Ghana’s 2013 BUDGET: Read it all here

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240x_mg_b27iym3xxs_479020317_788587Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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BUDGET SPEECH
BUDGET STATEMENT AND ECONOMIC POLICY
of the
GOVERNMENT OF GHANA
for the
2013 FINANCIAL YEAR
Parliament
On
Tuesday, 5th March, 2013
PRESENTED TO
SETH E. TERKPER
Minister for Finance
On the Authority
Of the
H.E PRESIDENT JOHN D. MAHAMA
REPUBLIC OF GHANATheme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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INTRODUCTION
1. Mr. Speaker, I beg to move that this august House approves the
Financial Policy of the Government for the year ending 31st
December, 2013.
2. Mr. Speaker, my presence in the House today is to present to you, for
the first time in my capacity as Minister for Finance, and on the
authority of His Excellency, John Dramani Mahama, the recently
elected President of the Republic of Ghana, the full-year Budget
Statement and Economic Policy for 2013. This is in accordance with
Article 179 of the 1992 Constitution.
3. Mr. Speaker, this presentation is an abridged version of the 2013
Budget Statement. I would like to request the Hansard Department to
capture the entire Budget Statement and Economic Policy.
4. In October 2012, my predecessor, Honourable Dr. Kwabena Duffuor,
appeared before this august House to lay the Expenditure in Advance
of Appropriation for the first quarter of 2013. This was in accordance
with Article 180 of the 1992 Constitution. Those Estimates were also
the first allocation of resources to Ministries, Departments and
Agencies (MDAs) to be presented on behalf of His Excellency President
John Dramani Mahama. This was shortly after he was sworn-in to
complete the term of our beloved late President, His Excellency
Professor John Evans Atta Mills. The approval of those Estimates by
this House has made it possible for government business to continue
uninterrupted.
5. Mr. Speaker, from January 2009 to December 2012, the NDC
government implemented cogent policies and programmes and
pursued activities that were based on the strategic goals of the Ghana
Shared Growth and Development Agenda (GSGDA) policy document
which was approved by this august House.
6. As stated by His Excellency John Mahama in the State of the Nation
address, the vision and commitment of government over the medium
term is to build a prosperous and equitable society in pursuance of the
common and cherished goal of ?Advancing the Better Ghana Agenda?
for all. This vision is anchored on the commitment to Putting People Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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First; A Strong and Resilient Economy; Expanding Infrastructure; and
Transparent and Accountable Governance.
7. Mr. Speaker, we have achieved macroeconomic stability and growth
on the basis of strong real and external sector performance, including
low rates of inflation and the build-up of substantial foreign exchange
reserves. We have achieved these goals against the backdrop of the
global financial crisis; we have also acted decisively to implement
policies that address the challenges that occasionally confront our
forward march.
8. Mr. Speaker, as we are all aware, the global economy remained fragile
in 2012 following four years of weak and uneven recovery notably the
persistent Euro-zone debt crises and the uncertainty surrounding the
fiscal issues in the United States. Therefore, Ghana’s 2012 provisional
growth rate of 7.1 percent is still high given that it is on top of the
growth rate of 14.4 percent recorded in 2011 when the GDP first
reflected the impact of crude oil production in commercial quantities.
Moreover, the 2012 provisional growth rate compares favourably with
the global growth of 3.2 percent and sub-Saharan Africa growth of 4.8
percent. [According to the IMF’s World Economic Outlook (Jan 23,
2013)].
9. Mr. Speaker, in contrast with the gloomy global picture, Ghana
recorded relative economic stability and appreciable growth rates.
Gross Domestic Product (GDP) which was about GH¢30 billion in 2008
expanded to GH¢71.8 billion at the end of 2012. This testifies that
output from all sectors of the Ghanaian economy (not just oil and gas)
has grown in leaps and bounds. It is anticipated that the economy will
achieve a growth rate of between 8.5 and 9.0 percent at the end of
2012, when the final GDP estimates are updated by end April 2013;
10. Mr. Speaker, the journey to attain macro-economic stability over the
past four years has not always been smooth because we are still
vulnerable to several external and domestic shocks. These require
decisive and immediate correction at all times. During the first half of
2012, the cedi came under speculative attack and despite an election
year, the Bank of Ghana and MOF implemented measures to stabilize
the foreign exchange and reserve situations;
11. The correction of economic threats is an obligation that we cannot
compromise. We need to work harder than ever to consolidate the Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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economic fundamentals that have been built over the years. With the
consolidation of these fundamentals the transition from a lower middle
income country to a middle income country will be easier. The Bank of
Ghana and the Ministry of Finance will continue to install earlywarning mechanisms and programs to carefully identify and manage
all sources of fiscal and monetary risks to the budget and financial
framework.
12. Mr. Speaker, in fulfillment of government promise of improving the
conditions of service and productivity in the public service, the NDC
government undertook to implement the Single Spine Salary Structure
(SSSS); an obligation that was bequeathed by the previous
Administration on the very eve of its departure from power.
Nonetheless, in the interest of social and industrial harmony the
government proceeded with the roll-out. Government was mindful of
the need to stop the continuing exodus of quality staff, improve salary
levels and attract critical skill to enhance productivity.
13. The demands and pressures that came in the wake of the
implementation of the scheme compelled government to shorten the 5
year implementation stretch. This has created the situation where
compensation to public sector workers grew overnight to 72.3 percent
of tax revenue (including oil) as at end December 2012: a figure that
is in fact higher than the 60.9 per cent in November 2012 as cited in
the State of the Nation address. This outcome has crowded out the
fiscal space for spending on critical social intervention and other
infrastructure programmes.
14. Mr. Speaker, at this stage there is therefore need to strike a balance
between (a) public sector productivity and remuneration and (b) the
equally important allocation of national revenues to expenditures on
goods and services, and investments. We aim at achieving this
through increased national output and higher levels of revenue
mobilization.
15. Mr. Speaker, one of the critical challenges that Ghana faces in the
quest to give real developmental meaning to its status of a Middle
income country, is the imperative need to widen the socio-economic
infrastructure space, through the replacement of old and worn out
ones and the building of new ones. Our efforts to attract foreign
investment, create international competitiveness for indigenous
private business, encourage the entrepreneurship of the youth and Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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provide gainful employment for our growing population, are
contingent upon such expansion and modernization of our socioeconomic infrastructure.
16. Mr. Speaker, the downside of our transition to a Lower Middle Income
Country (LMIC) status is that we shall gradually lose a substantial
amount of grants and concessional loans that accrue to developing
countries. It means that we must rely more on our own internal
resources and the capital markets for our developmental needs.
17. Therefore, Mr. Speaker, His Excellency President Mahama’s first term
will be used to implement programs that consolidate our fledgling
middle-income status and extend its benefits to current and future
generations. Already we are on track to consolidate our LMIC status.
18. As a nation that is determined to learn from its own history (and that
of others), with respect to natural resource management, we passed
the Petroleum Revenue Management Act (PRMA) to direct the use of
identifiable oil and gas revenues. Consequently we have been
complying with the Act in the following transparent and accountable
manner:
? Regular publication of various PRMA reports by MOF and BOG
? The publication of the first report of the Public Interest and
Accountability Committee (PIAC) that was laid before this House
in 2012; and
? The compilation of the first Annual PRMA Report by a Minister of
Finance which I will lay before this House as part of the
presentation of this Budget.
19. Obviously, there are lessons to be learnt from these reports and,
therefore, while the Executive awaits the recommendations of this
House, His Excellency President John Mahama has directed that we
take the following appropriate steps:
? Track the ABFA allocations transferred to the Consolidated Fund
to ensure that they are used for pre-approved programmes and
activities as required by Section 21 of the PRMA; Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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? Ensure that the approved proportions of the Ghana Petroleum
Funds (GPFs) are paid into the Ghana Stabilisation Fund (GSF)
and the Ghana Heritage Fund (GHF) and in a manner that
captures the spirit of the PRMA;
? Prepare a plan for using part of the ABFA to set up an
Infrastructure Fund to ensure the country’s cost-effective access
to the capital markets as part of the plan for enhanced financing
of the country’s capital expenditure; and
? Ensure that the independent expert appointed under the Act
works with relevant public institutions to validate the estimation
of the Benchmark Revenue and improve the estimation of
corporate tax revenues in particular, on account of the generous
incentives that the petroleum sector enjoys under various
agreements.
20. His Excellency, the President has also directed that MOF and the
Attorney General’s Department complete the PRMA Regulations, as
part of a comprehensive review to improve the smooth
implementation of the PRMA.
21. Thus, over the past three years the Government has strenuously
sought and secured considerable foreign grants and loans, to rebuild
worn out roads and construct new ones, construct classrooms,
teachers’ accommodations and other much needed educational
facilities; in addition to building hospitals and clinics.
22. Unfortunately, a considerable proportion of the secured foreign loans
remain in the disbursement pipeline; a situation that frustrates the
process of closing the infrastructure gap. One of the key features of
my tenure as Minister of Finance will be the removal of bottlenecks
that impede the disbursement process.
23. Mr. Speaker, the structural challenges that face the nation require
very decisive initiatives with their attendant huge financial
implications. Over the years, the initiatives have been driven mainly by
Government in spite of the huge potential of the private sector. It is,
therefore, Government policy that the next phase of the
transformation process must involve the private sector. In this respect,
among others we will embark on the following specific actions:Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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? The Private Sector Advisory Council chaired by H. E. President
John Mahama, will continue to engage with the private sector at
the highest levels;
? The Ministry of Finance will initiate a major review of our tax
and investment promotion laws—to be tabled as Bills before this
House by the Ministry of Finance – to bring them abreast with
the needs of our investing public. Many of these were enacted
over a decade ago and they have amendments that makes their
implementation difficult;
? Government will accelerate targeted investment in several
sectors of the economy to cater for the public goods that
facilitate private sector activities such as marketing and
exportation. These include infrastructure in transportation (e.g.,
roads, ports and railways), energy (e.g., power, oil and gas),
agriculture (e.g., irrigation and buffer stock), public safety,
education, and health (e.g., hospitals, clinics, and ambulances);
? The Ministry of Finance will lead a comprehensive review of
services and charges at strategic public sector, trade and
investment locations such as the airport, harbours and other
entry points to ease business and reduce burdens on importers;
? It is the decision of government to consolidate various public
sector identification programs including: national identification,
driver’s license, national health insurance, taxpayer
identification, and others as part of cost saving measures;
? It is also the intention of government, to ensure implementation
of local content policy even as we conduct a review of the public
procurement law and other regulations to boost the domestic
industry; and
? Government will also enhance the country’s competitiveness in
import-export (EXIM) trade, investment and loan arrangements
and negotiations with advanced and BRICS-country EXIM
institutions. This is to improve access to foreign markets by our
local firms and strengthen our balance of payments (BOP) and
current account (CA) situation.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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24. Mr. Speaker, we are resolved to tackling the main fiscal challenge
which is the budget deficit. The sources of the excess deficit are
known and include;
? Shortfalls in corporate income taxes, notably from the petroleum
sector – GH¢708.2 million (1.0 percent of GDP);
? Shortfall in grants from our development partners – GH¢389.4
million (0.5 percent of GDP);
? Implementation of the single spine salary structure – GH¢1.91
billion (2.7 percent of GDP);
? Higher interest cost – GH¢245.0 million (0.3 percent of GDP);
? Utility and fuel subsidies – GH¢339.0 million (0.5 percent of
GDP); and
? Higher spending on goods and services (which is already
constrained by other expenditures) – GH¢354.7 million (0.5
percent of GDP).
25. Mr. Speaker, as part of the corrective measures to be undertaken, in
January 2013, the NPA announced an adjustment in petroleum prices
to a reasonable level that is still below the full cost. Government will
take seriously, the suggestion to implement a periodic upward or
downward adjustments to avoid severe disruptions to public and
private sector output and financial planning.
