A QUICK REVIEW OF THE 2022 BUDGET
The 2022 National budget rightly tagged “Building a Sustainable Entrepreneurial Nation: Fiscal Consolidation and Job Creation” aspires to sustain the recovery efforts from the socio-economic impact of the COVID-19 pandemic and get the nation quickly back to pre-pandemic growth trajectory and on a sustainable debt path. It also outlines the strategies to address one of Ghana’s significant problems: youth unemployment and improving the quality of living standards while ensuring peace and security.
This year, the government of Ghana anticipates spending about 137.5 billion Ghana Cedis, a 21% increment compared to the 2021 budget of 113.8 billion Ghana Cedis. The 2022 budget also saw a 39 % increment in revenues and grants projection (100.5 billion Ghana Cedis) juxtaposed with an estimated 72.5 billion Ghana cedis last year. Although there is a substantial growth in the projected revenue, the budget still has a deficit of 37.1 billion Ghana Cedis, which is 10% lesser than the 2021 shortage of 41.3 billion Ghana cedis.
The Government’s 2022 budget prioritizes economic revitalization programs such as the YouStart Initiative, operationalizing the Development Bank Ghana (DBG) under the “Obaatan Pa” program. Others, such as the Community Improvement Initiative and the National Alternative Employment and Livelihood Programme (NAELP), are interventions meant to unleash the innovative and entrepreneurial spirit through nurturing a self-confident and business savvy generation that leverages the AfCFTA for economic transformation. With the anticipated multiplier effect of the YouStart initiative, Ghana will become an entrepreneurial nation with a great army of curious, competent, and compassionate actors empowered to conquer opportunities at home and beyond.
In addition, on March 24th, 2022, the government has undertaken stringent measures to curb its expenditure, ensuring that it achieves about a 7.4% deficit target set in the 2022 budget. The stringent measures include a 10% cut in discretionary spending by MDAs; a 50% cut in fuel coupon allocations for all political appointees and government institutions. A suspension on the importation of vehicles, all foreign travels, except pre-approved statutory travels, and the establishment of new public sector institutions. The Government also intends to implement measures to eliminate “ghost” workers, ballooning its recurrent expenditure.
Additionally, they plan to finalize the renegotiation of the Energy Sector IPPs to save about GHS1.5 billion by reducing payments by 20%, among other austerity measures. The 2022 budget is unique as it seeks Cabinet approval for Ministers and the Heads of State-Owned Enterprises to contribute 30 % of their salaries from April to December 2022 to the Consolidated Fund. This budget also prioritizes the completion of ongoing projects over new projects, which is critical to avoid wastage and efficient use of public resources. Ultimately, the government plans to reduce expenditure on all events by 50% to plug leakages and adjust to the current realities.
While the 2022 budget seeks to consolidate and revitalize a post-COVID-19 economic recovery agenda to promote sustainable growth, financial and fiscal stability, increased employment, and reduced inequality, the Government of Ghana must ensure the restoration and sustained macroeconomic stability. It must focus on debt sustainability and provide a supportive private sector environment (including promoting entrepreneurship) for local businesses. The Government may also encourage Foreign Direct Investment (FDI) by building a robust financial sector to support growth and development and deepen structural reforms to make the machinery of government work more efficiently and effectively to support socio-economic transformation. In particular, implementing reforms to increase revenue mobilization and the efficiency of public expenditure through innovation and more aggressive pursuit of transparency and accountability.