According to President Akufo-Addo, there is currently another structural vulnerability in the Ghanaian economy that has to be urgently fixed.
He claims that although Ghana has the second-largest economy in West Africa, its tax-to-GDP ratio is the lowest—around twelve percent (12%)—compared to the average of eighteen percent (18%) for the ECOWAS region.
“It is essential for our future, if we are to realize our goal of a Ghana Beyond Aid, that we make rapid strides to meet the eighteen percent (18%) and even higher target, to strengthen our self-reliance and our capacity to finance our development”.
Speaking at the 38th National Farmers Day Celebration in Koforidua, the capital of the Eastern Region, President Akufo-Addo remarked that; “It is in this light that I am calling strongly for support for the measures that the Minister for Finance outlined in the budget proposals, which will enhance significantly revenue mobilization. It should be obvious to all of us by now that we can only rely on ourselves to build the Ghana we want”.
Further, he urged Ghanaians to embrace these budgetary measures that the government has proposed for Parliamentary approval in order to restore macroeconomic stability, promote inclusive growth, and safeguard the poor in these trying times.
Additionally, he made a plea to Organized Labor to support the government's efforts to strengthen the Ghanaian economy and to continue its conversation with its Social Partners in order to swiftly find a workable and just resolution to the ongoing salary negotiations.
He continued by saying that the 2023 Budget, which the Minister of Finance presented to Parliament, aims to solve these economic issues through a number of extremely difficult but essential steps.
“These measures include a debt operation to address our fiscal and debt sustainability concerns. Debt operations alone will not be enough to address the debt sustainability concerns,” he stated.
He also noted that “it’s for this reason why we are complementing the debt operations with fiscal adjustments, through improvement in revenue collection and expenditure rationalization measures, to promote debt and fiscal sustainability. This is why the Minister for Finance outlined several revenue and expenditure measures for the consideration and approval of Parliament”.
These revenue-generating measures, he continued, "include a proposed increase in VAT rate by 2.5%, the review of the e-Levy rate from 1.5 percent to 1 percent and removal of the one hundred cedis (GH100) threshold; removal of selected VAT exemptions; implementation of the VAT e-invoicing system; revision of selected excise taxes; complete elimination of discount on benchmark values; implementation of the unified property rate collection; and review of the National Fiscal Stabilization Levy.
Additionally, President Akufo-Addo stated that both the revenue and expenditure sides of the budget will need to be adjusted.
In order to manage public sector wage negotiations and hiring within budgetary constraints, he said the government is proposing significant expenditure reduction measures, including a reduction of the cap on transfers to earmarked funds from 25 percent to 17.5 percent; a review of government flagship programs to reflect relevance, promote efficiency, and ensure value for money and integration.
Other significant public spending measures, according to him, aim to show how equally responsible the government is with the nation's economic problems.
He concluded by saying that his government is confident that all of these fiscal measures, along with debt reduction efforts and the implementation of significant structural reforms, will remove the structural economic bottlenecks outlined in the 2023 Budget, which will significantly help to address the challenges facing the economy.
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