26. We will continue to identify credible sources for financing
infrastructure projects to curtail costly and ad hoc short-term
borrowing. The purpose is to curtail over reliance on short-term
instruments such as treasury bills to finance the capital budget and
deficit. Government will endeavour to maintain a stable macroeconomic and debt service record in other to tap into the 10 year or
more bond and loan markets. This will ease pressure on credit to the
private sector and help reduce interest rates.
27. Mr. Speaker, since the problems are also structural, we are
implementing more efficient systems and procedures for processing
government transactions. In this regard: Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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? Ghana Revenue Authority (GRA) will hasten its reforms to
improve the tax processes and elevate them to an electronic
platform; improve compliance to increase the level of taxes we
generate; and root out corruption, tax evasion and tax
avoidance;
? Improve the efficiency of government expenditures by hastening
the implementation of new budget and accounting modules
under the Ghana Integrated Financial Management System
(GIFMIS) reforms to replace existing manual processes.
28. Mr. Speaker, as already directed by Cabinet, MOF will evolve a
financing plan to sustain the expansion of infrastructure into the nearterm without threatening our public debt status. Debt sustainability is
a crucial element of our sovereign ratings and our ability to borrow in
a cost-effective manner to finance the infrastructure projects.
Obviously, this is also a key element of our transition to middleincome status, as the flow of grants and concessional loans to the
Budget dwindles. Some elements of an improved sovereign financing
plan include:
? Ensuring that commercial projects pay for the facilities that
finance their implementation, through mechanisms such escrow
and on-lending arrangements;
? Financing the capital component of our Budgets with longer
tenor bonds and loans, preferably from the international capital
markets, to ease the pressure on the short-end of our domestic
treasury markets (a practice that crowds out credit to the
private sector and increases the cost of borrowing to businesses
and the government);
? Vigorously pursuing the public-private partnership
(PPP)programme that the government approved in 2011;
? Exploring the use of insurance and risk management options to
reduce the premium that the country pays on its commercial
loans for country and project risks;Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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? Improving operational and financial efficiency in our stateowned enterprises—notably those in infrastructure
development—to enable them borrow from the local and foreign
capital markets on their own Balance Sheet, without recourse to
sovereign guarantees;
? Minimizing the risk that is put on public debt through the use of
sovereign guarantees and making the issue of such guarantees
commensurate with the risk that the state assumes in the
implementation of all projects.
29. Mr. Speaker, I now proceed to present other key elements of the 2013
Budget which is aimed at sustaining confidence in the future of the
Ghanaian economy.
GLOBAL ECONOMIC DEVELOPMENTS
30. Mr. Speaker, following four years of weak and uneven recovery from
the global financial crisis, the global economy remains susceptible to
another economic downturn stemming from the lingering euro zone
crisis and the challenges in dealing with the US fiscal crisis.
31. The International Monetary Fund’s (IMF) World Economic Outlook
(WEO) for January 23, 2013 provides a provisional global growth of
3.2 percent. In the advanced economies, growth slowed down from
1.6 percent in 2011 to 1.3 percent in 2012, while in the emerging
markets and developing economies, the spillover effects of the
problems of the advanced economies combined with internal problems
led to reduction in growth rate from 6.3 percent in 2011 to 5.1
percent in 2012. Sub-Saharan Africa region also recorded slowdown in
growth from 5.3 percent in 2011 to 4.8 in 2012.
32. Mr. Speaker, the world economic outlook may adversely impact on
external demand as well as terms of trade of commodity exporters
such as Ghana which depends primarily on favourable terms of trade
for commodity exports.
MACROECONOMIC PERFORMANCE FOR 2012
33. Mr. Speaker, macroeconomic management in the year was beset with
challenges arising in part from the high wage bill which was the result Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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of the implementation of the SSPP as well as the financial sector
instability in early 2012 that stemmed from both domestic and
external sources. These challenges notwithstanding, the economy
posted some significant successes in the areas of economic growth,
and price and exchange rate stability.
Real Sector
34. Mr. Speaker, provisional GDP estimates released by the Ghana
Statistical Service in September 2012 indicate that in real terms, the
economy expanded by 7.1 percent. This compares with a growth
target of 9.4 percent in 2012 and the actual outturn of 14.4 percent in
2011. The 2012 provisional growth rate of 7.1 percent is still high
given that it is on top of the growth rate of 14.4 percent recorded in
2011 when the GDP first reflected the impact of crude oil production
in commercial quantities.
35. It is important to note that provisional data for 2012 shows that
growth in the oil sector was negative, implying that our growth of 7.1
percent was robust despite the slack in the oil and gas sector. The
2012 provisional growth rate compares favourably with the global
growth of 3.2 percent and sub-Saharan Africa growth of 4.8 percent,
according to the IMF’s World Economic Outlook (Jan 23rd 2013).
36. Mr. Speaker, the Agriculture Sector recorded a growth rate of 2.6
percent against a target of 4.8 percent in 2012 and an actual outturn
of 0.8 percent in 2011. With the exception of Forestry and Logging
sub sector, all the other sub-sectors recorded higher growth rates
than those of 2011 with Crops and Fishing sub-sectors making the
largest contribution to agricultural output in terms of shares. The low
growth in Forestry and Logging sub-sector can be attributed largely to
the:
? decline in the reforestation programme which started in 2010;
and
? reduction in the number of permits awarded to timber
contractors and the effective enforcement of the ban on illegal
logging activities in pursuit of environmental sustainability.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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37. Mr. Speaker, the Industry Sector, the second largest sector, recorded
a growth rate of 7.0 percent in 2012 against a target of 15.8 percent
and an actual outturn of 41.1 percent in 2011. The lower performance
in 2012, compared to the actual outturn in 2011, is due largely to the
base effect of crude oil production in 2011. The year 2011 witnessed
significant growth in the output of the Mining and Quarrying subsector as a result of the introduction of oil production in commercial
quantities.
38. The Mining and Quarrying sub-sector registered a growth rate of 5 per
cent, against a target of 31.9 per cent, due mainly to a contraction in
the oil and gas production occasioned by production difficulties in the
Jubilee Field in the first half of the year. Recent data on oil production,
however, shows a growth of 8.9 percent as at end-December 2012.
39. Mr. Speaker, the Services Sector, the largest sector of the economy,
recorded the highest growth rate in the year under review. The
Sector exceeded its 2012 target of 7.7 per cent by 1.1 percentage
points to register a growth rate of 8.8 percent. The sub-sectors which
contributed to this remarkable performance include Hotels and
Restaurants (13.6 per cent), Transport and Storage (11.4 per cent),
Financial Intermediation (11.4 per cent), Information and
Communication (12.1 per cent), and Business Services (13.5 per
cent).
Fiscal Sector
40. Mr. Speaker, preliminary data on implementation of the Budget for the
2012 fiscal year indicates that, total revenue and grants was below the
budget target. At the same time, expenditures for the period were
higher than the budget estimate. This resulted in an overall fiscal
deficit equivalent to 12.0 percent of GDP, against a target deficit
equivalent to 6.7 percent of GDP. The deficit was financed mostly
from domestic sources, resulting in a net domestic financing
equivalent to 9.8 percent of GDP, against a target of 4.0 percent of
GDP.
41. Mr. Speaker, Total revenue and grants for the period under review
amounted to GH¢16,668.4 million, against a target of GH¢16,927.6
million. This was 1.5 percent lower than target, but 30.2 percent
higher than the outturn for the corresponding period in 2011.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
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42. Mr. Speaker, Total expenditure, including payments made for the
clearance of arrears and outstanding commitments, totaled
GH¢25,317.1 million, equivalent to 35.2 percent of GDP. The outturn
was 17.2 percent higher than the budget target of GH¢21,596.6
million and 64.0 percent higher than the outturn for 2011. The strong
growth in expenditure was mainly as a result of higher recurrent
spending and increased clearance of arrears.
43. Mr. Speaker, based on revenue and expenditure outturns for 2012,
the overall budget balance on a cash basis was a deficit of
GH¢8,648.7 million, equivalent to 12.0 percent of GDP. This was
against a deficit target of GH¢4,669.0 million, equivalent to 6.7
percent of GDP. The budget deficit recorded for the corresponding
period in 2011 was equivalent to 4.0 percent of GDP. The domestic
primary balance also registered a deficit of GH¢1,172.1 million,
equivalent to 1.6 percent of GDP, against a targeted surplus of
GH¢1,737.5 million, equivalent to 2.5 percent of GDP.
44. Shortfalls in revenue and grants combined with higher spending were
the sources of the fiscal slippage in 2012.
45. Mr. Speaker, Net Domestic Financing of the budget amounted to
GH¢7,018.0 million (equivalent to 9.8 percent of GDP) against the
budget target of GH¢2,760.6 million (equivalent to 4.0 percent of
GDP). About thirty-two percent of the domestic financing was from the
central bank and the remaining was from deposit money banks and
non-bank public.
46. Foreign financing of the budget was GH¢1,630.6 million (equivalent to
2.2 percent of GDP), against a target of GH¢1,908.4 million
(equivalent to 2.7 percent of GDP).
Oil and Gas
47. Mr. Speaker, the fiscal year 2012 experienced an improvement in
production of crude oil amidst initial production difficulties in the first
two quarters of the year. The total volume of crude oil produced in
2012 was 26,351,278 barrels representing an increase of 8.9 percent
over the 2011 production levels. The GNPC lifted crude oil five times Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
14
on behalf of the State amounting to 4,931,034 barrels yielding
US$541.07 million (GH¢978.27 million).
48. Mr. Speaker, of the total oil lifting receipts of US$541.07 million
(GH¢978.27 million), Royalties amounted to US$150.64 million
(GH¢272.37 million) and the remaining US$390.43 million (GH¢705.91
million) represented the State’s Carried and Participating Interest.
Other sources of petroleum receipts, namely, surface rentals and
SOPCL royalties amounted to US$552,418 (GH¢1,044,290) bringing
the total petroleum receipts to US$541.62million (GH¢979.32 million).
Distribution of 2012 Petroleum Receipts
49. Mr. Speaker, petroleum revenues received in 2012 were allocated to
the various allowable sources in accordance with the PRMA. Of the
2012 petroleum receipts of US$541.62 million (GH¢979.32 million), an
amount of US$230.95 million (GH¢416.89 million) was transferred to
GNPC comprising Equity Financing Cost of US$124.63 million
(GH¢224.21 million), and GNPC’s 40 percent share of net Carried and
Participating Interest of US$106.32 million (GH¢192.68 million) in line
with Section 7 of the PRMA.
50. Mr. Speaker, the remaining amount of US$310.67 million (GH¢562.43
million) representing the Benchmark Revenue was distributed to the
ABFA and the GPFs in line with sections 11, 18, 19, and 23 of the
PRMA.
Utilization of 2012 Annual Budget Funding Amount
51. Mr. Speaker, an analysis of the allocation to ABFA in 2012 shows that
a total amount of US$286.55 million (GH¢516.83 million) was
allocated to ABFA in accordance with the PRMA against a projected
ABFA of US$383.52 million (GH¢614.55million) for the year resulting in
a shortfall of US$96.96 million (GH¢97.71 million). The main reasons
for the shortfall in the 2012 ABFA allocation were the shortfall in
production targets as well as the non-realization of corporate tax in
2012.
52. Mr. Speaker, of the total ABFA amount of GH¢516.83, an amount of
GH¢273.07 million representing 52.8 per cent was spent on oil and
gas infrastructure and amortization of loans in respect of such
infrastructure whilst GH¢176.73million, representing 34.2 per cent was Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
15
spent on Road and Other Infrastructure. The remaining GH¢67.03
million (13 per cent) was spent on Agricultural Modernisation
(GH¢42.09 million or 8.1 per cent) and Capacity Building (GH¢ 24.94
million or 4.8 per cent). Consistent with Section 21(4) of the PRMA
which requires that a minimum of seventy per cent of the ABFA be
used for public investments, 76 per cent of the 2012 ABFA was spent
on public investments and the remaining 24 per cent was spent on
goods and services.
