Review, forecast of 2018 budget to be presented today

The 2018 budget presentation on Wednesday, November 15, 2017 will be a major test of the acclaimed prowess of government’s economic management team.

The financial statement to be presented to Parliament by Finance Minister, Ken Ofori-Atta, would have to find a sound solution to the revenue shortfall problem, while at the same time detailing how President Nana Akufo-Addo’s many revenue-guzzling initiatives will be adequately catered for.

Key on the 2018 Budget and Economic Policy will be how the government intends to improve revenue collection, how much will be allocated for the free Senior High School (SHS) initiative, the Zongo Development Fund (ZDF), and others.

Some sources have said the Finance Minister will be seeking to get Parliament to approve a total budget of GH¢61 billion.

Revenue

The current problem poor revenue performance led to a reduction in expenditure of GH₵4.6 billion or 16.7%, more than the revenue shortfall.

The 2017 mid-year budget review presented in July this year showed that total revenue, including grants, was short of the GH₵20.5 billion target by GH₵3.1 billion or 14.9%.

As a percentage of GDP, the revenue collected was 8.6% against a target of 10.1% and, also, less than the outturn of 9.8% in the first half of 2016. The poor revenue performance is reflected in almost all the revenue lines.

In the 2017 budget review, the revenue target was revised downwards by GH₵1.9 billion to GH₵43.1 billion, which is 28% more than was collected in 2016.

The situation has led to speculations that while the government will still keep some taxes abolished, it will hike existing ones in the 2018 budget.

Furthermore, the Minority in Parliament says it has information that a 5% tax will be slapped on mobile money transactions, but that claim has been dismissed. Critics of the tax will surely be looking for that in the budget presentation.

Deputy Finance Minister, Kwaku Kwarteng, has said tax cuts in the 2017 budget aimed at reducing the cost of business will not happen in the 2018 budget.

“What we are seeking to ensure in this [2018] budget is that the kind of signal that we can send to business that, we are still relying on them to grow the economy,” the Deputy Minister told Joy Business.

The 2018 budget is expected to detail an aggressive strategy to use IT to improve revenue mobilisation.

Expenditure

The 2018 budget is expected to allocate GH¢150 million to the Zongo Development Fund (ZDF) to develop Zongo communities nationwide. This represents about 32% lower than the GH¢219 million that was allocated to the Fund in the 2017 budget.

The government also plans to allocate about GH¢700 million to the Agricultural Marshall Plan in next year’s budget. The agriculture policy is aimed at enhancing food production nationwide.

The expenditure estimate for the free SHS programme is expected to increase in the 2018 budget as the government is expected to allocate GH¢1.2 billion to the education initiative. The amount is three times higher than the GH¢400 million that was allocated to the programme in its first year of implementation in 2017.

The government is to set aside GH₵ 480 million in the 2018 budget for the payment of allowances to teacher and nursing trainees after restoring the allowances for next year. The amount is to be paid to the thousands of nurses and teacher trainees in the various colleges in the country.

The government’s flagship district industrialisation programme, One District, One Factory (1D1F) is likely to receive a GH¢430 million allocation in next year’s budget when the Minister of Finance presents the economic policy statement to Parliament on Wednesday.

Source: Ghana | Myjoyonline.com