Tamale Metropolitan Areas with the objective of stemming the
disposal of faecal matter into water bodies and drains. The
Ministry will also provide appropriate uniform and identification
for 4,500 Environmental Health Officers nationwide to ensure
visibility and enforcement of environmental sanitation and
basic hygiene bye-laws.
Roads and Highways
127. The Ministry maintained its focus on routine and periodic
maintenance activities to protect the huge investment made by
Government in the provision of the road infrastructure. In 2016,
routine maintenance activities were undertaken on
10,723.49km (90 percent of the approved work plan) of the
trunk road network; 16,183km (72 percent of the approved
work plan) on the feeder road network; and 9,384km (94
percent of the approved work plan) on the urban road network.
128. Mr Speaker, inspite of the major investments made in the
road sector, we continue to have major challenges. The past
few years has recorded a significant increase in the award of
contracts, leading to a large portfoli of projects that are in
excess of what our budget can accommodate. This has led to
delayed payments and the resultant penalty payments,
accumulation of arrears and unacceptable poor quality but
costly road construction.
129. There are also the issues of limited contractor capacities
leading to substandard work, encroachment of right of way and
lack of maintenance and care. In 2017 government will
undertake a review to of existing projects to bring them to
more sustainable levels and within available funding.
Monitoring will be strenghtened and efficiency measures
followed. New peojects will only be accomodated after this
review and within the allowable fiscal space
130. In the meantime maintenance work will be continued.
These will include 11,900km, 22,950km and 10,200km of
routine maintenance activities (grading, pothole patching,
shoulder maintenance, vegetation control) on trunk, feeder and
urban road networks respectively.
131. The Ministry will also undertake minor rehabilitation works
on 60km of trunk roads, 350km of feeder roads and 100km of
urban roads.
132. In 2017, 195km of trunk roads and 25km of urban roads will
be constructed. Some of the key roads programmed for
construction include;
• Construction of Bridge on the Volta River at Volivo
• Nsawam - Apedwa Road(Kwafokrom – Apedwa Road)
• Tamale – Yendi Road
• Bolgatanga – Bawku - Polmakom
• Nkwanta - Oti Damanko Road
• Oti Damanko - Nakpanduri Road
• Berekum – Seikwa Road
• Enchi - Dadieso Road
• Kasoa Interchange and Ancillary Works
• Dualisation of Ho Main Roads
• Construction of Ho Bypass
• Construction of Obetsebi Lamptey Interchange
• Construction of Pokuase Interchange
• Kumasi Roads and Drainage Extension Project
EDUCATION
133. The mandate of the Ministry is to provide equitable access
and quality education to all Ghanaians to make them functional
citizens in order to contribute to the growth and development
of the country.
134. Over the medium term, Government aims is to shift the
structure and content of Ghana’s education system away from
merely passing examinations to building character, nurturing
values and raising literate, confident and engaged citizens who
can think critically.
135. To overcome this challenge, Government will also redefine
basic education to include secondary education, covering
technical, vocational and agricultural education.
136. As part of this initiative, Basic Education Certificate
Examinations (BECE) will be used as a tool for placement of
students into second cycle schools and not for certification.
137. To improve the quality and relevance of education, and
further make the products of our school system competitive,
Government will review the Basic level curriculum to focus on
the four R’s (Reading, wRiting, aRithmetic and Recreation to
include life skills and creative skills). Government intends to
ensure that all our children have these basic skills when they
exit the Primary School system.
HEALTH
138. The health sector continues to grapple with the challenge
of bridging the equity gap in access to healthcare between
urban and rural as well as the rich and poor, production and
distribution of health personnel, high under five and maternal
mortality rates and neglect of the mental health subsector
resulting in huge unmet need for mental health services.
139. In 2017 there will be improved coverage of antenatal care
services and delivery by skilled attendants is expected to
increase from the 2016 targets of 78 percent and 53 percent to
80 percent and 55 percent, respectively. The target for fully
immunized children will be maintained at above 90 percent in
2017.
GENDER AND SOCIAL PROTECTION
140. Gender and Social Protection
Mr. Speaker, following the conclusion of the Millennium
Development Goals (MDGs) in 2015, Ghana joined the world in
developing the Sustainable Development Goals (SDGs) which
was endorsed by the United Nations at its 70th session in
September, 2015. The SDGs is adopted globally to end poverty,
protect the planet and ensure prosperity for all.
In order to fight extreme poverty and vulnerabilities and ensure
that no group is disadvantaged and left behind in the
development process, government is committed to improve on
social protection policy implementation and systems.
The Ministry of Gender, Children and Social Protection will
facilitate the passage of the Affirmative Action Bill and the
Domestic Workers Bills. We will refocus the LEAP programme
and adopt effective means of targeting and enrolling
beneficiary households. The School Feeding Programme will
also be reviewed to make it more transparent and effective
and linked to the agriculture sector initiatives.
YOUTH AND SPORTS DEVELOPMENT
141. Mr. Speaker, the youth will drive the discovery of new
technologies, innovation and growth in the future. Our focus
over the medium term is to create an enabling environment to
build the capacity of our youth to take on more active roles in
our country’s future and its development. A number of policy
initiatives we are rolling out are targeted at the youth.
142. In the area of sports development feasibility studies will be
completed to facilitate the expansion of the infrastructure
stock and transform the National Sports College into a Centre
of Excellence, through Public Private Partnership (PPP)
arrangements. Additional efforts will be made to support other
disciplines starting from our school.