Monetary Developments
53. Mr. Speaker, provisional monetary data indicated a slower pace of
growth in broad money supply including foreign currency deposits
(M2+). Broad money supply grew by 24.3 percent in 2012 compared
with 33.2 percent in 2011. By the end of December 2012, M2+ stood
at GH¢22,620.5 million, compared with GH¢18,195.1 million in 2011.
Inflation
54. Mr. Speaker, headline inflation went up marginally from 8.6 percent in
2011 to 8.8 percent in 2012, continuing the record single digit inflation
for more than two years. Although the end year inflation missed the
target of 8.5 percent, it remained within the target band of 8.5±2
percent. During the year, inflationary pressures remained largely
subdued by low food price increases explained by seasonal factors.
Food inflation peaked at 5.5 percent in July 2012 but declined to end
the year at 3.9 percent. Partly reflecting the exchange rate passthrough, non-food inflation also increased to 12.5 percent in August
2012 and steadily declined to 11.6 percent in December 2012.
Exchange Rates
55. The Ghana cedi traded weak in the first five months of 2012 due to
intense demand pressure for foreign exchange partly reflecting a
surge in import demand that accompanied the strong GDP growth in
2011 and the premature redemption of portfolio investments by nonresident. However, the introduction of policy measures by the Bank of
Ghana helped to moderate the volatility in the foreign exchange
market. The policy measures included policy rate hikes, introduction of
new bills to mop up excess liquidity and monitoring of foreign
exchange market activities. On a cumulative basis, the Ghana cedi Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
16
depreciated at the interbank market by 17.5 percent against the US
dollar in 2012 compared to 4.97 percent in 2011.
Developments in Interest Rates
56. Mr. Speaker, in response to the pressures in the foreign exchange
market and its possible pass-through to prices, the Monetary Policy
Committee (MPC) of the Bank of Ghana raised the Monetary Policy
Rate (MPR) by cumulative 250 basis points from 12.5 percent in
December 2011 to end December 2012 at 15 percent. As a
consequence, interest rates trended up but the pace moderated
during the second half of the year.
57. In the money market, interest rates on 91-day and 182-day bills went
up from 10.7 and 11.3 to 22.9 and 22.88 percent, respectively, in
December 2011 and December 2012. Similarly, rates on 1-year and 2-
year fixed notes increased from 11.3 and 12.4 percent in December
2011 to 22.9 and 23 percent in December 2012, respectively. The
long-dated instruments such as 3-year and 5-year bonds also rose
from 14 and 14.3 percent in 2011 to 24 and 23 percent, respectively,
during the period.
External Sector
58. Mr. Speaker, provisional estimates indicate that the trade balance
recorded a deficit of US$4,249 million in 2012, pointing to further
deterioration in comparison to a deficit of US$3,057.3 million in 2011.
This was on account of increased imports relative to marginal gains in
export earnings.
59. The worsening trade balance, as well as increased outflows from
services, income and current transfers, resulted in a current account
deficit of US$4,928 million in 2012 compared to US$3,546.4 million
recorded in 2011. The capital and financial account stood at US$3,305
million in 2012, compared with US$4,479.3 million in 2011, and was
explained by higher short-term capital and net official capital outflows.
60. These developments resulted in an overall balance of payments deficit
of US$1,210.9 million in 2012, compared to a deficit of US$546.5
million in 2011. By end 2012, gross international reserves stood at Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
17
US$5,348.9 million, compared to US$5,474.6 million in 2011 and
equivalent to 3 months of import cover.
Financial Stability in 2012
61. Mr. Speaker, Ghana’s financial system faced significant risks to
stability in early 2012, emanating from both external and domestic
sources. Threats to stability from external sources were mainly from
the sovereign debt crisis in the euro area that spilled into the euro
zone banking. Domestic threats to stability emanated mainly from
rapid depreciation of the cedi, which constituted the major risk to
macroeconomic stability in early 2012. Measures taken to contain
threats to the system included three-consecutive hikes of the
monetary policy rate that culminated in 250bps increase in the first
half of the year and re-introduction of Bank of Ghana bills.
62. Mr. Speaker, by the end of 2012, the financial stability indicators
pointed to steady improvement. Generally, the banking system
remained strong in 2012 on account of increased capital levels of
banks and reduced non-performing loans. Other sectors of the
financial system comprising the insurance sector, the securities market
and the Ghana Stock Exchange also registered improved performance.
Public Debt
63. Mr. Speaker, the public debt (including government guaranteed debt)
increased by 23 per cent from US$15,350.08 million in 2011 to
US$18,832.77 million by end-December 2012. This represents 40.8
per cent of GDP in 2011 and 49.4 per cent of GDP by end December
2012. In terms of debt type, domestic debt grew by 30 percent
(between 2011 and 2012) to constitute 53 percent of the total public
debt, compared to 47 percent for external debt.
64. A combination of factors, including the reduction in the availability of
concessional funds as a result of the Euro financial crises, contributed
to the increase in non-concessional borrowing to finance infrastructure
projects. The increased public debt was also due to issuance of
longer-dated domestic debt instruments (3-year and 5-year bond).
Although the rise in total debt has sent some shivers in sections of
Ghanaians because of the fear of its medium to long term
sustainability implications, we wish to assure Ghanaians that the debts Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
18
were issued for priority and self-financing projects, including Eastern
the Corridor Roads, Gas Processing Plant, Wa and other hospitals
project, rehabilitation of the Western railway line, retooling of the
Ghana Police and the provision of essential equipment to the military.
They will, therefore, not pose threat to debt sustainability of the
country.
New Loan Commitments
65. Mr. Speaker, Government in 2012, raised loans to the tune of about
US$2,286.24 million (of which US$1,089.75million was concessional
and US$1,196.49million non-concessional), to implement various
infrastructural projects in an effort to help bridge the gap in
development, consistent with our middle income status.
Debt sustainability Analysis
66. Mr. Speaker, the Ministry of Finance in conjunction with the World
Bank recently undertook a debt simulation exercise for the end of year
2012, to ascertain our country’s debt sustainability levels. This
assessment revealed that Ghana remains within the category of
moderate risk of debt distress – the same rating the joint World Bank/
IMF mission assessed in November 2011. The assessment, though,
showed that public external debt burden indicators remained below
their respective thresholds; it also showed an increasing trend in the
liquidity ratios, especially the debt service-to-revenue ratio which is
projected to average about 9.1 percent of GDP between 2013-2018
from the current 7.5 percent.
67. Mr. Speaker, projects under the CDB financing arrangement are
progressing smoothly. Works are far advanced on the Western
Corridor Gas Infrastructure Project, and application made for the
supply and installation of ICT enhanced surveillance under the
Integrated National Security Communication Project. Ministry of
Finance is working diligently with the beneficiary MDAs to finalize
relevant project preparation documents to ensure timely completion of
projects. The completion of these projects will significantly reduce the
infrastructural deficit in critical areas of the economy.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
19
Petroleum Hedging Programme
68. Mr. Speaker, Government in the 2012 Budget mentioned the hedge
programme put in place to contain the phenomenon of crude oil price
escalation, with the view to achieving price stability and guarantee the
availability of petroleum products on the Ghanaian market at all times.
The hedging programme has largely been successful. The key benefit
has been a stabilization of the prices of finished petroleum products
which were partially protected by the hedge when crude oil prices
soared from $78 per barrel in September 2010 to $128 per barrel in
April 2011 and from the lowest average price of $95.77/pbl in June
2012 to the highest price of $124.50 / pbl in March, 2013.
69. The impact of the latest (and still on-going) oil crises on the economy
of Ghana would have been very consequential, had the hedging policy
not been put in place. In view of the potential benefits, government
intends to strengthen further the programme in 2013.
Macroeconomic Policies and Targets for 2013
70. Mr. Speaker, the Ghana Shared Growth and Development Agenda
(GSGDA) is expected to end in 2013 and, it is expected to be replaced
by a successor Plan by end of July 2013. The medium-term framework
for this Budget is informed by the policy direction for the remaining
duration of the GSGDA and the Manifesto of the National Democratic
Congress (NDC) as presented to the good people of Ghana.
71. Mr. Speaker, in his Sessional Address to Parliament delivered on
February 21, 2013, H.E. the President indicated that, the vital strength
underpinning our national development programme will focus on four
pillars, namely putting the People First; a Strong and Resilient
Economy; Expanding Infrastructure; and Transparent and Accountable
Governance. These pillars will, therefore, inform our medium-term
economic framework as we formulate our economic policies.
72. Mr. Speaker, the details of macroeconomic targets for 2013 are
outlined below:
? real non-oil GDP growth of 6.5 percent;
? real overall GDP growth including oil of 8.0 percent;Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
20
? average inflation of [8.9] percent;
? end period inflation of [9.0] percent;
? overall budget deficit equivalent to [9.0] percent of GDP; and
? gross International Reserves of not less than three months of
import cover for goods and services.
73. Mr. Speaker, it is projected that economic growth will remain strong
and inflation is also expected to remain in single digit in 2013, in spite
of the fiscal challenges and risks that confront the economy.
74. Measures will be taken to protect the credibility of fiscal policies and
the deficit target. Strong monetary policy stance is expected to be
maintained to ensure the stability of the cedi and support our single
digit inflation target. The fiscal programme will hinge on the
rationalisation of expenditure and strengthened revenue collection.
75. Public Financial Management will be strengthened within the context
of our macroeconomic policies and fiscal discipline to prevent
overspending and avoid new arrears accumulation.
76. Mr. Speaker, implementation of the Ghana Integrated Financial
Management Information System (GIFMIS) is expected to reduce the
occurrence of outstanding payments and help with implementation of
the realignment of the Budget that was mentioned by H.E. the
President in his Sessional Address.
Real Sector
77. Mr. Speaker, based on the policies and strategies to be pursued in the
medium term, the economy is projected to grow at no less than 8
percent from 2013 to 2015. On annual basis, it is projected that real
GDP will grow at 8 per cent in 2013, 8.7 per cent in 2014 and 8.9 per
cent in 2015.
78. Mr. Speaker, consistent with our policy of ensuring that adequate
attention is given to the non-oil sector to prevent the Dutch Disease,
the non-oil GDP is projected to grow at an average of 8 percent in the
medium term. On annual basis, it is projected that the non-oil GDP will Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
21
grow by 6.5 percent in 2013 and increase further to 8.9 percent in
2014 and 9.4 percent in 2015.
2013 Petroleum Receipts and Distribution
79. Mr. Speaker, based on an estimated average crude oil price of
US$94.36 per barrel and daily production of 83,341 barrels, the total
petroleum receipts projected for the 2013 fiscal year is US$581.72
million (GH?1,122.72 million).
80. Mr. Speaker, in line with Section 18 of the PRMA, a maximum of 70
percent of the Benchmark Revenue is allocated as the ABFA and the
remaining sum is allocated to the GPFs.
81. Mr. Speaker, it is, therefore, proposed that out of the Benchmark
Revenue of US$390.28 million (GH¢753.24 million), an amount of
US$273.20 million (GH¢527.27 million) be allocated as ABFA and the
remaining US$117.08 million (GH¢225.97 million) as the GPF. The 70
percent allocation of the GPF to the GSF will amount to US$81.96
million (GH¢158.18 million) whilst the 30 percent allocation to the GHF
will amount to US$35.13 million (GH¢67.79 million)
82. Mr. Speaker, in line with Section 21(5) of the PRMA, the ABFA would
be spent in the following four priority areas:
? Expenditure and Amortization of Loans for Oil and Gas
Infrastructure;
? Road and Other Infrastructure;
? Agricultural Modernization; and
? Capacity Building (including Oil and Gas).
