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Mid–Year Fiscal Policy Review of the 2018 Budget Statement and Economic Policy

Mid–Year Fiscal Policy Review of the 2018 Budget Statement and Economic Policy

Right Honourable Speaker and Honourable Members of Parliament, in accordance with Section 28 of the Public Financial Management Act, 2016 (Act 921), I stand before this august House, to present a Mid-Year Fiscal Policy Review of the 2018 Budget Statement.

Mr. Speaker, permit me to convey our sincere appreciation once again to this august House, on behalf of His Excellency, President Nana Addo Dankwa Akufo-Addo, for the continued cooperation and support of Honourable Members in the management of the economy since the New Patriotic Party (NPP) assumed office in January 2017. It is our fervent wish that this cordial relationship between the Executive and Parliament continues to promote the attainment of our collective development aspirations and goals.

Mr. Speaker, on 15th November 2017, I came to this august House and presented a report on our continued efforts to resolve the many economic challenges we face and our strategies to improve the socio-economic conditions of our people, as part of the 2018 Budget Statement.

As you may recall, in April 2015 the NDC government had sought and received approval to bring in the IMF to redeem them from the economic distress they had put the country in. Mr. Speaker, in October 2016, after a year and half under the program, this was the IMF’s assessment of their performance:

“…Economic outlook remains difficult and fiscal challenges are mounting. The growth outlook for 2016 and 2017 has weakened… Revenues are underperforming and the deteriorated financial situation of some SOEs in the energy sector is posing fiscal risks. The authorities will cut spending to offset revenue shortfalls and have taken steps to address the financial situation of SOEs, including with new levies on petroleum products… Domestic revenues are underperforming-reflecting lower-than-projected oil prices, weak economic activity with lower business profits and personal incomes, as well as lowerthan- expected revenue impact from several measures implemented so far...”

It therefore should come as no surprise to you all that shortly thereafter, in January 2017, we inherited an economy in distress: with a debt overhang which had exceeded 73 percent of our GDP; GDP growth which had declined to 3.7 percent of GDP, the lowest in twenty-three (23) years; a fiscal deficit which had risen to 9.3 percent of GDP, and a Monetary Policy Rate(MPR) of 22.5 percent which had led to a crowding out of the private sector making it difficult for entrepreneurs and businesses to grow and expand to create jobs. The IMF programme had also derailed.

Mr. Speaker, the NPP government managed to bring the programme back on track and after one year of managing the economy, the same IMF had this to say in
April 2018, and I quote:

Implementation of the ECF-supported programme has significantly improved in 2017. Growth has rebounded, the fiscal deficit has declined, leading to a primary surplus for the first time in fifteen years, the external position has strengthened, generating a build-up of external buffers, and key steps have been taken to address fragilities in the financial sector. Reforms should continue to entrench these hard-won gains....”