The economy of Ghana is experiencing hardship and investors, businesses and Ghanaian citizens are hoping for a 2019 budget that will offer some form of relief and make life better. Presenting the Ghana budget 2019, finance minister Ken Ofori-Ata said that the budget theme is a stronger economy, for job and prosperity. In his speech, he was quick to point out that the economy of Ghana has been experiencing hardships since 2006. However, some people believe that the last two budget years have made progress in easing the impacts of hardships that Ghanaians are facing. So what are the highlights of the 2019 budget Ghana and what kind of relief can you expect?
Ghana budget 2019: Highlights
Unlike the 2018 budget Ghana which was popularly referred to as Adwua budget and the 2017 Asempa budget (meaning the Good news budget); the 2019 Ghana budget focuses on six strategic pillars. These pillars are entrepreneurship, infrastructure, industrialization, social intervention, agricultural modernization and improving efficiency in revenue mobilization. The following is a simple breakdown of the 2019 budget.
Ghana resource mobilization for 2019
From his speech, the finance minister explained that the total revenue and grants for 2019 is expected to be GH¢ 58.9 billion from the projected GH¢ 46.8 billion in 2018 budget Ghana. Domestic revenue is estimated at GH¢ 57.8 billion while non-oil tax revenue is estimated at GH¢ 42.9 billion.
Financial operations for 2019
According to the finance minister, the total expenditure for 2019 is estimated to reach GH¢ 73.4 billion from which wages and salaries will be GH¢ 19.4 billion. Expenditure on goods and services is estimated to be at GH¢ 6.3 billion while interest payment of public debt is expected to reach GH¢ 18.6 billion.
The 2019 fiscal operation will have a budget deficit of GH¢ 14.5 billion based on the total expenditure and total revenue and grants. To reduce the deficit, the government will have to borrow from both foreign and domestic sources.
To help the government track its financial performance, the Ghana budget will integrate the Sustainable Development Goals (SDGs) framework. This will make the 2019 budget Ghana the first in Africa and second in the world to embrace the SDGs framework. To boost the financial sector a bill will be submitted to ensure that the fiscal deficit is capped at 5% of GDP.
Fuel prices 2019
Fuel prices have been a major concerns for Ghanaians and investors. According to the 2019 budget statement of Ghana, the crude oil price has been projected at 66.76 US dollars per barrel while the gas price is estimated at $3.99 per MMBtu. The finance minister has proposed to exclude gas revenues of up to $181.80 million from the projected petroleum revenues for 2019. If accepted, the petroleum revenue for 2019 will reach $1.1 billion.
Tax reliefs 2019
Before a working person can calculate tax, they have to first understand what is a budget and the types of budget they need to be concerned about. When it comes to what's a budget meaning, it is all about presenting the revenues and spending for that particular financial year. The government budget can also be referred to as the annual fiscal statement of a country.
Based on the revenues and expenses, there are three types of budgets: balanced budget, deficit budget and surplus budget. Revenues usually come from the tax collected by the government. However, when it comes to the budget most people need to be concerned with tax reliefs and income tax rates.
Ghanaians will be happy to know that there are various tax reliefs proposed for 2019 this include for minimum wage, and income tax. The income tax which was introduced mid this year offers relief to all Ghanaians as those who earn a salary of below GH¢ 10,000 will be exempted from paying personal tax. However, those who earn an income of GH¢ 20,000 will part with a tax rate of 30%.
Minimum wage earners are also exempted from paying income tax. However, the finance minister proposed a Tax reform bill that will change tax exemptions such as import duty and import VAT.
2019 tax changes and improvements
The government will also put in place measure to simplify the collection of withholding tax for tax authorities and small-scale mining operators. For both of these parties, the point of tax collection will be at the point of export.
Additionally, to help mobilize revenue that will be used to finance improvements that will benefit the lives of Ghanaians, change will be made to the Ghana Revenue Authority. In 2019, the government will also make use of third-party data for tax administration in both the public and private sectors. This will help catch big tax defaulters, and the retrieved money will go to tax debt recovery.
The government will also partner with Metropolitan, Municipal and District Assemblies (MMDAs) to boost the revenues collected at the local government level.
Corruption is a thorn for most African countries and Ghana is no exception. One of the aspects that the finance minister touched on was corruption. To help fight corruption GH¢ 180 million has been allocated from the 2019 budget to the special prosecutor’s office.