83. The four priority areas which were approved by this august House in
the 2011 Supplementary Budget, will be reviewed for the 2014 fiscal
year in accordance with Section 21(6) of the PRMA.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
22
STRUCTURAL REFORMS OF THE MEDIUM TERM AGENDA
Sustainability of Government’s Wage Bill
84. Mr. Speaker, as indicated earlier, the huge wage bill has crowded out
the fiscal space for spending on critical social intervention and other
infrastructural programmes. Going forward, the following measures
will be taken to ensure the sustainability of the SSPP and reverse the
worrying trend of the public sector wage bill:
? Consistent with the White Paper on the SSPP, the SSPP is to be
implemented within a five-year period, therefore, aspects of the
pay policy with huge fiscal implications will be spread over the
five-year period rather than rush their implementation;
? Government will ensure that the SSPP, which is an all-embracing
Government policy, will apply to all Ministries, Departments and
Agencies that are fully or partially on Government budget except
those which are exempted by the Constitution or an Act of
Parliament. In addition, Government will speed up the migration
of subvented agencies onto the mechanized payroll system as
part of measures to ensure efficient control and management of
the payroll.
? The FWSC, the MOF, Public Sector Reform Secretariat, the
Public Services Commission, the Office of the Head of Civil
Service and other relevant agencies will carry out
complementary public sector reforms to ensure that pay is
linked to productivity in the public service. Public service
workers are expected to match the increased pay that has
resulted from the implementation of the SSSS with improved
productivity to ensure the sustainability of the pay policy;
? The wage adjustments in the public service and the current
exercise on the rationalization and standardization of categories
2 and 3 allowances will be undertaken within budgetary
constraints in the implementation period;
? Government has decided that emphasis will be laid on
determining the National Minimum Daily Wage and negotiating Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
23
the public service wage before the annual budget is submitted
to Parliament for approval;
? Government will, as a matter of urgency, ensure that market
premium guidelines are issued to provide more clarity on the
determination of market premium and prevent its abuse; and
? The payroll upgrade, auditing, and biometric registration
exercises will be mainstreamed into the Government payroll and
human resource management system and there will be strict
enforcement of existing wage management regulations on
government officials who renege on their responsibilities,
thereby, promoting payroll fraud.
External Sector
85. In the medium term, the thrust of external sector policy will focus on
the accumulation of external reserves to provide support for exchange
rate stability during external shocks. The reserve build up will be
largely supported by favourable world market prices of the major
export commodities and anticipated foreign inflows from portfolio and
foreign direct investments.
Price and Money
86. The objective of monetary policy will be maintained on price stability
which provides an enabling environment for economic growth. In the
medium term, monetary policy stance will focus on risks in the outlook
that may confront the economy from both domestic and external
sources, and at the same time remain complementary to government’s
fiscal consolidation efforts in the years ahead. The Bank of Ghana will
continue to enforce prudential regulations to ensure soundness and
stability of the financial system to enhance financial intermediation
efforts in the economy.
Outlook for Debt Management in 2013
87. Mr. Speaker, the end December 2012 debt simulation exercise showed
vulnerability to the exchange rate in a stress test with the debt to GDP
ratio approaching its threshold by the end of 2018. The main
vulnerabilities are related to a high debt service-to-revenue ratio Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
24
which may pose a risk to the fiscal outlook. While overall public sector
debt is projected to marginally increase in relation to GDP in the
medium term, the ratio of 49.5 per cent at end December 2012 does
not provide strong buffers against shocks. Government in this regard
will embark on a gradual fiscal consolidation and additional revenue
mobilization measures, supported by a stable economic growth.
Loan Financing and Infrastructure Projects
88. Mr. Speaker, Government is on course with the implementation of key
infrastructure projects under various loan financing arrangements
committed in 2011 and 2012. Works are far advance on the Western
Corridor Gas Infrastructure Project under CDB of China, the Bui Hydro
Dam Project by EXIM China is expected to be completed this year, the
water projects by EXIM Turkey and Korea are to commence this year,
as well as the Tamale Project, the Flyover Project and some portion of
the Eastern Corridor Road Project supported by the Brazilian PROEX
facility. MoF is working diligently with the beneficiary MDAs to finalize
relevant project preparation document to ensure the timely
preparation of these and other projects in the pipeline. The completion
of these projects will significantly reduce the infrastructural deficit in
critical areas of the economy.
Petroleum Hedging Programme
89. Government plans to continue the petroleum hedging programme in
2013 with plans to hedge about 2 million barrels of crude oil per
month, aimed at stabling crude oil prices. To this end, MOF will
embark on an education campaign with the aim of managing public
expectations about the programme and underline the fact that the
programme is first and foremost a price protection strategy, rather
than a profit-making venture.
Resource Mobilisation Initiatives
Tax Revenue
90. Mr. Speaker, Domestic Tax Effort as measured by the Tax/GDP (nonoil) ratio improved from 15.1 percent in 2011 to 16.0 percent in 2012.
However, the Tax/GDP ratio including oil (excluding exemptions)
increased from 15.4 percent in 2011 to 16.3 percent in 2012. The Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
25
following reasons accounted for the performance of Tax revenue in
2012:
? higher than anticipated payments for corporate tax from some
mining companies on account of high gold prices;
? higher than anticipated payments for mineral royalties on
account of high gold prices;
? efficiency gain from the ongoing revenue administration reform;
and
? shift from specific to ad valorem basis in excise taxation.
91. Mr. Speaker, while recognizing the strong revenue performance in
2012, the country needs to sustain revenue mobilization efforts in
view of the huge funding requirements needed to close the country’s
infrastructure gap and domestic payment of arrears. The focus on
revenue generation in the 2013 fiscal year therefore, is to expand the
tax base and improve the efficiency of tax administration.
Tax Bills
92. Mr. Speaker, the Customs, Excise and Preventive Service, the Internal
Revenue Service and the VAT Service were organized into one
business unit, the Ghana Revenue Authority. The GRA reform was
established in 2010 and the reforms have brought Customs, Internal
Revenue Service and the VAT Service under one Commissioner
General. The specific functions of Customs and Domestic tax divisions
are being headed by various Commissioners. The reforms will
ultimately lead to efficiency gain and remove duplication of functions.
However, the various Commissioners will have to maintain flexibility in
carrying out their function under the overall control of the
Commissioner General. The Ministry of Finance will assist to smoothen
out this reorganization so that the intended synergy in operations will
be achieved with positive results.
93. Mr. Speaker, there is the need to consolidate and harmonize all the
various tax laws. During the year, the following laws will be tabled
before Parliament.
? The Revenue Administration Bill;Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
26
? The Value Added Tax Bill;
? The Income Tax Bill;
? The Customs Bill; and
? The Excise Bill.
94. Mr. Speaker, the following are the tax proposals for 2013.
Domestic Taxes
Personal Income Tax Bands
95. Mr. Speaker, in line with our social democratic principles, personal
income taxation will continue to be used as a measure for equitable
distribution of income and also for protecting low income earners.
Taking cognizance of the current inflation trends in the country, the
impact of real increases in GDP on personal incomes, and to
compensate for the loss in purchasing power of income earners, the
income tax thresholds and brackets are being revised as follows:
Table 1: Tax Bands
Revision of Personal Reliefs
96. Mr. Speaker, personal reliefs are a means of reducing the burden on
tax payers in certain categories. It is noted that not many tax payers
take advantage of personal reliefs which are granted when tax returns
are filed. I would wish to encourage tax payers to file their annual
returns to take advantage of reliefs since subsidies are not the right
way for compensating low income earners. The following personal
reliefs are proposed:
Income Band
(GH¢)
Rate
(%)
First 1,584 Free
Next 792 5
Next 1,104 10
Next 28,200 17.5
Exceeding 31,680 25Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
27
Table 2: Personal Reliefs
Item 2011 Rate 2013 Rate
Marriage/Dependent
Responsibility
100 currency points 200 currency points
Old Age 100 currency points 200 currency points
Child Education 100 currency points up
to 3 Children
200 currency points up to
3 Children
Aged Dependent 50 currency points 100 currency points
Training Cost 200 currency points 400 currency points
97. Mr. Speaker, the Ghana Revenue Authority (GRA) is to set up a
dedicated office to assist tax payers in filing their tax returns.
Additionally, the GRA will simplify the present tax returns form which
will make it a lot more convenient for tax payers who have no other
income apart from their salaries to file returns.
98. Mr. Speaker, in order to set the pace, all staff of the GRA must file
their 2012 tax returns and assist other public and civil servants to do
the same.
Vehicle Income Tax
99. Mr. Speaker, in the last revision of vehicle income tax, existing
quarterly rates were increased for vehicles of all categories except
trotros and taxis. It is only fair that we adjust these rates that have
not changed since 2005. For example an owner of a 33-seater
commercial vehicle is paying only GH¢15 per quarter (GH¢ 5 per
month) as compared to rates paid by public servants and other
workers in the formal sector. It is to be noted that the incidence of
this tax is not on the drivers of these vehicles but on the owners.
There is an alternative for the owners to opt to file their tax returns if
they believe this presumptive tax is too high. Owners who will opt to
file their tax returns will take advantage of the additional deductions
allowed for business (e.g. capital allowances and personal reliefs).
Environmental Taxes
100. Mr. Speaker, the growing concern about climate change in many
advanced and developing countries have brought environmental issues
to the forefront of the policy agenda in most of the advanced and
developing countries of which Ghana should not be left out. The Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
28
argument has always been pointing at the need to introduce a more
comprehensive environmental tax system. Ghana is currently facing
several environmental challenges and in the area of environmental
sanitation, solid waste management presents a challenge to many
District Administrations across the country.
101. Mr. Speaker, the annual rate of generation of solid waste is high and
over the past decade this has increased from about 7,000 metric
tons/day in 1996 to about 13,800 metric tons/day in 2011 (Ministry of
Local Government and Rural Development, 2012). The waste problem
is most deplorable in urban communities, which struggle with everincreasing populations due to rural-urban migration.
102. Mr. Speaker, one of the major constraints militating against waste
collection and disposal is lack of funding. Currently, the main sources
of funding for environmental sanitation services are from the national
budgetary allocation and donor support while the Municipal and
District Assemblies are expected to use significant portions of their
locally generated revenue to handle their waste collection and
disposal. These sources of funding have been inadequate and in the
case of donor support, unsustainable. Other competing demands in
the national budget tend to make funding for environmental sanitation
a low priority.
103. Mr. Speaker, in view of this an Environmental Fiscal Reform working
group has been formed to look at the various fiscal instruments
around the world that can be used to raise revenue for addressing
environmental problems in Ghana. The group will also look at how the
funds raised can be appropriately applied to addressing the
environmental concerns in waste management, transport and mining
sectors to mention a few. The group will present some proposals in
the 2014 budget.
Environmental tax on Plastic
104. Mr. Speaker, Environmental taxes have been introduced on plastics at
a rate of 15 percent with exemptions for pharmaceuticals and
agricultural sectors. Also, plastic for water sachets were exempted. Mr.
Speaker, it is time as a nation for us to find a solution to the
environmental hazards of water sachets. In this respect, the Ministry
of Finance (MoF) and the GRA will later in the year submit proposals
for the review of the tax regime.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
29
Penalty on over-aged vehicles
105. Mr. Speaker, previously cars beyond a certain age were completely
banned in the country. However, it was later decided to impose
penalties instead of the outright ban on old aged cars. Considering the
environmental implications of over age cars and the risk associated
with its usage on our roads, the MoF and the GRA will conduct a
comprehensive review of the tax regime on overaged cars and submit
proposals to Parliament in the course of the year.
Tax Amnesty
106. Mr. Speaker, in the 2012 Budget we offered a tax amnesty to all
companies and individuals who have defaulted in the payment of their
taxes. This amnesty is still in effect. It appears from returns so far
received that the response from the real estate sector is not
encouraging. I wish to call on real estate owners who receive rental
charges to take advantage of the ongoing exercise on tax amnesty
and get registered.