SECTION SIX: POLICY INITIATIVES
143. Mr. Speaker, despite the major macroeconomic and
structural challenges we face as a nation, we believe that with
the appropriate policy interventions, we will set the stage for
job-creation opportunities, ease hardships and secure a bright
future for our families, businesses and industries. The
following policy initiatives are therefore designed to help
improve the business environment, instill fiscal discipline and
promote investment in critical infrastructure especially in rural
and deprived communities.
IMPROVING THE BUSINESS ENVIRONMENT
Tax Incentives
144. Mr. Speaker, a number of tax measures have been
introduced in recent years in an attempt to deal with revenue
shortfalls. Some have proven to be nuisance taxes. They have
low revenue yielding potential and at the same time impose
significant burden on the private sector and on the average
Ghanaian. As part of our commitment to reenergize the private
sector, Government has decided to review these taxes to
provide relief for businesses. The following specific measures
shall be implemented in the short to medium term:
•abolish the 1 percent Special Import Levy;
•abolish the 17.5 percent VAT/NHIL on financial services;
•abolish the 17.5 percent VAT/NHIL on selected imported
medicines, that are not produced locally;
•initiate steps to remove import duties on raw materials and
machinery for production within the context of the ECOWAS
Common External Tariff (CET) Protocol;
•abolish the 17.5 percent VAT/NHIL on domestic airline
tickets;
•abolish the 5 percent VAT/NHIL on Real Estate sales;
•abolish excise duty on petroleum;
•reduce special petroleum tax rate from 17.5 percent to 15
percent;
•abolish duty on the importation of spare parts;
•abolish levies imposed on kayayei by local authorities;
•exempt from taxation, the gains from realization of
securities listed on the Ghana Stock Exchange or publicly
held securities approved by the Securities and Exchange
Commission (SEC);
•reduce National Electrification Scheme Levy from 5 percent
to 3 percent;
•reduce Public Lighting Levy from 5 percent to 2 percent;
•replace the 17.5 VAT/NHIL rate with a flat rate of 3 percent
for traders; and
•implement tax credits and other incentives for businesses
that hire young graduates.
REVIEW OF IMPORT DUTY AND TAX EXEMPTIONS
145. Mr. Speaker, while Government’s focus is on reducing taxes
to enhance production, we are also determined to tackle the
systemic abuse in the exemptions regime. There shall be a
comprehensive review of the regime on import duty
exemptions and tax reliefs with a view to eliminating abuses
and improving efficiency in the applications of these incentives.
To this end, the review will cover, among others, the following
exemptions and tax reliefs as a matter of urgency:
• import duties, taxes and levies payable by MDAs and
other government departments;
• import duties and all forms of taxes and levies
payable by both domestic and foreign companies, suppliers
and contractors executing projects and contracts in the
country;
• import duties and all forms of taxes and levies
payable by employees, directors and senior officials of both
domestic and foreign companies, suppliers and contractors
executing projects in the country;
• import duties and all forms of taxes and levies
payable by both domestic and foreign companies and
investors doing business in the country; and
• import duties and all forms of taxes and levies
payable by non-governmental and charity organisations.
146. Mr. Speaker, as a transition arrangement, henceforth,
applicants for these import duty exemptions and tax reliefs
shall be required to, except in exceptional circumstances to be
determined by the Minister for Finance, pay fully all applicable
import duties and taxes, and apply with justification for refund.
LOCAL CONTENT
147. Government believes in empowering the local private
sector and will pass legislation to require that over time, at
least 70 percent of all government projects and procurement
are executed by local corporations and enterprises, with set
asides for entities owned by women, persons with disability,
and those established under the Youth Enterprise Fund (YEP),
among other initiatives.
148. Government will introduce and enforce a local content
policy, for government projects and procurement that will focus
on job creation and local value addition, with emphasis on skills
improvement. To ensure the success of this policy,
Government will require, among other things, a job impact
analysis of all qualifying projects that must demonstrate clearly,
positive job creation with skills improvement, and other local
value addition that must passes strict criteria established by
government. LI 2204, which was passed in 2013 to maximize
value addition and job creation through local value addition, will
be expanded and legislated as local country content for the
country.
Job Impact Analysis
149. In the push towards job creation and skills development,
Government will introduce a mandatory job impact assessment
for all public-sector projects or initiatives. Job impact
assessment will also be required of private-sector entities that
access government projects or contracts. In other words, all
public-sector projects whether it is executed by the publicsector or the private-sector contractors must undergo a job
impact assessment to evaluate the potential job creation
impact. This will enable Government to analyze how various
jobs are being created so as to better structure incentives and
stimuli for higher skill jobs and opportunities for Ghanaians.
Banking Sector Initiatives
150. Mr. Speaker, banks play an important role in our economy.
Despite past interventions, the banking sector still faces major
challenges. We are committed to working with the financial
sector to resolve these challenges. A strong private sector
credit growth is needed to support our medium-term GDP
growth to increase productivity and create jobs.
151. We will harmonize and streamline some of the existing
policies to make the sector more efficient. Policy interventions
will focus on improving liquidity for banks through the payment
of SOE related debt due banks over the short to medium-term
in line with our debt sustainability framework.
152. Specific measures to be implemented in 2017 and the
medium term include:
•streamline the Energy Sector Levy Act, 2015 (Act 899,)
(ESLA) to accommodate all the existing legacy debts for the
banking and the private sector, which include energy sector
debt, Bulk Distribution Companies (BDCs), and other energy
sector related debts;
•ensure that revenue streams from ESLA are properly used
to ensure certainty of cash flow for the payments of all
corresponding debts; and
•work with commercial banks to ensure that they are able to
issue bonds on the back of the streamlined ESLA revenue for
immediate liquidity.
153. In addition, the Bank of Ghana in collaboration with
Government, will undertake the following structural reforms to
the banking sector:
•Increase the banking industry’s minimum capital
requirements and strengthen the licensing and regulatory
framework.
