A dedicated Professional Consultancy and Independent Firm, Deloitte Ghana, has advised the government to fast-track the pace of implementation of its flagship programs to improve the economy.
This followed a cut in the country’s growth forecast for 2022 by the government in the 2022 Mid-year review of the Budget Statement.
Deloitte Ghana indicated that based on the half year performance, Government’s revised real GDP growth projection of 3.7% appears realistic as gold production and processing is expected to strengthen in the face of increasing domestic inflation and the disruption in global supply lines from the ongoing Russia-Ukraine war.
“Revision of initial GDP growth projections is in the right direction, given the uncertainties surrounding tensions between the aforementioned nations which is expected to aggravate the country’s current situation. The implementation of the Enhanced Domestic Program supported by the IMF is expected to improve Government’s fiscal situation and re-instill investor confidence. We expect these interventions, together with Government’s initiatives on digitalization and improvement in commodity prices, to yield favorable results in the medium to long term.
“We advise Government to intensify its implementation of the programs designed to expand and improve the economy such as the agricultural modernization program, industrialization and supporting businesses to take advantage of the Africa Continental Free Trade Agreement (AfCFTA)” Deloitte Ghana said.
General global economic slowdown
Ghana, like other developing countries on the continent, has suffered severely from the impact of the general global economic slowdown caused predominantly by the Russian-Ukraine tensions and the COVID19 pandemic.
The country’s present inflation situation replicates that of the global economy caused largely by the disruptions in the global production and trade of goods and services, coupled with soaring oil prices.
Deloitte Ghana highlighted in a review of the mid-year budget statement that the situation in Ghana has been worsened by the depreciated Cedi value caused by heightened investor concerns on the country’s fiscal stance and food supply challenges from the shortage of fertilizer supply.
“With continuous monetary tightening and weakening supply-side price pressures, we expect inflation to stabilizes in the medium term, however, still above Bank of Ghana’s (BoG) long term target of 6-10%. We expect the country’s fiscal deficit situation to improve slightly given the implementation of Government’s 30% cut in projected expenditure and implementation of improved revenue mobilization strategies”.
Deloitte Ghana further noted that revenue measures including the Ministry of Local Government Decentralization and Rural Development Project (MLGDRD) and the Revenue Assurance, Compliance and Enforcement (RACE) as well as other compliance initiatives undertaken by the Ghana Revenue Authority will improve government’s revenue mobilization yields amidst the current fiscal challenges.
Real GDP growth
Real GDP growth is projected to dip from 5.4% in 2021 to 3.7% in 2022 as private consumption declines on account of rising prices of goods and services. Growth is projected to pick up from 2023-2025 as the economy is projected to recover from the adverse impact of global developments including the Russia-Ukraine War and COVID-19 pandemic.
The Economist Intelligence Unit (EIU) projected a 4.8% real GDP growth at the end of the year which is higher than the Government of Ghana’s revised projection of 3.7%.
Overall, real Gross Domestic Product (GDP) for 2021 grew by 5.4% in 2021 from 0.5% in 2020 with a revised 2021 annual target of 5.1%. Real GDP growth in 2021 was mainly driven by the post-pandemic economic recovery, following the Covid-19-induced disruptions to the global supply chain, which had a strain on the economy in 2020. The economic recovery in 2021 was also anchored by Government of Ghana’s medium-term revitalization agenda.