107. Mr. Speaker, businesses in the oil and gas sector who supply final
products and do not report their incomes for taxation are also being
advised to take advantage of the tax amnesty and register for tax
purposes. The GRA will embark on a rigorous exercise after the grace
period ends to bring all defaulters to book.
Airport Tax
108. Mr. Speaker, the Kotoka International Airport is not only serving as a
hub for the West Africa region but, in addition, the number of
passengers and airlines are increasing putting the facilities in use at
the airport under pressure. It is the intention of the government to
upgrade the facilities to higher standards.
109. Mr. Speaker, currently, revenue raised from the Airport tax is shared
between the GRA and the Ghana Airport Company. I am proposing
that the Ghana Airport Company be allowed to retain all Airport tax
collections so that the entire revenue raised can be used to develop
both the international and local airports. The Ministry of Finance and
the Ministry of Transport will in due course present a sustainable plan
for infrastructure development and expansion of all airports in Ghana.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
30
Communication Service Tax (CST)
110. Mr. Speaker, when the CST was introduced in 2008, it was fixed at an
ad valorem rate of 6 percent on a minute call charge. In addition, an
interconnectivity charge was added to raise revenue for services
rendered by mobile operators to each other when they are dealing
with calls from customers. The 6 percent was arrived at in order to
remove the cascading nature of the interconnectivity charge.
However, Communication Service Companies have raised an issue of
double taxation in the interconnectivity charge.
111. Mr. Speaker, in consultation with the industry a bill will be presented
to Parliament later this year to take care of these issues which will not
lead to any revenue loss to the State. However, the communication
companies are being urged to pay all accrued arrears.
Customs Assurance/Destination Inspection
112. Mr. Speaker, for more than fifty years, all imports into the country
have been under pre-shipment destination inspection. This system has
not resolved the issue of corruption at the ports. This system cannot
be allowed to continue forever. Therefore, after the existing contracts
expire, the Customs Division of the GRA will assume the full
responsibility for valuation, quality and quantity of imports, in line with
the new thinking of the World Trade Organization (WTO). The GRA
will develop a module that will enhance the existing risk management
module and assist in carrying out this assignment. Currently, the GRA
has eight commodities under their valuation assurance program.
During the course of the year, the coverage will be increased to cover
all the high value commodities.
Tax Technical Assistance
113. Mr. Speaker, Ghana was subjected to a Phase one Peer Review by the
Global Forum of the Organisation of Economic Cooperation and
Development (OECD) in October 2010 and the associated report
published in May 2011. Ghana subsequently joined the Global Forum
in May 2011. The report made seven recommendations which must be
implemented before Ghana undergoes the Phase II Review in the
second half of 2013. To implement the Phase 1 recommendations,
some amendments to the legal and regulatory framework are
required. The amendments relate to the Anti-Money Laundering Act Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
31
2008, (Act 794), the Companies Code 1963, (Act 179) and the Internal
Revenue Act, 2000 (Act 592). Government will in the next few weeks
introduce the relevant Bills to effect these amendments.
114. Mr. Speaker the phase one review also recommended that Ghana
increases its Tax Information Exchange Agreements (TIEA). These
TIEAs allow jurisdictions to exchange information among themselves
for tax and other purposes. This tool is used by tax authorities around
the world to mitigate tax risk and tax evasion across borders. In 2013,
Ghana will initiate steps to enter into more TIEAs with our relevant
trade and investment partners.
115. Mr. Speaker our relationship with some Development Partners led to
the promulgation of a Transfer Pricing Regulation in 2012. Even
though Act 592 made provision for transfer pricing abuses, it could not
be implemented because of lack of a transfer pricing regulations.
Staffs of GRA and other stakeholders like the Judiciary, the Police and
the business community have been trained with the support of the
Development Partners. In 2013, a special unit will be set up to
conduct special audit to detect transfer pricing abuses. It is believed
that these special audits will lead to a reduction in transfer pricing
abuses and, ultimately, result in bigger profits declaration for tax
purposes.
Increase in Value Added Tax threshold
116. Mr. Speaker, Government will continue to improve efficiency in tax
administration. The VAT registration threshold which is currently GH?
90,000 will be increased to GH?120,000 in fiscal year 2013. This
proposal which was announced in the 2012 Budget Statement was not
implemented for technical reasons. Businesses with turnover of less
than GH? 120,000 over a twelve month period will pay a presumptive
tax of 6 percent of turnover. Other businesses that do not deal in
goods on which VAT can be applied will pay a flat rate of 3 percent.
These taxpayers will fall within the category of small taxpayers and
the GRA will put in place the necessary measures to operationalize the
small tax payer offices that are being set up as part of the tax
administration segmentation programme. This will be in line with an
enhancement of the presumptive tax system. The increase in VAT
threshold does not constitute an increase in VAT rate.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
32
Tax Exemptions
117. Mr. Speaker, it is estimated that tax expenditure is about 3.28 percent
of GDP. Compared to the actual tax revenue/GDP ratio of 17.1
percent, it can be concluded that this is on the high side. In the past,
attempts to reduce exemptions have been marginally successful. We
intend to introduce new control measures to be incorporated in the
new Bills to be tabled before this House later this year to reduce the
overall impact of tax exemptions. A recent OECD study showed that
direct tax accounted for most of the exemptions, followed by VAT and
customs exemptions. Prior to this study most of the control measures
that were put in place affected mainly customs exemptions. Once we
are aware of the entire impact we will go ahead and review the overall
tax exemptions regime will be reviewed in order to drastically reduce
the granting of tax exemptions.
118. Mr. Speaker, against this backdrop MOF and GRA will undertake a
comprehensive review of the following:
? tax Incentive for agro-processing business;
? tax incentive for location of businesses;
? withholding tax rate on management and technical fees; and
? VAT on imported services.
119. Mr. Speaker, in order to reduce the abuses of tax incentives, a special
monitoring team will be formed in the Ministry of Finance and the GRA
to monitor the administration and use of tax incentives granted to
NGO’s, charitable organizations and all other institutions under the
various incentive regimes. The team will also conduct periodic costbenefit analysis of the various tax incentives currently in place.
120. Mr. Speaker, over the past years, government has given tax incentives
to some professionals in the public institution under a special vehicle
waiver scheme. In order to create a level playing field for all
professionals in the country and also to prevent a situation of
extending the incentive to all professionals (which will eventually
erode the tax base), the GRA and the TPU will conduct a Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
33
comprehensive review of the special vehicle waiver scheme and later
present some proposals to Parliament in the course of the year.
Corporate Tax
121. Mr. Speaker, over the years corporate tax rates have been reduced to
a level of 25 percent for most of the corporate entities in the country
except the natural resources sector which has a rate of 35 percent.
For tax certainty, we do not intend to vary these rates. However,
recent observations are giving cause for alarm. Transfer pricing
abuses, inflated cost, and unallowable expenses are reducing the
amount of profits for taxation. The GRA will conduct in depth audit to
stem these abuses.
Tax Refunds
122. Mr. Speaker, delayed payment has been a common feature of our VAT
refund and duty drawback system. The Ministry of Finance and
Economic Planning will ensure that there are enough resources
available for refunds and duty drawbacks. Initially, two percent of
GRA’s collection will be dedicated to this Fund. At the end of each
financial year, any excess amount standing in the refund account will
be transferred into the Consolidated Fund. Ultimately, the GRA in its
administrative improvement, will adopt an accounting system that will
allow taxpayers to offset such refunds against other tax liabilities.
Capital Allowances
123. Mr. Speaker, the maximum cost base of road vehicle other than
commercial vehicle is currently pegged at GH?25,000 for capital
allowance purposes. The amount was last reviewed in 2004 from
GH?15,000 per Act 669. It is proposed that a new amount not
exceeding GH?70,000 will apply in 2013 due to the rising cost of
vehicles. This will be restricted to brand new vehicles with capacity not
exceeding 1.8 cc acquired by a business.
Windfall Profit Tax
124. Mr. Speaker, in 2012 the windfall profit tax Bill was tabled in
Parliament. The Bill sought to impose a Windfall Profit tax of 10
percent on mining companies. Unfortunately, the Bill could not be
considered by Parliament. A committee is reviewing all stability Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
34
agreements and incentives in the mining sector, and civil society
interest groups have also submitted recommendations on how to
adequately tax the mining industry. In the coming weeks, Government
will seek to re-introduce the Bill in Parliament after due consultation
with all stakeholders.
Withholding Tax on Rents
125. Mr. Speaker, in 2002 a final withholding tax was imposed on the rents
received as investment income at a rate of 10 percent. This was
further reduced to 8 percent in 2006. Though we still have a deficit in
residential accommodation, more landlords are converting residential
accommodation into commercial ones. The GRA will improve the
administration of rent tax, including withholding elements, in
conjunction with the street/premises numbering programme as well as
property taxation by the MMDAs, particularly, with the Ministry of
Local Government and Rural Development.
Policy Initiatives
126. Mr. Speaker, in 2013 the following policy initiatives will be undertaken:
Development of a Fiscal Risk Management Plan
127. Mr. Speaker, developments over the years has exposed the need to
carefully identify and manage all sources of fiscal risk to the budget.
Governments have, over the years, endeavoured to ensure
macroeconomic stability through the implementation of prudent fiscal
and monetary policy measures. However, there remains a huge
challenge in bringing unplanned and unanticipated expenditures under
control.
128. These expenditures include contingent liabilities from State
Enterprises, subnational governments and unexpected legal claims. In
the absence of an institutional framework, and effective management
system, government’s ability for effective fiscal management is
reduced thereby, undermining the credibility of the budget.
129. Mr. Speaker, in recognition of this, the Ministry of Finance in the
coming year, will develop and implement a Fiscal Risk Management
Strategy (FRiMs). The strategy will identify all sources of fiscal risk, Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
35
categorize them, undertake a comprehensive analysis of the risk and
put in place a plan to manage them, ensuring that they are minimized
as much as possible.
130. An institutional framework and monitoring systems and other risk
mitigation measures will be developed to manage all contingent
liabilities.
131. It is expected that over the medium term, this initiative will lead to an
improved and sustained government fiscal outcomes.
Water for Schools
132. Mr. Speaker, most schools in Ghana do not have access to clean water
and sanitation facilities. For a lot of the boarding schools, access to
water remain a major challenge and affect learning and other critical
activities of the schools.
133. As part of efforts to address the deficit in water provision, Government
has decided, as a priority over the medium term, to ensure that all
primary, junior and senior high schools in the country have access to
clean and potable water.
134. The Ministry of Works and Housing will collaborate with the Ministry of
Education to undertake a needs assessment of water and sanitation
facilities in all existing schools and draw up a programme to meet the
existing gaps. With regards to new schools, conscious effort will be
made to provide adequate water and sanitation facilities as part of the
essential requirements for the schools.
Infrastructure Development through Public Private Partnership
(PPP)
135. The country faces an infrastructure funding gap of US1.5 billion a
year. In the coming year, government will increase its effort to involve
the private Sector in public infrastructure development. In connection
with that a PPP Law is being developed to provide the framework for
the increased involvement of the private to meet the current
infrastructure deficit.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
36
136. It is the expectation of Government that Ghanaian development
professionals and institutions will appropriately position themselves to
participate actively in the opportunity open to the Private Sector and
thereby pride themselves as having provided adequate local content in
this new business initiative.