•Introduce risk capital requirements in addition to minimum
capital requirements for banks;
•Strengthen corporate governance by enforcing the term
limits for Board Chairmen and Managing Directors of
commercial banks in accordance with the Banking Act;
•Enhance enforcement of single obligor limit for commercial
banks; and
•support mobile money and mobile banking businesses to
enhance and expand financial inclusion.
154. We believe that all these measures will help minimize
systemic risks in the banking.
Capital Market Development Initiatives
155. Mr. Speaker, the growth of Ghana’s capital market is
impeded by lack of depth and liquidity. Addressing these
challenges require the implementation of decisive measures in
the short to medium term to deepen the capital markets,
increase liquidity and trading activities and encourage more
companies to list.
156. The specific measures to be implemented to improve
capital market performance in 2017 and the medium term,
include the following:
•exempt from taxation, the gains from realization of
securities listed on the Ghana Stock Exchange or publicly
held securities approved by the Securities and Exchange
Commission (SEC);
•exempt the financial services industry from stamp duty for
2 years to enable the re-capitalization of the industry as per
the new SEC law;
•encourage a capital market local content policy that enjoins
companies operating in the energy, oil and gas, financial
services, telecommunications, and mining sectors to list a
minimum percentage of their shares on the Ghana Stock
Exchange within 5 years of commencement of operations;
and
•Divest Government’s holdings in some SOEs with a view to
ensuring efficiency. This will include the sale of government
shares in some SOEs and companies via a listing on the
Ghana Stock Exchange.
•We will work with the Securities and Exchange Commission
(SEC) to develop the regulations governing Asset-backed
instruments including Real Estate Investment Trusts (REIT)
and mortgage-backed securities and enable the pensions
industry to support the development of these assets classes
and other alternative investment schemes.
157. Mr Speaker, the National Pensions Regulatory Authority
(NPRA) will be moved back to be under the Ministry of Finance
and the Ministry of Employment and Labour Relations. This is
because, just like the SEC, the NPRA is a financial service
regulator but of the pensions industry that also deals with a lot
of Labour issues. Pensions are about finance:
•Financial contributions;
•Financial investments; and
•Benefit payout.
158. All the above are financial decisions affecting employees
hence the decision to have joint oversight by the two ministries.
Additionally, NPRA will be completely weaned off in 2017.
Building an Entrepreneurial Nation
159. Mr. Speaker, this government seeks to build an
entrepreneurial nation. The National Entrepreneurship and
Innovation Plan (NEIP) is a flagship initiative which will be the
primary vehicle for providing an integrated, support for earlystage (start-ups and small) businesses, focusing on the
provision of business development services, business
incubators, and funding for youth-owned businesses.
160. The NEIP will enable qualified new businesses to emerge
and give them the space to grow, position them to attract
financing, and provide business development support services.
The programme will assist these businesses to secure markets
during the critical formative years, and tap into a wide supply
chain and network during their growth years.
National Industrial Revitalization Programme – A Stimulus
Package for Industry
161. Growth in the industrial and manufacturing sector has
significantly declined over time, contributing to an
unprecedented level of unemployment. This situation could be
attributed to a variety of factors including, but not limited to the
high cost of capital; limited access to medium to long term
financing; high cost of electricity and unreliable power supply;
limited access to land for industrial activity as well as weak
logistic and infrastructure support for industrial development.
162. It is against this background that a National Industrial
Revitalization Programme with a stimulus package for industry
will be established to provide technical and financial support to
existing companies that are currently distressed or are facing
operational challenges, but are deemed to be viable to benefit
from the stimulus package which will put them in operation in
the shortest possible time.
Industrialising Ghana from the Ground Up: One District, One
Factory
163. “One District, One Factory”, implementation of which will
commence this year and be closely intertwined with our
“National Industrial Revitalization Programme”, is designed as
a comprehensive programme for rural industrialisation, driven
by the private sector and involving the setting up of at least one
medium to large scale factory in each of the administrative
districts of Ghana.
164. It is aimed at creating massive youth employment,
especially in rural and peri-urban communities, add value to the
natural resources of each district, ensure even and spatial
spread of industries to stimulate economic activity in different
parts of the country, enhance the production of local
substitutes for imported goods, and promote exports and
increase foreign exchange earnings.
165. It has the potential of transforming the industrial landscape
of Ghana, and will contribute significantly to the socioeconomic development agenda of the country. We estimate
that over 350,000 direct and indirect jobs would be created
from all parts of the country, as a result of the implementation
of the programme.
National Identification Programme
166. Mr. Speaker, the benefits of having a modern, reliable and
unique national identification system are enormous and
imperative for the development of our nation. A robust
identification system and the issuance and use of integrated,
multipurpose national identification cards would enable us to
advance economic, civic and social activities in Ghana and to
target particular developmental programs.
167. It is against this background that the National Identification
Authority (NIA) was established in 2007 to oversee the
registration of all residents in Ghana. However, a decade later,
the NIA has made limited progress. In consonance with
Government’s commitment to reenergise the NIA to fulfil its
statutory mandate, the new leadership of the NIA will be
supported and resourced to be more effective.
168. Government has commenced stakeholder consultations to
revive and roll-out the National Identification Scheme in 2017.
All registered persons will be provided with a Unique
Identification Number, and an ID Card. Subsequently, a national
ID Card shall be required for the provision and efficient delivery
of public and private services, including financial services,
mobile banking, m-commerce, social safety nets, health
insurance, and revenue collection among others.
National Digital Addressing System
169. Mr Speaker, the last time the whole country was mapped
was in 1974. The lack of modern property addressing system in
Ghana is a serious impediment to our developmental agenda.
