Unpacking Ghana’s 2024 budget assumption

Ghana's fiscal outlook for 2024 has projected total revenue and grants of GH¢176.4 billion, with expenditures set at GH¢226.7 billion, resulting in a deficit of GH¢50.1 billion. Economist Courage Boti from GCB Capital provided insights on the budget assumptions and medium-term targets as the country awaits approval from the International Monetary Fund (IMF) Executive Board for the release of the second tranche of the loan under the Extended Credit Facility arrangement. Boti highlighted the conservative nature of the budget, emphasizing minimal new revenue measures, expenditure cuts, and policy interventions. The budget aims to stabilize the economy, restore access to capital markets, and set the stage for future growth. With Ghana's economy facing challenges such as the industrial sector's recession and subdued growth indicators, Boti expressed cautious optimism about the budget projections. He noted a 2.8 percent growth forecast for 2024, with revenue growth driven by compliance enforcement rather than new interventions. While some relief measures were introduced for specific sectors like domestic vehicle assembly and electric vehicles, Boti emphasized the budget's focus on completing existing projects, especially in an election year. Despite concerns about the projected deficit of 61 billion, Boti suggested potential debt restructuring impacts could mitigate the borrowing needs. The discussion also touched on the momentum leading to the expected IMF Executive Board approval, with Boti acknowledging progress in discussions with external creditors. While the Finance Minister hinted at exchange rate stability due to the IMF program implementation, Boti highlighted ongoing negotiations with creditor committees, indicating a more realistic timeline for resolution towards the year-end. Overall, Boti's analysis provided a detailed overview of Ghana's budget assumptions, economic challenges, and the path towards financial stability amid global uncertainties.