Millennium Challenge Account
137. Mr. Speaker, with the successful completion of the Compact I, Ghana
was selected as one of the four countries to submit proposals for
Compact II. Taking cognisance of the critical energy requirement of
the country, the Compact II has been entirely earmarked for the
energy sector. It is expected that the implementation in the Compact
will make Ghana self-sufficient in Energy generation
DACF Management Reforms
138. Mr. Speaker, aligning, MMDA’s budget with the national budget will
provide a medium term outlook in all sources of funding to the
MMDAs. In connection with that, measures will be put in place to
ensure that DACF, DDF and UDG ceilings are determined at the
budget preparation stage. It is expected that the timely provision of
such information will improve the efficiency and effectiveness of
budget management at the local level.
“Girls in ICT” Programme nascent
139. To increase the interest of girls in ICT knowledge, the Ministry of
Communication will collaborate with the Ministry of Gender Children
and Social Protection to initiate the celebration of girls in ICT
Programme as part of the activities marking the annual
commemoration of the World Communication and Information Society
Day.
Securities Depository
140. Mr. Speaker, the country has two depositories for the management of
stocks and other securities. These depositories are databases that
store electronic information of individuals and group investments
made for treasury bills, bonds, shares etc.
141. Mr. Speaker, in 2013 the two Depositories will be merged to create
one National depository for all securities. This will provide easy access Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
37
to information on securities, enhance efficiency in the securities
market and lower transaction cost.
142. Mr. Speaker, government will also implement the following measures
to improve efficiency in the delivery of services in 2013. They include:
? A temporary freeze on the creation of new GYEEDA modules
and the recruitment of additional new beneficiaries in pursuance
of government policy of reviewing and re-aligning GYEEDA
activities;
? A review of the allowances of Chiefs to include judicial
allowances in response to their adjudication role;
? The provision of GH?10,000,000.00 to furnish the Parliamentary
Tower Block and GH?10,000,000.00 for the construction of MPs
Constituency Offices;
? The registration of all government Vehicles with GV Number
Plates.
? The introduction of a hire purchase plan for the acquisition of
Vehicles by government officials;
? Taking of inventory of all government Vehicles in all MDAs and
MMDAs will be undertaken;
? The standardisation of allocation of fuel coupon for official use
across Ministries;
? The piloting of electronic toll collection on the Tema Motor-way
and other road networks;
? The Media Development Facility will be resourced with additional
GH?2,000,000.00;
? The promotion of the use of Solar Energy and portable Gas
stoves;
? The restructuring of the National Board for Small Scale
Industries (NBSSI) into an umbrella supervisory body for SMEs;
andTheme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
38
? The consolidation of the role of National Identification Authority
(NIA) to be responsible for the compilation and management of
all primary Biometric data for official use.
SECTORAL PERFORMANCE AND OUTLOOK
ECONOMIC SECTOR
Performance for 2012
Agriculture
143. Mr. Speaker, the use of technology to improve agricultural production
has been the main objective of Government policy in agriculture. The
key interventions are: the adoption of livestock production
technologies, agricultural mechanization, irrigation development,
fertilizer subsidy, seed improvement, quality standardization, and the
implementation of modern buffer stock management techniques.
144. In this regard, Mechanization Service Centres were established in 62
districts. The Agricultural Machinery Subsidy Programme also provided
150 units of 50HP Cabrio compact tractors imported in semi knockdown forms. The first lot of 50 units of these tractors were distributed
to smallholder farmers across the country.
145. Mr. Speaker, under the Fertilizer and Seed Subsidy Programme
300,000 farmers benefitted from 170,000mt of fertilizer and 20,000kg
of improved seeds of maize, rice and soybean.
Fisheries and Aqua Culture
146. Construction works have begun in earnest on the Anomabo Fisheries
College to improve then knowledge and skills of the players in the
sector. A curriculum for the college has also been developed.
Lands and Natural Resources
147. The core objectives in natural resource management is to ensure
efficient and sustainable management and utilization of the nation’s
lands, forests, wildlife and mineral resources for the socio-economic
growth and development of the country. To accomplish these
objectives the following programmes were undertaken: Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
39
? 9,426 hectares of land were demarcated for afforestation, out of
which 3,698 hectares were planted with trees. This created not
only over10,000 full time jobs but also restored restored
degraded forest landscape and addressed the deficit in wood
supply for both industrial and domestic purposes.
? the establishment of the Regional Task Forces to collaborate
with National Security to address issue of illegal mining and
resultant land degradation. So far, five regional task forces are
operational in the Eastern, Greater Accra, Ashanti, Western and
Central Regions;
? the completion of a blueprint to establish District Lands
Commission Offices to decentralize land administration services;
and
? the completion of a policy document on granting large tracts of
agricultural land to improve the management of land acquisition
in the country.
Trade and Industry
148. Mr. Speaker, the Governance structure for Private Sector Development
Strategy (PSDS) II and the trustees to manage the accompanying
fund has been set up.
149. Mr. Speaker, it is gratifying to note that the Ayensu Starch factory at
Bawjiase in the Central Region which started test production in 2011 is
currently running effectively and has produced 35,000 tonnes of
cassava starch.
150. Mr. Speaker, to promote the sustainable development of the Central
Region through partnership with the private sector and development
partners, CEDECOM completed the construction of 37 boreholes and 9
CHPS compounds. The Children’s Library and Park at Kasoa and the
Sports Stadium at Agona Swedru and the rest stop at Eyisam are at
various stages of completion. Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
40
Tourism, Culture and Creative Arts
151. Mr. Speaker, Government engaged the Tourvest Investment Group of
South Africa and secured their interest to invest in the ecologies of
Mole and Kakum National Parks, and Shai Hills. The Ghana Tourism
Authority established the Tourism Development Fund to develop and
promote the sector. In this regard, the Tourism Levy Regulations LI
2185 was passed to operationalize the Tourism Act 817.
Energy and Petroleum
152. The on-going construction work on the 400 Mega Watts Bui Power
Project is progressing satisfactorily. Transmission lines for power
evacuation for Bui – Sawla, Bui – Kintampo and Bui – Techiman are 98
percent complete. Nine substations were upgraded to increase
transformer capacity in the New Tema, Akwatia, Achimota, Asanwinso,
Takoradi, Techiman, Kumasi, Winneba and Akosombo substations.
Work on Tumu-Han-Wa Transmission Line also commenced.
153. Mr. Speaker, the construction of a 161/34.5kV substation at Buipe to
serve a new cement factory, Buipe township and its environs has been
completed and in commercial operation.
154. Mr. Speaker, to facilitate the sector objective of increasing the
proportion of renewable energy in the national energy mix from the
current 0.01 per cent to 10 per cent by 2020, installation work for 752
off-grid solar systems for remote public institutions (GEDAP Phase II)
commenced with 50 per cent of the installations done. In addition,
255 off-grid solar PV systems have been installed for remote public
institutions on lakeside and island communities.
155. Exploratory activities by GNPC and Partners intensified resulting in six
new discoveries in 2012 which are at various stages of appraisal and
development. These are Hickory North, Almond, Beech, Pecan,
Sankofa East and Wawa. This brings to a total of 22, the number of
hydrocarbon discoveries made since June 2007.
156. Mr. Speaker, work has commenced on the laying of onshore 111Km
20-inch pipes from the site of the processing plant at Atuabo to the
Aboadze Thermal Station. The core processing units of the Gas Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
41
Processing Plant are currently being fabricated in Canada and the
entire modular plant is expected to be delivered to Ghana in the first
quarter of 2013.
157. Draft Regulations to provide legal backing to the Local Content Policy
was developed and laid before Parliament. A Memorandum of
Understanding for the establishment of an Enterprise Development
Centre in Takoradi was signed between the Ministry of Energy, Tullow
Ghana Limited and Ministry of Trade and Industry to train SMEs in the
Oil and Gas Industry to take advantage of opportunities in the oil and
gas sector.
Tema Oil Refinery (TOR) Debt
158. Government over the years has been saddled with the debt of TOR. At
the end of December, 2008 the total debt in the books of TOR was
GHC1,678 million increasing to GHC1789 million at the end of 2009.
As part of Government’s effort to find a solution to the TOR debt,
Governments in 2010 made a payment of GHC445 million to Ghana
Commercial Bank (GCB) to help reduce the debt of TOR.
159. Government again in March 2011, restructured the TOR debt by
securitising the TOR debt through the issue of medium term
government bonds. To date Government has made payment on behalf
of TOR to the tune of GHC1,137 million.
160. In our quest to find a lasting solution to the perennial financial
challenges of TOR a technical, operational and financial diagnostic
review was commissioned. The audit has been completed and the
recommendations including maintaining the timely implementation of
price adjustment arrangements are being implemented to ensure that
TOR operates efficiently on a financially sound basis well into the
future and thus bring to a close the TOR debt phenomenon. In the
process the re-capitalisation of TOR will be an important requirement
and various options are being considered for this purpose.
Environment, Science, Technology and Innovation
161. Mr. Speaker, Government procured and distributed 108,000 laptops
under the Better Ghana ICT Project with the aim of promoting skills Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
42
and knowledge in Information Communication Technology among
pupils and students countrywide.
162. In addition, the Government developed the National Climate Change
Policy and Strategy, built capacity for Clean Development Mechanism
Programme and conducted country assessment on achievements for
sustainable development.
INFRASTRUCTURE SECTOR
Water Resources, Works and Housing
163. Mr. Speaker, under the phase II of the Atorkor-Dzita-Anyanui
Emergency Sea Defence Works, the Groyne System being constructed
to protect the 1.5km stretch of the coast is about 95 per cent
complete. Similar works were done on the 1.5km stretch of revetment
to protect the Accra-Tema rail line from the effects of sea erosion
under the Sakumono Sea Defence works.
164. Mr. Speaker under the Kpong Water Supply Expansion project,
substantial works have been completed on the booster station and
reservoir at Dodowa. Thirty-seven kilometres out of 73km
transmission pipelines were laid while work on the Water Treatment
Plant is 45 per cent completed. Overall progress of project is 37 per
cent complete.
165. Construction works to expand the Kumasi water supply from the
current production capacity of 24mgd to 30mgd is 90 percent
complete, while the Mampong water supply project to add 1.76 million
gallons a day of water to the supply is on-going.
166. Mr. Speaker, all communities under the Sustainable Rural Water and
Sanitation Project (SRWSP) were engaged in Community Led Total
Sanitation (CLTS) activities during the year. In addition, an
assessment for rehabilitation of 13 Small Town Water Supply Systems
in the Northern Region was completed. These towns are: Bole,
Bimbilla, Chereponi, Daboya, Gambaga, Walewale, Salaga, Gushiegu,
Nalerigu, Saboba, Tinga, Wulensi and Zabzugu.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
43
Roads and Highways
167. Mr. Speaker, under the Trunk Road Development Projects, the
following major roads were completed during the period: AchimotaOfankor, Nsawam Bypass, Nkawkaw Bypass 1, Akatsi-Akanu, AkatsiAgbozume and Techiman–Apaaso. In addition, contracts were also
awarded for the following major trunk road projects and works are in
progress: Asikuma Junction–Hohoe, Dodo-Pepesu Nkwanta, Nkwanta–
Oti Damanko, Fufulso-Sawla, Ayamfuri-Asawinso and Agona Junction
to Elubo.
168. Under the Feeder Road Development Project, a total of 104 bridges
were launched. Out of these, 82 have been completed and opened to
traffic while the rest are at various stages of completion. Some of the
completed bridges are on the following roads; Tetegu Jn.–Tetegu,
Dodo Amafrom – Dodofe, Osuboi – Ponponse, Nsutapong –
Chakachakam, Eshiro Jn.–Eshiro – Kwesigyan, Potsin Jn.–Awobrem,
Abochie –Nyankaman, Torya Jn.–Torya, Drabonso – Dawia, Ahenkro–
Boaman–Amoako, Wenchiki–Bumbrugu, Zabzugu–Kuntumbiyilli,
Bolgatanga–Naga, Bui–Zanlerigu, Karni–Kulkarni, Kundugu–
Bawasabele.