As part of our plans to enhance economic development and
growth, Government has commenced stakeholder consultation
to develop and implement a National Digital Property
Addressing System for the country in 2017.
170. The aim of the National Property Addressing System is to
have digital addresses for parcels of land and properties of the
entire country. Every land or property will be assigned a unique
identifier. This is aimed at facilitating improved ownership data
and unique identification of properties. A proper addressing of
properties will ensure efficient delivery of services for
economic development.
E-Services Portal
171. In order to improve efficiency of service delivery by
government institutions with regard to acquisition of licenses
and payment for services, Government established the eservices portal (http://www.eservices.gov.gh/) in 2012. This
platform has helped in the delivery of government services
(licenses and permits, etc.). Government will expand coverage
to all parts of the country and improve efficiency of service
delivery through private sector participation in the e-services
portal. This is expected to help reduce corruption, promote
compliance and improve the tracking of government resources.
EXPENDITURE MANAGEMENT AND COMMITMENT CONTROL
172. Mr. Speaker, our country continues to grapple with weak
expenditure management and budgetary controls leading to
excessive expenditure overruns and payment arrears resulting
in persistent fiscal deficit. Prudent expenditure management
and commitment controls are, therefore, very crucial in order to
achieve the goals and objectives of the budget.
Enforcement of the PFMA
173. Mr. Speaker, the Public Financial Management Act, Act 921,
passed by Parliament and enacted into law in August 2016 has
the sole objective to strengthen the public financial
management system in the country. The Act regulates the
financial management of the public sector within a sound
macroeconomic and fiscal framework; defines the
responsibilities of persons entrusted with the management and
control of public funds, assets, liabilities and resources in a
manner consistent with the level of public debt; provides for the
accounting and audit of public funds; and provides for more
robust sanctions and penalties.
174. The effectiveness of the law depends to a large extent on
strong enforcement and compliance with its sanctions regime.
Government will ensure that the robust sanctions regime
provided for in the law is complied with by all Public Institutions.
The required institutional arrangements, including functional
independent Audit Committees, will be addressed to promote
and enhance the effectiveness of the law.
175. Mr. Speaker, in addition to the assignment of
responsibilities and enforcement of sanctions, two provisions
are crucial for the effective implementation of the law. First, is
the Commitment Control provisions to curb the build-up of
expenditure arrears. Second, is the provisions that prohibit
MDAs from entering into agreements with financial
commitments that bind Government for more than one
financial year or that results in contingent liability, unless
approved by the Minister of Finance and authorized by
Parliament. These we must strictly adhere to if we are to
ensure sound public financial management.
176. To fully operationalize the law to enhance budget credibility,
Government will ensure the introduction of the necessary
regulations to support implementation of the law, in
collaboration with PFM stakeholders for effective
implementation of the Act. Government through the Ministry of
Finance will strengthen oversight of SOEs and Public
Corporations, as well as, Local Government, to help mitigate
fiscal risk emanating from contingent liabilities.
177. Mr. Speaker, to facilitate adherence to the provisions of the
law, the Ministry will continue with the sensitization
programme for Public Institutions at the National and Sub
National levels as well as for key Stakeholders including CSOs,
media, professional bodies and the public at large.
Establishment of the Fiscal Council
178. Ghana has been faced with significant, long-term fiscal
slippages and an escalating public debt stock leading to a high
risk of debt distress. This is principally due to the fact that our
fiscal policy implementation lacks a transparent institutional
arrangement for providing quality fiscal information to the
public, a mechanism for ensuring accountability in
implementing optimal fiscal policies to guarantee the stability
of the system, and an institution to ensure the credibility of
fiscal projections provided by the Government.
179. To address this, Government will initiate the process
towards the establishment of a Fiscal Council that will adopt
and implement rules to anchor fiscal policy implementation.
The Fiscal Council will contribute to the accountability of
Government, responsible for setting up medium-term fiscal
policy anchors to guide fiscal policy as well as monitor
compliance. The principal objectives for the formation of the
Fiscal Council are to:
• ensure the credibility of our fiscal projections,
• set up medium-term fiscal policy anchors to guide
fiscal policy, and
• monitor compliance of fiscal policy rules.
180. Legal backing will be given to the Fiscal Council through an
amendment of the Public Financial Management Act, 2016
(PFMA), Act 921, to inter alia capture all the elements of a
fiscal responsibility law.
Re-alignment of Statutory Funds
181. Mr. Speaker, as the President noted in his State of the
Nation Address on the 21 st February 2016:
182. “[T]he reality of the state of Ghana’s public finances today
are quite stark. Today, as a result of policy choices, we find
ourselves in a situation where Ghana’s total revenue is
consumed by three main budgetary lines: wages and salaries,
interest payments and amortization, and statutory payments.
These three items alone account for 99.6 percent of
government revenue. This means that anything else that
government has to do outside of these lines, will have to be
financed by borrowing or aid. The persistent resort to
borrowing for any additional expenditures to meet the
aspirations of our people is also not sustainable. We cannot
continue this way with our public finances” (State of the Nation
Address, 2017).
183. Indeed, this problem of lack of fiscal space in the current
budget architecture and the problems associated with
earmarking was rightly recognized by the NDC Government in
the 2010, 2011, 2015 and 2016 budget statements. In these
budget statements, the then Ministers for Finance noted the
following:
•“Statutory funds introduce extreme inflexibility in the
management of the budget, giving no room for policy
manoeuvre. Given the important social interventions that
need to be scaled up and/or implemented, some key
government programmes will have to be offloaded from the
core budget to the statutory funds, in order to create space
for the utilisation of discretionary expenditure in other
priority areas.” – 2010 Budget Statement.
