2017 Budget - ‘Sowing the Seeds for Growth and Jobs’ (1)

The 2017 Budget Statement (“the Budget”) was delivered on the back of Government’s promise to move Ghana beyond aid and create the most business-friendly environment and people-centred economy in Africa to engender growth and create jobs.

There is, therefore, an anticipation that the policies and strategies outlined therein will accelerate the change in Ghana’s economic transformation and move the country towards increased prosperity.

GoG has also proposed to abolish a number of taxes and levies which are intended to create a business-friendly environment to enhance production. Given that these tax cuts have the potential to reduce revenues, Government must actively pursue measures to improve revenue mobilisation by making good on its promises to broaden the tax base, close loopholes and curb wastage to avoid a possible negative impact on the proposed budget deficit. In addition, local industries must be provided with some form of protection against dumping from imports to enable them grow and help achieve the industrialisation objective.

According to figure 2, Government projects significant economic growth (oil inclusive) of about 6.3% in 2017, from an estimated actual growth of 3.6% in 2016.

Inflation is targeted to decline to 11.2% in 2017, down from estimated actual inflation of 15.4% as at end of December 2016 

According to the World Economic Outlook (“WEO”) Update, January 2017, global economic growth for 2016 was 3.1%, same as 2015 but lower than the projected 2016 growth rate of 3.4% estimated in January 2016.  WEO estimates global growth will increase to 3.4% in 2017 and 3.6% in 2018. Growth in advanced economies is expected to hit 1.8% and 1.9% in 2017 and 2018 respectively. Emerging Markets and Developing Economies (“EMDEs”) on the other hand are expected to experience growth rates of 4.5% and 4.8% in 2017 and 2018 respectively.

Growth in the global economy is expected to pick up after a sluggish year in 2016, boosted by the expected growth of the United States and other advanced economies.

Although the growth rate target of advanced economies has an optimistic outlook, it remains highly uncertain particularly because of the geopolitical uncertainties around the policies of the new administration in the USA and around “Brexit”. The actual impact of these two economic shakers of 2016 will be felt much later in 2017 and beyond as Britain triggers its ‘Article 50’ to formally begin the process of leaving the European Union and the policies of the new Donald Trump-led administration in the USA become clearer. Anticipated growth in advanced economies could be a positive development for the Ghanaian economy as demand from these countries is likely to boost commodity prices and increased foreign direct investment.