169. Mr. Speaker, in collaboration with the Ministry of Local Government
and Rural Development, Government continued with the Urban
Transport Project with the objective of reducing congestion on our
roads. The following road works were completed during the period
under review: Expansion of the Odaw Bridge and construction of
flyover bridge, Extension of the La-Teshie road, Gulf House to GIMPA
by-pass, Dansoman main road, all in Accra. Reconstruction of the
Oforikrom-Asokwa bypass (including an Interchange at Timber
Gardens) and the Lake road in Kumasi, and over 200 No. of Traffic
signals in the major urban centres were rehabilitated to reduce
intersection bottlenecks.
170. Contracts were awarded for the following major urban road projects;
Giffard Road (from 37 to T-Junction), Burma Camp Road (from Giffard
road to Spintex road), Area-Wide traffic Control System for Accra and
works are currently on-going.
171. Government improved revenue generation into the Road Fund for the
maintenance of the road network. Toll collection commenced at New Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
44
Offinso (Kumasi-Techiman), Kubease (Nkawkaw-Kumasi) and Sawla
(Bole-Wa). The total revenue generated in 2012 was about
GH¢235million which is GH¢26million more than the total revenue that
accrued in 2011.
Transport
172. Re-construction of Net-Mending Wharf for the canoe basin (Tema
Fishing Harbour) is about 70 per cent complete. This will support local
artisanal fishing industry at the Tema Community.
173. The construction of 4 ferries for cross ferry services on the Volta Lake
and 2 new cross ferry vessels and landing site were completed and
are currently in operation at Adawso-Ekye Amafrom and Kete Krachi.
Communications
174. In the area of Telecommunications, the total telephone subscription
for both cellular/mobile and fixed line as at December, 2012 stood at
25,903,408, yielding a tele-density of 105 percent. This is a marked
improvement from the December 2008 figure of 11,713,699
representing 52.4 percent tele-density.
SOCIAL SECTOR
Education
175. Mr. Speaker, Government continued with its objective of improving
access and quality of education. To this end a number of interventions
were implemented. These include:
? payment of Capitation Grant of GH¢32.1million to 5,467,808
pupils in all public basic schools;
? payment of subsidy of GH¢7,518,157 for the 2012 Basic
Education Certificate Examination (BECE);
? provision of free school uniforms for 1.6 million pupils in
deprived communities;
? distribution of 28.4 million free exercise books to Basic Schools;Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
45
? distribution of 53,555 laptop computers under the Basic Schools
Computerization Project to over 2,000 schools;
? payment of subsidies for 697,917 and 51,487 students in Senior
High Schools and Technical Vocational Institutes respectively;
and
? completion of ten two-storey emergency dormitory blocks and
206 six-unit classroom blocks.
176. Mr. Speaker, in line with Government policy to reduce to the barest
minimum the incidence of schools being operated under trees and
temporary structures, a total of 1,683 schools are being constructed.
Forty-two percent of the schools have been completed and handed
over to the beneficiary schools while 20 percent are at advanced
stages of completion. The remaining 38 percent are at various stages
of completion.
Health
177. Mr. Speaker, 209 new functional Community-Based Health Planning
Services (CHPS) zones were created in consonance with the Better
Ghana Agenda objective of enhancing access to Primary Health Care.
178. To support improvement in pre-emergency health services, 161 new
ambulances were procured. In addition 28 new ambulance stations
were opened bringing the total number of stations to 52.
179. Mr. Speaker, the Ministry completed the following projects: 5
polyclinics (phase ??) in the Upper West Region ( Wechau, Babile,
Lambussie, Ko and Hain), office complex for the Food and Drugs
Authority, rehabilitation and upgrading of Tamale Teaching Hospital
(phase ?), Eye Centre at Komfo Anokye Teaching Hospital, water
improvement projects in selected health facilities in Brong Ahafo
Region and the installation of new MRI and CT scan equipment in
Korle-Bu, Komfo Anokye and Tamale Teaching Hospitals. In addition,
the Children’s Ward, Theatre for Kidney Transplant and Neurosurgery
were also rehabilitated at the Korle-Bu Teaching Hospital. Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
46
Public Safety
180. Mr. Speaker, internal security is critical for accelerated socio-economic
development and the attainment of sustainable development which is
contingent on the maintenance of peace, safety, security and stability.
In this regard, Government implemented measures to further reduce
crime rate especially robberies, drug trafficking/abuse, chieftaincy,
inter-ethnic and land conflicts as well as murders.
181. Mr. Speaker, Government procured a total of 1,094 vehicles of various
types, 2,200 Bullet-proof vests, and 4,400 Ballistic plates, 100 Helmets
with communication gadgets, 1,000 walkie-talkies and four speed
boats for the security services. The Police Service also introduced
Automated Fingerprint Identification System (AFIS) to enhance
investigation of cases by the Criminal Investigation Department. The
Forensic Laboratory of the Police Service has been added to the AFIS
facility to enable the Police carry out D.N.A. profiling locally.
Poverty and Social Protection Programmes
182. Mr. Speaker, consistent with the objectives of the Ghana Shared
Growth and Development Agenda (GSGDA) and the Better Ghana
Agenda, Government continued to expand access to basic services
and facilitate the provision of employment opportunities for the youth
and the vulnerable in society. Poverty-focused activities received
about one third of total Government expenditures in 2012. Key
achievements under the various programmes are as follows:
? the Livelihood Empowerment Against Poverty (LEAP), the
flagship social protection programme, received attention during
the year and provided cash grants to over 60,000 households;
? the Ghana School Feeding Programme (GSFP) is currently
covering 1,582,402 pupils in 4,545 beneficiary schools;
? the Local Enterprises and Skills Development Project (LESDEP),
provided 44,735 beneficiaries with skills training in vocational,
entrepreneurship and business development services and set-up
equipment to start their own businesses in various trades;
? under MASLOC:Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
47
i. lending Operations covered 168 Districts out of the 170
districts. Recovery rate for new loans disbursed stood at
70.06 per cent; and
ii. a total of 1,000 outboard motors were distributed to
fishermen in all the fishing communities in Ghana for the
fishing industry. It is estimated that, at least 13,000 new
direct jobs and additional 20,000 indirect jobs were created;
iii. 6,450 bundles of fishing nets were distributed to help
minimize the use of unapproved fishing nets.
iv. 390 Hyundai Verna cars and 200 Hyundai Accent cars on
hire purchase were distributed to individuals and taxi drivers
across the ten regions of Ghana.
OUTLOOK FOR 2013
Food and Agriculture
Agriculture Estate Programme
183. Under the Accra Plains programme, Government will begin work on
11,000 hectares agriculture estate, facilitate sustainable agricultural
production and provide employment. Graduate from Agriculture
tertiary institutions will be encouraged to participate in the
programme.
184. Government through the Ministry of food and Agriculture will
coordinate the procurement and distribution of 180,000mt subsidized
fertilizer to farmers. In addition, web-based software for the smooth
implementation and management of fertilizer and seed subsidy
programme will be introduced. Furthermore, 4,127mt of seed cotton
and 9,472mt of lint will be produced.
185. Construction works will commence on the Accra Plains Irrigation
Project covering an area of 11,000ha, the Mprumen dam and the 3
dams in Koori, Zuedem and Tankasa in the Builsa District of the Upper
East Region. The Vea Scheme, Dawa dam and the 10 dams in the
Volta and Greater Accra Regions will also be rehabilitated.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
48
186. Mr. Speaker, the number of Agricultural Mechanization Service Centres
(AMSECs) will be increased to cover at least 170 districts in order to
provide mechanization services to farmers who cannot afford their
own machines. One thousand tractors, 100 maize planters, 50 seed
drills, 50 boom sprayers, 10 maize/soya harvesters, 50 rice threshers,
100 shellers and 50 dryers will be procured to support the Agricultural
Mechanization Service Centres (AMSECs), individual farmers and
processors among others. It is intended to provide on season and off
season employment for holders of agriculture machinery.
187. Government will also finance the construction and mechanization of
500 boreholes on farmer fields for irrigation, animal watering and
agro-processing.
188. COCOBOD will continue the treatment and control of the Cocoa
Swollen Shoot Virus Disease (CSSVD) which has continued to threaten
the sustainability of the industry through cutting and removal of
affected trees. An amount of GH¢9.7 million has been allocated for
this programme. Government will continue to support farmers to
replant and rehabilitate cocoa farms in key growing areas which
started in 2009/10, a project aimed at reversing the trend of low
productivity.
Fisheries and AquaCulture
189. Mr. Speaker, Government will also pursue an accelerated aquaculture
development strategy to fill in the gap in fish supply. Improved
aquaculture development packages such as, feed and credit will be
rolled out to interested farmers. In addition, the Ministry will train
farmers to increase fish pond productivity from 1.5 metric tons/ha to
2.5 metric tons/ha and also increase output from the current
20,000mt to 40,000mt within the year.
190. To equip the actors in the fishing industry with skills in sustainable
fishing practices, the construction of the administration block, hostels,
laboratories and lecture halls for the Fisheries College at Anomabo will
be continued.
Trade and Industry
191. Government will continue its pursuit of the implementation of the
Private Sector Development Strategy phase II (PSDS II) to widen Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
49
economic opportunities for the transformation of the Ghanaian
economy and to develop a thriving private sector that creates jobs and
enhances livelihoods for all.
Tourism, Culture and Creative Arts
192. The Government recognizes the potentials of the Creative Industries
to shape and reinforce Ghana’s economic growth. The creative
economy is the complex interaction between culture, economics and
technology. The emerging creative economy has become a leading
component of economic growth, employment, trade and innovation,
and social cohesion in many countries.
193. Government will facilitate the development of cultural villages and
enclaves as a critical appendages to tourism which is fast gaining
economic relevance as a source of revenue generation and
employment creation. The creative arts industry will be supported with
GH¢3 million in 2013.
Energy and Petroleum
194. Mr. Speaker, the 132MW Takoradi T3 Power Project which was
projected to be formally commissioned by the end of the first quarter
of 2013 has been duly commissioned by His Excellency, the President.
The Bui Hydroelectric Power Project would come online with the full
capacity of 400MW by end 2013.
195. The completion of the Gas Infrastructure Project for the
onshore/offshore pipeline in respect of the regulatory and metering
station and the gas plant is scheduled for completion in the third
quarter of 2013. Testing and commissioning are to be done in the
third quarter and commercial operation in the fourth quarter of 2013.
196. As part of measures to promote local content and participation in the
petroleum industry, an Enterprise Development Centre (EDC) in
Takoradi with support from the Jubilee Partners will be fully
operational in the course of the year. This will facilitate the training of
SMEs to be properly positioned to take advantage of the oil and gas
industry.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
50
Environment, Science, Technology and Innovation
197. Government will procure and distribute 100,000 laptops to individuals
and educational institutions to promote the teaching, learning and use
of ICT. Government will also provide training for the youth in
assembling and repairing of ICT equipment, promote skills and
knowledge in Information Communication Technology and create jobs.
Water Resources, Works and Housing
198. Mr. Speaker, Government will construct 1,200 new bore holes,
rehabilitate 400 old bore holes, and develop 40 Limited mechanised
water facilities and 29 Small Town Systems in the Upper West, Upper
East, Northern, Brong-Ahafo, Central and Western Regions of Ghana.
199. Mr Speaker, Government will continue with the construction of 1.5 km
of the defence wall along Atorkor-Dzita-Anyanui shore line, Sakumono
and Ada Sea Defence works. In addition, the Ngyiresia Sea Defence
works to salvage the adjoining road from being totally washed away
by the sea waves will commence.
200. During the year the expansion of the Nsawam water system, the
Mampong water supply system and the Kumawu, Kwahu Ridge,
Konongo water systems will be continued.
Roads and Highways
201. Mr. Speaker, the government’s overall objective under the road sector
is to achieve a preferable road condition mix in line with the GSGDA.