• “…over 75 percent of the total wage bill and the associated
increases resulting from the Single Spine Salary Structure
goes to employees in only three MDAs, namely the
Education, Health and Local Government, which ironically are
the very sectors with the statutory funds that introduce
rigidities in the budget structure and leaves no revenue
space for the sustainable implementation of the Single Spine
Salary Structure.” - 2011 Budget Statement.
•“Mr. Speaker, the national budget is increasingly becoming
inflexible to manage as well as to accommodate shocks and
changes in government priorities. These are mainly due to
the earmarking of a huge component of the budgetary
resources as statutory transfers in addition to existing
statutory liabilities, such as wages and salaries, amortisation,
and interest payments…. Mr. Speaker, in the medium term,
government will realign expenditures under the Statutory
Funds hitherto being catered for under the Consolidated
Fund. Starting with the 2015 Budget and as a transitional
arrangement, government will enhance the administrative
process for aligning statutory fund expenditures to national
policies and priorities.” - 2015 Budget Statement.
•“To address the increasing rigidities in the budget that
limits the room for policy manoeuvre, Government
announced a policy of aligning the statutory and internally
generated funds to national fiscal goals in the 2014 Budget.
Consequently, in 2016, Statutory Funds expenditures
totalling GH¢564.6 million will be realigned to the central
Government budget.” - 2016 Budget Statement.
184. In 2016, transfers to the earmarked funds constituted 33.5
percent of national revenue, up from 28.2 percent in 2015.
These rigidities mean that government’s ability to shift public
spending from one expenditure line to another is hindered even
where current exigencies require government to do so.
Consequently, it has become difficult to use public spending as
an instrument to respond adequately to changing public needs.
185. Further, these increasing statutory rigidities have limited
our flexibility and impeded our ability to meet our commitments,
especially capital expenditure. As such, we continue to miss
our obligatory disbursements to the Statutory Funds due to
wishes to fulfil other commitments.
186. Mr. Speaker, in sum, we have been unable, as a nation, to
comply with our statutory and budget requirements in respect
of earmarked funds because they impose unhelpful rigidities in
our public expenditure and development strategies.
187. Notwithstanding the recognition of the underlying problem
with the lack of flexibility and space in the budget as a result of
the earmarking of funds, we have not tackled the problem.
After many years of talking about it, this budget is finally going
to tackle this problem.
188. Mr. Speaker, starting this year, government will propose a
cap of 25 percent of tax revenue to all Earmarked Funds for the
approval of this august House. The capping of transfers to
Earmarked Funds to 25 percent of tax revenues in any
particular year will allow a realignment of budget revenues to
government priorities and in fact make possible increased
expenditure on government priorities such as education, health,
agriculture and infrastructure. However, we will make
adjustment for constitutionally-mandated earmarked funds to
make them whole.
Treasury and Risk management
189. Mr. Speaker, efficient budget implementation requires a
proper alignment of cash inflows and outflows. This will
improve the predictability of budget implementations and cash
allocations. In line with this, Government will strengthen its
treasury management functions by creating a Treasury
Management Unit in the Ministry of Finance to handle all
treasury management and related functions.
190. The current PFM law will be enforced with regards to the
utilization of the Treasury Single Account (TSA). To this end,
the bank accounts of all government institutions will be
transferred to the Central Bank for ease of management and
monitoring.
191. Additionally, Government will eliminate all payments in
cash at service delivery points in public service institutions,
including MDAs and MMDAs, in order to improve efficiency in
service delivery and revenue collection to support the TSA.
Improving Payroll Management
192. Mr. Speaker, the size of the public-sector compensation bill
(wages, salaries, & other costs), which accounts for a
significant proportion of domestic revenue, is a major concern
for Government. It is one of the ‘Big-Three’ budget line items
that continue to narrow Government’s choices in pursuing
higher economic growth and development programmes.
193. The SSNIT database will be used as a filter for the payment
of public sector workers. Starting in April, all workers who have
not been biometrically registered with SSNIT will be taken off
Government payroll.
Recruitment and Promotion Related Arrears
194. Mr. Speaker, in spite of the Public Services Commission
policy on recruitments and promotions, we continue to see
delays in the processing of recruitments and in promotions.
These delays create frustrations for new recruits and serve as
demotivation for serving officers due for promotion. Further,
these delays lead to unexpected accumulation of arrears that
hurt the integrity of our fiscal planning.
195. Mr. Speaker, in order to control the wage bill, and avoid
compensation arrears that have not been provided for in our
budgets, Government will from 2017 strictly enforce the policy
and guidelines on the effective dates of promotions and
recruitments within the Public Services. Substantive effective
dates of recruitments and promotions shall not be backdated
without the explicit permission of the Minister for Finance in
writing.
Enforcement of the Public Procurement Act
196. Mr. Speaker, as part of our expenditure management
framework, Government will strictly enforce the provisions of
the Public Procurement Act, 2003 (Act 921) as amended by
Public Procurement (Amendment) Act, 2016 (Act 914),
especially with regard to sole sourcing, which has proven to
pose significant risks to fiscal policy management. To ensure
that public procurements are done within budgetary constraint,
we intend to strengthen the procurement process by
introducing another level of approval for MDAs and MMDAs. To
this end, sole sourced procurements by MDAs and MMDAs
beyond the threshold of GHȻ50 million will be subject to
explicit approval by Cabinet before submission to the Public
Procurement Authority for consideration and approval.
IMPROVING DEBT MANAGEMENT
197. Mr. Speaker, as a sign of Government’s commitment to
ensuring public debt sustainability within the framework of the
PFMA, the debt management strategy in 2017 envisages the
introduction of new instruments to further lengthen the
maturity profile of public debt, reduce cost/risk factors
associated with the debt portfolio through effective liability
management, and support the development of the capital
market.