While presenting the 2019 budget Ghana, finance minister Mr. Ken Ofori-Atta explained that a bill would soon be submitted to set up the Ghana Asset Management Corporation. The corporation will aid in the management of the infrastructure. The minister went on to say that in 2019, the government will invest massively in the development of road and infrastructure in various regions of Ghana.
Ongoing projects like Nswam-Apedwa Road and Bridge on the Volta River at Volivo will also receive financing. In 2019, the government wills also partner with the private sector to complete various highways projects including Accra-Tokaradi highway dualization.
Rehabilitation of the railway gauge line will also be completed by the end of 2019.
2019 sovereign bond issuance
From the 2019 Ghana budget speech, the government of Ghana intends to issue sovereign bonds of up to $3 billion. Ultra-long-term bond will enable the government to finance massive economic transformation plans next year. Ghana will issue sovereign bonds of longer tenor either as green bonds or Eurobonds on the international capital markets and also structure a Sovereign Century Fund for bilateral investor partners.
Ghana debt repayment plan 2019
On debt repayment, Ghana will spend over GH¢ 16 billion of revenue to pay the interest on the GH¢ 120 billion debt. According to the minister, the ultra-long-term bonds will help improve the debt sustainability path hence reduce the inherited debt.
Social policies that protect the poor
For the 2019 social intervention, the finance minister explained that the current government would expand the social security to cover the informal sector. By collaborating with the government, the Social Security and National Insurance Trust (SSNIT) will come up with a policy framework that will be launched by 2019 to ensure that the informal sector workers get a voluntary fully funded pension scheme.
The Ghana budget 2019 brings good news to the farmers. In 2019, the government plans to expand the Planting for Food and Jobs (PFJs) programme to cover 1 million Ghana farmers. The government also plans on launching the Rearing for Food and Jobs project to help increase livestock and poultry production. These projects will help reduce the amount of food import because currently, Ghana spends more than $2 billion every year importing food.
An increase in food production will require a larger warehouse storage capacity. As a result, in 2019 the government plans to increase warehouse storage capacity by 80,000 metric tons. Construction of the 570 dams and dugouts will also continue next year.
Government is establishing the Ghana Incentive Base Risk Sharing System for Agricultural Lending (GIRSAL). GH¢ 400 million has been included in the 2019 budget. And additional funding of $14 million from the AFDB will be used to ensure that in 2019 GIRSAL operates smoothly and efficiently.
Improved health facilities
In 2019, work will commence on the building of the 3 rd phase of the 37 military hospital project based in Accra. The new 500-bed military hospital at Afari is expected to be complete by 2019. To improve the health care in Ghana, the government has obtained a $50 million loan to complete University of Ghana Medical School.
Mortgages and housing plans
The Saglemi Housing Project that will contain 5,000 homes will be completed by 2019. To scale up the mortgage and housing finance ecosystem, the government has also included in the 2019 budget, GH¢ 1 billion which will go to the mortgage and housing finance fund. Starting 2019 the building of around 200,000 housing units will also commence in all the regional capitals. The second phase of the SSNIT Housing Projects will also begin next year
What Ghana 2019 budget says about communication?
The Ghana budget 2019 will cover the construction of an additional 600 telephony sites to provide and boost voice signals to more than 1,800 communities that experience limited coverage. The development of the ICT Technology Park will also be completed in 2019. Rural electrification done using cables and electrical conductors from local manufacturing companies will also continue in 2019.
According to the 2019 budget read by the finance minister ken Ofori-Atta, a proposal to secure $1.5 billion for GETFUND was presented to parliament. The proposal if approved will be used to build various secondary and tertiary institutions infrastructure. In 2019, the government will upgrade 10 technical universities and 13 technical institutes.
Ghana budget 2019 on tourism
The finance minister touched on the government intentions of commemorating the 400 years of slavery, calling 2019 the year of return; a strategy of promoting tourism. As from September African Diaspora from various countries including the UK, Caribbean and USA will be allowed to Ghana on pilgrimage. Home-based airline will also be constructed to promote tourism and provide smooth movement of goods and services.
The yet to be established National Film Authority will act as a regulatory body that will help nurture the film industry. The functions of the film body includes marketing, regulation, distribution, and exhibition of films.
The 2019 Ghana budget promises to improve debt management by putting measures that will manage the country’s economy. Presenting the Ghana budget 2019 to parliament, the finance minister Ken Ofori-Atta said that the budget will continue to fund programmes that began in 2018 and implement others in 2019. By partnering with the private sector and embarking on the various projects and programs that will transform the economy, the government will better the lives of Ghanaians.
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