To achieve this objective, the underlisted projects are to be
undertaken: Nsawam-Suhum-Apedwa road, Tetteh-Quarshie-Madina
road, Madina–Pantang road, Berekum–Sampa road, Kpando–
Worawora–Dambai road (PhIII), Wenchi–Sampa road (PhII), Bomfa
Junction–Asiwa–Bekwai road, Sefwi Bekwai–Eshiem–Asankragwa road
(km 10-56), Asankragwa–Enchi road, Navrongo–Tumu road.
202. The rest are Sofoline Interchange in Kumasi, Spintex road–Polo
ground bypass, Boundary road (American house-Madina), Emergency
road rehabilitation of Spintex and East Legon roads.
203. Mr. Speaker,other major on-going projects that will achieve significant
progress in 2013 include: Buipe–Tamale road project, Eastern corridor Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
51
roads (Asikuma Junction–Have, Nkwanta–Oti Damanko), AyamfuriAsawinso road, Agona Junction-Elubo road, Giffard and Burma Camp
roads, Tarkwa–Bogoso road and Awoshie–Pokuase road and
community development project.
Transport
204. The Takoradi Port Development Project will commence to upgrade the
port to meet the demands in the emerging oil and gas industry. The
breakwater extension, dredging and reclamation, construction of bulk
ore handling facility, quay-walls and related basic marine
infrastructure in the Port of Takoradi will be continued.
Communications
205. Mr. Speaker, in line with the Government’s commitment to accelerated
development, access to Information and Communication Technology
(ICT) has been identified as a necessity to advance this agenda. In
this regard, the Government will continue the construction of the 600
km rural-urban fibre optic broadband infrastructure from Ho to Bawku.
Education
206. Mr. Speaker, over the next four years, Government will construct 200
new community non-boarding senior high schools. This year, GH¢173
million will be provided for the construction of 50 community nonboarding schools. An amount of GH¢89 million will be provided for the
removal of schools under trees while GH¢62 million will be provided
for 10 colleges of education.
207. Mr. Speaker, Government will present a draft Bill to Parliament for the
establishment of a new University for Sustainable Environmental
Development and Research in the Eastern Region. GH¢5 million has
been allocated for preparatory works towards the establishment of the
Eastern Region University.
208. Mr. Speaker, Government will continue to provide free uniforms for
pupils in basic schools in deprived districts. Capitation Grant and free
exercise books will be provided to approximately 5.7 million basic
school pupils nationwide as well as subsidy for 410,109 registered
BECE candidates.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
52
209. Mr. Speaker, to ensure that education is accessible to children with
special needs, Government will continue to provide feeding to over
4,557 pupils in special schools. The Ministry would also facilitate the
ongoing construction of Assessment Centres as well as equip special
education units.
210. To attain the target of 95 percent of trained teachers at all levels by
2015, the Ghana Partnership for Education Grant will be used to train
at least 5,000 teachers in the Untrained Teachers Diploma in Basic
Education (UTDBE) qualification. Government together with its donor
partners will support 57 deprived districts and basic schools in support
of planning, monitoring and delivery of basic education services in
deprived districts.
Youth and Sports
211. Mr. Speaker, notwithstanding the inability of the Black Stars to win the
prestigious 2013 African Cup of Nations tournament in South Africa,
Government will continue to support the team to participate in the
Brazil 2014 FIFA World Cup qualifiers.
212. Mr. Speaker, the Youth Enterprise Development Project will take off. It
is estimated that over 300,000 jobs will be created in the
entrepreneurial and self-employment modules.
Gender, Children and Social Protection
213. Mr. Speaker, Government will engage stakeholders on the draft
National Gender Policy (NGP) to validate the document before
submission to cabinet. In addition, the Ministry will continue to
implement the Gender Responsive Skills and Community Development
Project (GRSCDP) to assess the performance of Ghanaian women,
micro entrepreneurs and the youth to increase their access to both
financial and non-financial services.
214. A special programme to deal with the peculiar hygiene needs of the
adolescent girl to improve their retention in schoolsTheme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
53
Health
215. Mr. Speaker, Government will undertake the following to improve the
delivery of quality health services in the country:
? Strengthen governance and improve the efficiency and
effectiveness of the health system.
? Improve access to quality maternal, neonatal, child and
adolescent health and nutrition services.
? Bridging equity gaps in access to health care and ensure
sustainable financing arrangements that protect the poor.
? Intensify prevention and control of communicable and noncommunicable diseases.
? Strengthen institutional care including mental health service
delivery.
216. Mr. Speaker, Government will scale up coverage of HIV Prevention of
Mother–to-Child Transmission (PMTCT) towards elimination target by
2015.
217. Mr. Speaker, for infrastructural development, the priority projects for
this year are as follows:
? The Construction of 5 polyclinics in Brong Ahafo region;
? Construction of 597 capacity bed in University of Ghana
Teaching Hospital at Legon;
? Expansion of Radiotherapy and Nuclear medicine centres at
Korle-bu and Komfo Anokye Teaching Hospitals;
? Expansion of Health Training Institutions;
? Upgrading and rehabilitation of Greater Accra Regional Hospital
(Ridge Hospital) and the Tamale Teaching Hospital (phase ??);Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
54
? Supply and installation of hospital beds and other medical
equipment for various hospitals nationwide;
? Construction of trauma and acute pain centre at Korle-Bu;
? Design construction and furnishing of 7 district hospitals (Abetifi,
Fomena, Dodowa, Garu Timpane, Takoradi Metropolitan,
Kumawu and Sekondi);
? Completion of works on District Hospital at Tarkwa;
? Continue work on Maternity Block for Tema General Hospital;
? Continue works on Maternity & Children’s Block at Komfo
Anokye Teaching Hospital;
? Procurement of 200 Ambulances; and
? Supply of assorted equipment for replacement in various
hospitals nationwide.
GOVERNANCE AND PUBLIC SAFETY
218. Mr. Speaker, Parliament will complete the establishment of a Fiscal
Analysis Office (FAO) to provide in-house capacity on fiscal, financial
and budget analysis and will also support the work of Parliament
across its legislative, representation and oversight functions.
219. Mr. Speaker, the Police Service in collaboration with other security
agencies will continue to maintain peace, internal security and stability
to ensure conducive environment for accelerated socio-economic
development. In this regard, the Special Weapons and Tactic (SWAT)
Unit will undergo special training to enhance their professional outlook
in order to enhance crime prevention and control.
220. Mr. Speaker, the Fire Service will provide adequate fire hydrants to
enhance fire-fighting, ensure that Metropolitan, Municipal and District
Assemblies (MMDAs) improve upon market fire safety to prevent and
contain fire outbreaks in the markets. Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
55
Poverty and Social Protection Programmes
221. Going forward, Government spending on poverty will focus on
reducing inequalities – inequalities between north and south, between
women and men, and between various occupational groupings.
Government will work with the private sector to translate economic
growth into the creation of jobs especially for the youth. It will also
support various skills development programmes. We will work to
ensure that we reduce extreme poverty, hunger and malnutrition.
Government will continue to improve access to safe water, maternal
and child health and also provide social safety nets for the vulnerable
in society. Making progress towards the MDG targets which are almost
at the finishing line will be our priority this year, making sure we
sustain progress so far made and continuing to address the
challenges.
222. Mr. Speaker, beneficiaries who have served their two-year internship
and those whose internships have been renewed for additional one
year will be exited. In this regard, the Community Education Teaching
Assistants (CETA) and Health Extension Workers (HEW) totaling about
50,000 who have served 3 years and above on the Programme will be
exited.
223. The Agency will extend the biometric system which was piloted in the
Eastern Region to all the other regions to improve and sanitize the
payroll system.
224. Mr. Speaker, the issue of job creation has become a global challenge,
especially in the wake of the global financial meltdown. Whilst Ghana
Youth Employment and Entrepreneurial Agency (GYEEDA, previously
known as the National Youth Employment Programme – NYEP) and
other schemes have provided some short-term reliefs, government is
developing more sustainable solutions to the employment problem by
linking more effectively with the private sector and other communityoriented efforts to create and sustain employment. As a way of
consolidating the People First Social Compact that underpins the social
democratic principles of the NDC government, we will continue to
provide the public and private sectors with the needed incentives that
would facilitate business expansion and job creation, enable the youth
to enter and stay in worthy and skill-based employment through
various forms of industry-supported schemes.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
56
225. In this regard, Government will also revamp existing credit schemes
such as MASLOC and Venture Capital, alongside new schemes, such
as the Youth Entrepreneurship Development Fund to provide financial
leverage to aspiring entrepreneurs as part of the job creation agenda.
226. Mr. Speaker, the National School Feeding Policy will be launched and
implemented. The programme will also collaborate with NAFCO to
introduce other food commodities other than rice.
227. Mr. Speaker, the program will be expanded to cover 60,000
beneficiaries. Needs assessment will be conducted to determine new
viable businesses in 4 regions. The development of the monitoring and
evaluation framework will be finalized.
CONCLUSION
228. Mr. Speaker, in summary, the policies outlined in this Budget seek to
sustain confidence in the future of the Ghanaian economy. Towards
this end, we have fashioned and will continue to fashion pragmatic
policies to correct imbalances that threaten our economic aspirations
and lay a firm foundation for consolidating our middle income country
status.
? We are determined to realign expenditures, especially, on nonfunded projects, Personnel Emoluments, which is now out of
proportion to expenditures on Goods and Services as well as
infrastructure developments.
? We are determined to continue with measures and programmes
that give effect to our commitment to the welfare of the
vulnerable members of our society, through judicious allocation
of resources.
? We are determined to avoid the phenomenon of long delays in
completing government projects, and ensure that all major
capital projects have clearly identified sources of finance without
which there will be no approval by the Ministry of Finance.Theme: ?Sustaining Confidence in the Future of the Ghanaian Economy?
57
? We are determined to improve coordination of central
government programmes with the MMDAs that control statutory
funds.
229. Mr. Speaker, thus far, we have managed to push the economy onto a
higher growth trajectory, maintained relative macroeconomic stability
in the midst of the turbulent global financial crises and attracted
sizeable investments into critical sectors of the economy. The
exchange rate of the cedi against Ghana’s trading partners has
stabilized. Inflation has been in single digit for over 2 years.
230. Our delivery of critical economic and physical infrastructure has been
unparalleled and will continue.
231. The administration of H.E. John Mahama will remain faithful to the
NDC’s philosophy of social democracy and continue with well-targeted
social intervention programmes for the benefit of all the people of
Ghana. Indeed, the Better Ghana Agenda continues unabated.
232. Mr. Speaker, every country in the world is experiencing its fair share
of economic challenges. However, we in Ghana have reason to feel
confident in the future of the Ghanaian economy judging from our
overall performance. We must all understand that if we work together
to overcome the current challenges, we all stand to benefit from the
opportunities that would be created. We must not and should not seek
refuge in blame games. This is not the time for that.
233. I believe in solving problems as and when they confront us. That is
what efficient and effective governance is all about. As the Minister for
Finance, I will keep an open mind and remain receptive to good ideas
that will help advance our goal of attaining High Middle Income Status
and spread the benefits to all Ghanaians within the shortest possible
time.
234. Mr. Speaker, I beg to move.

ABOUT: Nana Kwesi Coomson

[email protected]

A Freelance Journalist, Entrepreneur and Philanthropist. Editor-in-Chief of www.233times.com. A contributory writer for Ghanaian Chronicle Newspaper. An alumnus of Adisadel College where he read General Arts. He holds first degree in Bachelor of Arts from the University of Ghana; Political Science (major) and History (minor). He has also pursued MSc Corporate Social Responsibility (CSR) and Energy with Public Relations (PR) at the Robert Gordon University in the United Kingdom. His mentors are Rupert Murdoch, Warren Buffet, Sam Jonah, Kwaku Sakyi Addo and Piers Morgan

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