On 23rd July 2024, the Ghanaian government, through the Minister for Finance, Dr. Mohammed Amin Adam (MP), presented its 2024 mid-year budget, outlining a bold and comprehensive plan to steer the nation towards economic stability and inclusive growth.
Amidst global economic uncertainties and domestic challenges, the budget emphasises strategic investments in critical sectors such as education, health, infrastructure, and housing, underscoring the government’s commitment to improving the quality of life for all citizens. This paper seeks to analyse the key components of the mid-year budget, highlighting its potential impacts and benefits, while also critically assessing the challenges and areas for improvement, demonstrating how the government’s strategies align with the long-term goals of sustainable development and social equity. With a focus on these crucial areas, the budget sets the stage for a brighter and more resilient future for the country.
Economic Recovery and Growth
A cornerstone of the 2024 mid-year budget is its optimistic outlook on economic growth. The government has revised the GDP growth target upwards to 3.1%, signalling confidence in the country’s economic recovery. This positive projection is anchored in strategic investments across various sectors, particularly agriculture, industry, and services. The stabilisation of key macroeconomic indicators, such as a reduction in inflation by 31 percentage points since December 2022 to 22.8% and a more stable exchange rate depreciation of 18.6%—an improvement over the 22% recorded last year—further bolsters this growth outlook.
However, while these economic indicators are encouraging, the government’s reliance on optimistic growth forecasts may be risky given the volatile global economic environment. Factors such as global inflationary pressures, potential downturns in major trading partners, and unforeseen domestic challenges could hinder the attainment of these targets. The government’s proactive stance in enhancing revenue mobilisation, as demonstrated by the Ghana Revenue Authority exceeding its target by 0.2%, is commendable. Yet, the emphasis on expanding the tax base and improving tax compliance should be balanced with efforts to ensure that the tax burden does not disproportionately affect lower-income individuals and small businesses.
Social Investments and Human Capital Development
Education remains a central focus of the government’s social investment strategy, with the continuation and expansion of the Free Senior High School (SHS) programme and significant investments in Technical and Vocational Education and Training (TVET). The construction of 10 new STEM schools and centres is a forward-looking initiative aimed at equipping students with the necessary skills for a modern, technology-driven economy. To date, over GH¢1.5 billion has been allocated to support 1,488,575 students under the Free SHS programme from January to June 2024.
While the emphasis on education is laudable, there are concerns about the quality of education being provided amidst rapid expansions. Overcrowded classrooms, insufficient educational materials, and inadequate teacher training could undermine the effectiveness of these programmes. The government is proactively addressing these challenges by expanding school infrastructure, improving educational resources, and enhancing teacher training to ensure high-quality education amidst the growth of the Free SHS programme.
Similarly, the expansion of the National Health Insurance Scheme (NHIS) and the Livelihood Empowerment Against Poverty (LEAP) programme is a positive step towards providing a safety net for the vulnerable. Recognising the importance of these initiatives, the government has prioritised ensuring their sustainability, even in the face of fiscal constraints, by exploring diverse funding mechanisms and seeking international partnerships.
Infrastructure Development
Infrastructure development is another key pillar of the budget, with substantial investments earmarked for roads, railways, and water systems. These projects are crucial for economic growth, facilitating trade, reducing transportation costs, and improving regional connectivity. The completion of critical road networks and the expansion of railway lines will not only boost economic activities but also enhance the quality of life for residents by reducing travel time and improving safety.
The focus on housing, particularly through the National Rental Assistance Scheme and various affordable housing projects, addresses the pressing housing deficit. By partnering with private developers through public-private partnerships (PPPs), the government is leveraging private sector expertise and resources to deliver much-needed housing solutions. However, the scale of these initiatives may not be sufficient to meet the actual demand, especially in rapidly growing urban areas. Additionally, the success of these projects hinges on effective project management and transparency to avoid issues such as cost overruns and delays.
Fiscal Responsibility and Debt Management
The 2024 mid-year budget reflects a strong commitment to fiscal responsibility, with efforts to control public spending and enhance revenue mobilisation, aiming for a primary surplus and a reduction in the budget deficit. The decision not to seek supplementary funds highlights a disciplined approach to budget management, focusing on living within the country’s means.
The successful negotiation of debt restructuring agreements, particularly with Eurobond holders and the Official Creditor Committee (OCC), is a significant achievement. These agreements provide critical debt relief and improve Ghana’s debt profile, ensuring long-term fiscal stability and sustainability. Ghana is expected to reduce the nominal value of its US$13 billion of outstanding Eurobonds by US$4.7 billion and provide debt service relief of about US$4.4 billion during the IMF programme period from 2023 to 2026.
Despite these positive developments, the high public debt level remains a concern. The restructuring, while providing immediate relief, does not eliminate the long-term risks associated with high debt levels. The government’s ability to maintain fiscal discipline, particularly in the face of potential external shocks, will be crucial in ensuring sustainable debt management. In a significant and commendable move, the government has cut expenditure by 2.1%, amounting to nearly GH¢9 billion, demonstrating a remarkable level of fiscal discipline, especially during an election year. This is unprecedented compared to 2016 when the government not only requested an additional GH¢1.8 billion in the mid-year budget but also exceeded this expenditure. To further deepen fiscal responsibility, the government intends to amend the Fiscal Responsibility Act, reinstating the numeric debt ceiling that was suspended in 2020 during the COVID-19 pandemic. By prioritising these fiscal prudence measures, the government has shown its commitment to sustainable economic management, even under the pressures associated with an election year.
Inclusive Growth and Social Equity
The budget includes various social programmes aimed at supporting the poor and vulnerable, such as the Ghana School Feeding Programme and increased capitation grants. These programmes are essential for reducing inequality and ensuring that all citizens benefit from economic growth. The focus on youth employment and entrepreneurship, exemplified by the GH¢8.2 billion SME Growth and Opportunity (SME GO) programme, reflects a strategic effort to create job opportunities and support small businesses. In the first half of 2024, the Youth Employment Agency engaged about 90,000 beneficiaries, including 15,000 in community policing and 6,000 in community health.
While these initiatives are commendable, their success will depend on effective implementation and monitoring. Ensuring that resources reach the intended beneficiaries and that programmes are not hampered by administrative inefficiencies or corruption is critical. Additionally, more targeted efforts may be needed to address regional disparities and ensure that vulnerable groups across all regions benefit equally from government programmes.
Conclusion
The 2024 mid-year budget outlines a comprehensive plan for Ghana’s economic and social development. By prioritising education, health, infrastructure, and fiscal responsibility, the government has laid a solid foundation for sustainable growth. However, while the budget’s goals are ambitious and well-intentioned, careful consideration must be given to the challenges of implementation, fiscal sustainability, and ensuring that the benefits of growth are equitably distributed. The government’s commitment to economic recovery, social equity, and the well-being of all Ghanaians is evident, but continued vigilance and adaptation will be crucial in navigating the complex and dynamic landscape of both domestic and global challenges.
The author is the Deputy Minister for Works and Housing and Member of Parliament for Kwesimintsim.
He previously served as the Director-General of the National Council for Curriculum and Assessment (NaCCA) and consulted for several projects funded by prominent international organizations such as The World Bank, UKAID, USAID, and the UN Education Commission in Ghana.