Liability Management
198. Mr. Speaker, to improve the structure of public debt,
Government will continue to implement sound liability
management initiatives aimed at reducing interest cost and
mitigating interest rate risk associated with the current debt
portfolio. This will involve the implementation of a wide variety
of operations, including the buy-back of existing debt using
Sinking Fund Account, interest rate hedging and the use of
structured financial instruments, as market conditions permit.
Implementation of a Credit Risk Assessment Framework for
SOEs
199. Mr. Speaker, the current financial state and governance
structures of the SOEs, particularly, in the Energy Sector, is
worrying. This continues to pose challenges for fiscal policy
outcomes. In this regard, Government will implement a credit
risk assessment framework to guide SOE borrowing and
continue to ensure that necessary security structures and
instruments are put in place by the SOEs to ensure they honour
their debt obligations.
200. In addition, Government intends to establish a Single Entity
with oversight responsibility of the SOEs. This forms part of
broader SOE reforms aimed at consolidating the State’s
ownership role, improve performance and ensure effective and
efficient service delivery by SOEs.
INFRASTRUCTURE FOR POVERTY ERADICATION
PROGRAMME
201. Mr. Speaker, Government intends to pursue an inclusive
development strategy aimed at radically improving the state of
basic infrastructure at the constituency level, especially in rural
and deprived communities. The Infrastructure for Poverty
Eradication Programme (IPEP) will be our main vehicle for
tackling these challenges. The IPEP is designed to direct our
capital expenditure towards local, constituency-level specific
infrastructure and economic development priorities, with
particular emphasis on rural and deprived communities.
202. Mr. Speaker, under IPEP, every one of our 275
constituencies will be allocated the equivalent of US$1 million
(GH¢4.39 million) annually. It is expected that the project
selected, under standardised guidelines, will fall in the following
categories:
•One District One Factory;
•One Village One Dam;
•Small Business Development;
•Agricultural inputs, including equipment;
•“Water For All” Projects; and
• Sanitation Projects.
Establishment of Development Authorities
203. Mr. Speaker, in order to ensure that IPEP and other local
initiatives are implemented in a well-coordinated manner,
Government will set up three (3) Development Authorities,
namely, Northern Development Authority (NDA), Middle Belt
Development Authority (MBA), and Coastal Development
Authority (CDA).
204. The Development Authorities will be the main economic
development implementing agencies in the areas they cover.
205. Mr. Speaker, Government will restructure and transform the
Savannah Accelerated Development Authority (SADA) into a
more focused Northern Development Authority
(NDA) as
originally envisaged. We will make the NDA a flagship
programme which will serve as the vehicle for delivering our
economic transformation agenda in the three northern regions.
206. Mr. Speaker, the Middle Belt Development Authority (MBA)
will serve as the main development agency for the middle belt
of the country. The Coastal Development Authority (CDA) will
serve as the principal development agency for the coastal
regions of the country.
Zongo Development Fund
207. Mr. Speaker, as part of our efforts to develop Zongo
communities, government will set up a Zongo Development
Fund (ZDF) with seed money of GHȻ219.5 million. The Fund
will support the provision of critical infrastructure in education
and training; health and sanitation; local businesses and
centres of culture, as well as improve security in the Zongo
communities. The ZDF is expected to leverage its seed fund to
attract additional funding from Development Partners, private
sector institutions, civil society organizations, and other nongovernmental organizations.
FREE PUBLIC SENIOR HIGH SCHOOL
208. Mr. Speaker, as part of our commitment to improve access
to education at all levels, Government will implement the
comprehensive free public Senior High School (SHS)
programme starting with the 2017/2018 academic year. This
will include technical and vocational institutes.
209. Mr. Speaker, adequate provisions have been made for the
funding of this monumental social intervention programme
which is set to begin in September, 2017, from the ABFA and
other domestic revenue sources.
OTHER INITIATIVES
210. Other special initiatives that will be implemented in 2017
are as follows:
Establishment of Airport Free Zone
211. Mr. Speaker, airports all over the world are becoming
increasingly multimodal, multi-functional enterprises creating
considerable opportunities for commercial developments in
areas they are located. Available evidence suggests that
airports tend to attract investment and therefore generate jobs.
Many countries are considering airport cities, or aerotropolis
(airport-centred urban economic regions) as a vital means of
expanding opportunities and creating jobs.
212. Mr. Speaker, Government has identified the establishment
of sector-targeted Free Zones as a major driver for capital
inflows and jobs for Ghanaians starting, this year, with the
preparatory work for attracting private investment into an
Airport Free Zone (AFZ). The AFZ will be purely a private sector
investment with government only facilitating the process.
Government will explore several options with potential
investors.
213. It is expected that the preparatory work for the AFZ will be
completed by the end of this fiscal year.
Financial Stability Council
214. Mr. Speaker, exposure to debts from Bulk Distribution
Companies, State-Owned energy entities, as well as nonperforming private sector loans continues to exert enormous
pressures on the banking sector, posing a systemic risk to the
entire economy. A significant number of banks have capital
adequacy ratios below the required 10 percent even after
restructuring of the VRA and TOR debts.
215. To address this over the long term, the government will
establish a Financial Stability Council that will be mandated,
among others, to continuously assess the vulnerabilities
affecting the stability of the financial system and provide
oversight over the steps taken to avert these risks.
Optimizing Energy Assets
216. Mr. Speaker, as a government, we are committed to
achieving a least-cost power generation infrastructure through
accelerated private sector participation. This will partly involve
the restructuring of the power sector by bringing all hydro
generation exclusively under the Volta River Authority (VRA)
and creating a separate thermal market.
