Today, Thursday, July 29, 2021, Finance Minister Ken Ofori-Atta will submit the mid-year budget review to Parliament.
The budget review, which is mandated by Article 179 of the 1992 Constitution and the Public Financial Management Act 921, provides an opportunity to adjust macroeconomic targets and offer a thorough economic forecast for the remainder of the year.
This is usually based on the first six months of the year’s inflows and outflows. Over the next five years, the government is anticipated to unveil projects and programs that will create one million employment.
The 2021 Budget, dubbed “Economic Revitalisation via Completion, Austerity, and Continuity,” aimed to strike a delicate balance between fiscal consolidation and the economy’s recovery after the COVID-19 epidemic. For the fiscal year 2021, Parliament approved GHS129 billion for government services.
The introduction of some levies, which were extensively criticized by many stakeholders, was one of the budget’s key talking points. As part of the increased taxes, the indirect tax measures included a 5.7 percent increase in the price of gasoline and diesel.
The increase was due to the introduction of a new 10-pesewa Sanitation and Pollution Charge, as well as a 20-pesewa levy to cover charges on the country’s excess power capacity.
The new 10-pesewa Sanitation and Pollution Levy, as well as a 20-pesewa levy to cover expenses on the country’s excess electricity capacity, accounted for the increase.
The 5 percent financial sector clean-up levy, the 30% income tax rebates for companies in the hospitality sector, the suspension of instalment income tax stamp and vehicle income tax payments from April to December 2021, and the extension of the exemption of income tax on capital gains made from the realization of securities were among the direct tax measures introduced.
There was also a 1% COVID-19 levy, which was a 1% increase over the previous year. A 1% COVID-19 fee was also imposed, representing a one-percentage-point increase over both the previous VAT Flat Rate Scheme (VFRS) and the National Health Insurance Levy (NHIL).
The taxes, according to the Finance Minister, are required to pay the rollout of the coronavirus vaccination as well as the expansion of general health infrastructure.
The slow speed of the consolidation route defined by the budget statement and the associated medium-term fiscal framework, according to Fitch Ratings at the time, exposes Ghana to a hefty debt-service burden and risks of fiscal slippage.
Ghana’s debt stock has climbed to GHS332 billion since then, with a debt-to-GDP ratio of 76.6 percent.
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