Expectations of the biannual review of the 2019 budget

In accordance with Article 28 of the Financial Administration Act, 2016 (Law 921), the Minister of Finance is responsible for presenting to Parliament a mid-budget review of the budget policy, at the latest July 31 of each fiscal year. The mid-term review of the Budget Statement and Economic Policy for 2019 as well as an additional budget should be submitted to Parliament today.

The fiscal policy review should provide an overview of the government's macroeconomic development over the last six months and the rest of the year. The implementation of the six-month budget has given a clear picture of the health of the economy and it is likely that some of the macro-fiscal policy objectives for 2019 and the medium term defined in section 4 , part 248 of the 2019 budget, will be revised.

The finance minister said that one of the taxes that would be adjusted at the semi-annual review is the luxury tax on vehicles in response to stakeholder concerns. The government introduced the luxury vehicle tax in August 2018 as a new policy to increase revenues. According to the regulation, vehicles with a displacement between 3.0 and 3.5 liters receive an annual tax of 1,000 GH ¢; those with a displacement of between 3.6 and 4.0 liters pay 1,500 ¢ per year; while 4.1 liters and more attract an annual tax of GHG 2,000.

We expect the biannual review to provide an update on the government's interventions to support and support the vision of industrial transformation to enhance collaboration with the private sector and strengthen government policy initiatives. such as A district, a factory, a village. -One-Dam, Free High School, Plant to Feed and Create Jobs, Revitalization of the Microfinance Center and Small Loans, Zongo Development Fund Initiative and National Builder Corps. In addition, Ghanaians would like to know the measures put in place to strengthen the cedi, create sustainable jobs and promote security.

In the 2019 budget, the central government planned to join the Metropolitan, Municipal and District Assemblies (MMDA) to improve revenue mobilization at the local government level. This partnership concerns the areas of ownership registration and property data management; the use of an inexpensive and simplified tool for the valuation of property; setting up a system for generating and distributing invoices; and setting up an efficient collection system of property rates and other rates. Property tax collection at the MMDA level is low, partly due to an insufficient appraisal capacity and the high cost of appraisal. The mid-year review should describe the measures put in place to collaborate with the local government department and the MMDAs to improve efficiency both in the community. property valuation and in the process of collecting revenue from the property rate.

Ghana is facing a mbadive infrastructure deficit in areas such as roads, water, bridges, electricity, hospitals and sanitation. The 2019 budget provided for a number of roads to be built and the establishment of other infrastructure in the areas of sanitation, health, education, rural development management and urban and disaster management. Ghanaians would like to know about the initial measures and funding arrangements put in place to complete the roads and other projects described in the 2019 budget. The mid-year review should identify the measures in place to minimize the infrastructure gap that exists. required the introduction of the dual-track system badociated with Free SHS.

Budget 2019 describes the measures taken to provide support and incentives to local manufacturers to improve their competitiveness. This policy responds to the turmoil of local textile manufacturers and the need to revive the textile industry, which faces problems of contraband and counterfeiting. We expect the Minister of Finance to indicate the measures taken to improve the textile industry and create new jobs, in keeping with the policy of strengthening the economy for jobs and prosperity.

The initiative A district, a factory (1D1F) aims to create at least one factory in every district of the country. In order to strengthen the competitiveness of 1D1F enterprises, the Cabinet approved a set of incentives for 1D1F companies, including a tax holiday, an exemption from duties and taxes on imported machinery, equipment and raw materials. At mid-year, the review must demonstrate what has been done to ensure that the tax incentives granted under 1D1F produce the expected results.

The government has taken debt management measures that have resulted in a reduction in the debt-to-GDP ratio. The economic management team should continue to implement innovative strategies that would help governments manage the stock of public debt with the primary goal of increasing adequate funding at the lowest possible cost and ensuring a degree of of prudent risk. The medium-term debt management strategy must focus on a combination of appropriate financing to support fiscal consolidation without compromising macroeconomic stability.

The law on fiscal responsibility and the creation of a fiscal council as a measure of fiscal sustainability is commendable, but such factors as the high payroll of the public sector, the payment of high interest on the debt and capital expenditures to fulfill the government's stated promises of industrialization and infrastructure development can achieve the stipulated budget deficit of no more than 5 percent of GDP. To achieve the set fiscal goal, the government needs to rethink its strategies by strengthening revenue mobilization, strive to improve and sustain ongoing interventions, and implement programs that can translate economic growth and macroeconomic stability in tangible improvements in the lives of Ghanaians.

By Eric Akobeng (economist and expert in development policy)