217. A new entity will hold the thermal assets which are
currently held by VRA and make available a significant portion
of this entity for private sector investment in pursuit of its
private sector participation policy.
Ghana Infrastructure Investment Fund (GIIF)
218. Mr. Speaker, in 2007, the then NPP government announced
its intention to set up what was to be the Ghana Investment
Corporation (GIC) as its principal sovereign wealth fund vehicle.
In pursuing this, in April of 2008, the late Kwadwo Baah-Wiredu
presented a memo to cabinet for approval to commence the
processes of forming the GIC which was approved. A draft bill
was prepared but could not be passed before we exited
government.
219. Mr. Speaker, Government intends to review the GIIF law to
make it consistent with the original objectives of the Ghana
Investment Corporation (GIC). This has become imperative as
we seek to take a more aggressive posture in leveraging the
assets side of our balance sheet to create wealth to support
the development of the country.
220. Mr. Speaker, the GIC will manage the National Asset
Protection Project (NAPP), a programme designed to conduct a
physical and financial audit to locate, identify and value
uncompleted Government assets.
International Financial Services Centre
221. Mr. Speaker, the Banking (Amendment) Act, 2007 (Act 738)
was passed to make way for the establishment of the
International Financial Services Centre (IFSC) by the
Government. The purpose is to attract foreign direct
investment, income from license fees payable in foreign
currencies, create employment, enhance local skills and
knowledge, strengthen the financial sector through expansion
in the use of investment banking instruments, and to increase
the general competitiveness of financial sector.
222. Mr. Speaker, Government will reactivate the process started
by the Ministry of Finance and the Bank of Ghana as far back
as 2007 to establish the International Financial Services Centre
(IFSC).
MILLENNIUM CHALLENGE CORPORATION
223. Mr Speaker, the Ghana Compact II programme has
officially come into force. Both parties to the Compact, the
Governments of Ghana and United States of America, are
committed to complying with their obligations. However, the
implementation of Ghana’s commitments has faced some
challenges due to disagreements between stakeholders,
particularly between labour, ECG and the Millennium
Development Authority (MiDA). We need further dialogue on
the key issues that have generated these disagreements. We
are aware that these discussions should be concluded urgently
in order to arrive at the decisions that will allow for its
implementation.
224. Mr. Speaker, Government will reactivate the dialogue on the
key issues that have generated these disagreements to ensure
that all concerns are adequately addressed and that the
resolution will ensure the centrality of Ghanaian leadership.
EDUCATION FUND
225. Mr. Speaker, we will initiate discussions with all
stakeholders interested in the performance of their senior high
schools in their communities; Parents, school alumni, religious
organisations, the diaspora, will be encouraged to establish a
funding mechanism to support high schools of their choice.
This will reinforce community involvement in governance and
improve the quality of education in our senior high schools. It is
time we all participated in ensuring that Ghana’s education
regains its status of excellence.
INTEGRATED ALLUMINIUM INDUSTRY
226. Ghana has since 1962, been contemplating the
establishment of an integrated aluminum industry, using its
natural resources in bauxite, hydro, gas and its existing smelter.
The closest that the country got to realizing this was in 2008,
under President J A Kufuor. Thankfully, President Akufo-Addo
has made the rapid and sustainable establishment of an
integrated aluminium industry a top economic priority. This is
line with his vision for industrialization and transformation of
the Ghanaian economy, with a deliberate focus on valueaddition to the country's vast mineral wealth to significantly
expand the capacity of the economy to create jobs and wealth
for the people.
A lot of feasibility studies have been done in the area. The 2017
budget seeks to revive this critical game-changer and has,
accordingly, made provisions to see to the implementation of
an integrated aluminium industry. The development of the
industry will require 6 main components:
• First, the development of the bauxite mines which are
located in Awaso, Nyinahin and Kyebi.
• Second, the establishment of a refinery at one of the
bauxite sights, preferably in Kyebi, because of its closet
proximity to Tema, where the Valco smelter is located.
• The allocation of a dedicated, reliable and affordable
source of power supply for the smelter.
• The development of a rail way infrastructure between the
mines and Tema.
• The conversion of the alumina to aluminium at the current
Valco plant.
• The establishment of an industrial park dedicated to
manufacturing aluminium related products to complete the
value chain of what is potentially a multi-billion local industry.
The President intends to introduce a Bill to this House this year
to oversee the urgent development of this critical industry.
FIGHTING CORRUPTION
227. Mr. Speaker, as we have said severally, “corruption holds
back economic growth, increases the cost of doing business,
reduces revenue to the state, leads to capital flight, and inflates
the cost of runnning government. It also results in a loss of
legitimacy and respect for legally constituted authority”.
228. In this regard, Government will continue the implementation
of National Anti-Corruption Action Plan. Additionally,
Government will pursue a combination of institutional and
legislative reform as part of our anticorruption policy, including
establishing the Office of the Special Prosecutor, strictly
applying the provisions in the PFM and PPA Acts, as well as
amend, in particular, sections 3, 151 and 239-257 of the
Criminal Offences Act, 1960 (Act 29), which will make
corruption a felony instead of a misdemenour.
229. Mr. Speaker, this government is commited to passing the
Right to Information Bill as part of our tools in fighting
corruption. We will not pay lip service to fighting corruption.
JOB CREATION
230. Mr. Speaker, the centrepiece of this budget is to create an
environment that will stimulate the private sector to create jobs,
especially for the youth. It seeks to create an enabling
environment to build the capacity of our youth to take on more
active roles in our country’s future and its development. This
has been reflected in the key policy initiatives announced in this
budget, such as:
• Tax policy measures
• Financial sector initiatives
• Entrepreneurship development
• One district one factory
• One village one dam
• Small Business Development
• Stimulus package for industries
• Planting for food and jobs
• Sanitation
SECTION SEVEN: CONCLUSION
CONCLUSION
231. Mr. Speaker, Ghana turns 60 in a few days and there have
been arguments whether it is worth celebrating this milestone
given the sombre state of affairs. I believe we must. This
anniversary provides us, not only the opportunity to reflect but
also the challenge to chart a new and enduring course.
232. Ghana is seen as a bastion of democracy and stability in
Africa. As a country, we have deepened our democracy
especially in the fourth republic. We have had three (3) peaceful
and successful transfers of power. Our love for education and
our national character of friendliness and peace loving sets us
apart.
233. Our economic challenges, have however, been the bane of
our development aspirations. The policy actions spelt out in
this Budget Statement seek to fix the economy and change the
narrative to put the economy on the right path of phenomenal
growth. We believe that this budget sows the seeds for growth,
jobs, and the economic transformation agenda outlined in the
vision of the President, Nana Addo Dankwa Akufo-Addo.
234. Ours, Mr. Speaker, is a government of destiny which will
unite our people; and together, including all the people in this
Chamber, we will create a climate of social solidarity, a soceity
where the preferential option for the poor is at the core of a
private sector led growth to transform our society and achieve
social justice, inclusive growth and restore human dignity and
prosperity for all citizens. Poverty, Honourable members is not
natural. Our challenge as we sit in these hallowed halls is to
liberate ourselves from a rigged and unjust economic, politial
and social system that we have helped to impose on our nation.
The democratic dividends of prosperity and equity are thus
currently eluding us.
235. Mr Speaker, this government will take deliberate and
strategic steps to fundamentally change the structure of this
economy bequeathed to us 60 years ago and we are
committed to implementing the measures I have outlined.
•We will restore and sustain macro stability.
•We will provide the environment for private sector to grow
and thrive,
•we will improve public services and tackle corruption.
•We will support small businesses in rural and deprived
areas
•We will ensure that every Ghanaian has equal opportunity
and right to lead a productive and dignified life, being able to
fully develop their God-given capabilites.
236. Our rural communities will begin to see a more purposeful
and sustained effort at transforming their lives through the
introduction of various district level industrial and agricultural
initiatives as well as improved education and health facilities
and services. Mr. Speaker, I see our nation with this
overwhelming election mandate as all having decided to
withdraw in unison like Jesus to a remote place, Mr. Speaker,
only to discover that we have five loaves of bread and two
fishes to feed our 25 million plus fellow citizens. But herein lies
the genius of the Ghanaian ”for we are God’s handiwork
created in Christ Jesus to do good works which God prepared
in advance for us to do.”
As you can see, Mr. Speaker, with 5 loaves and 2 fishes,
President Akufo-Addo’s budget has tackled the five structural
pillars of revenue, expenditure, earmarked funds, labour and
our debt. Budgetary allocations have been made from tax
revenue, ABFA and the realignment of statutory funds to fund
these priority programmes. The breakdown of the funding
sources are, ABFA GH¢342.0 million, tax revenue GH¢785.0
million, and realignment of statutory funds GH¢1.08 billion.
This has been done through prioritization of expenditures and
planned improvement and efficiency in government spending.
Mr. Speaker, in addition to funding these significant number of
programmes with lesser resources than was spent last year,
we have allocated over GHs 700million for capital expenditure
seven times more than was allocated last year, funded NHIS
and free SHS, provided tax relief for the private sector and all
other socio economic classes, reduced levies on petroeum
products, reduced electricity prices, provided a stimulus for
the private sector and agricutlure and brought down the deficit
from 8.7 percent to 6.5 percent. But that is not all Mr. Speaker,
for a heritage of 12 baskets full of fish and loaves is yet
available to further sow for growth and jobs.
237. Our aim is to restore hope and steer the country onto a
sustainable and inclusive growth path.
A country that is reenergized to redefine and reorient itself to
confront the challenges ahead;
•A country in charge of its own destiny;
•A country where the private sector is well equipped to
invest in the economy and be the catalyst for growth;
•A country where our youth have access to the requisite
education which will expand their horizon and give them the
opportunity to dream and express their creativity, talents and
abilities and
•A country where each and every citizen is proud to be a
Ghanaian and to call this country home.
238. Mr. Speaker, let me take this moment as we near the end of
this great priviledge to present President Akufo-Addo’s first
budget to this august house, to reflect on one iof the finest
moments in the history of our democracy on July 23rd 1981. As
you all know, during the third republic, the country was in
econoic crisis under the government of the PNP. I am proud to
say that my father, Dr. Jones Ofori-Atta, in opposition with an
amendment motion, co-sponsored by Dr. GK Agama
successfully got this august house to support an amended
motion to save the country. Honourable Members, we do have
a crisis which we can handle and I will call on you, Honorable
Minority Leader Haruna Iddrisu, the Honourable Minority Whip
Alban Bagbin, honourable ranking members Ato Forson and
Fiifi Kwetey of the Finance Committee to join us in the great
example of the 3rd Republic to salvage and build our economy.
239. We believe with the help of the Almighty God we can deliver
on all the well thought out programmes and policies, and build
a business friendly and prosperous economy. Mr. Speaker,
“God did not give us a Spirit of timidity but of power, love,
sound judgment and self discipline”
MR. Speaker, we can do it, I personally pledge to work with you,
with candour, with transparency, respect and a deep
commitment to protect this public purse. Let us go forth
together.
240. God Indeed bless our homeland Ghana and make our
nation great and strong.
241. Mr. Speaker, I beg to move.
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