New Era Africa (NERA) as part of its core objectives to champion real development Ghana and Africa by actively partaking in socio-economic discourse has initiated an initiative where policy decisions of active development players will be scrutinized, criticized, applauded if necessary and alternatives proffered.

In pursuing this objective and in line with the President’s clarion call for us (individuals and organizations) to be active citizens and not spectators, NERA has decided to interrogate the 2019 budget, and paint the economic picture for the 2019 fiscal year to the citizens in a reader-friendly (touching on hardcore economic issues) and non-economic manner.

This document will analyze critical parts of the budget. To do this, the document is put in sections. The first section gives a broad overview of the budget. Afterwards, the macroeconomic targets for 2019 will be discussed. Thereafter, the real issues of the budget, namely revenue, expenditure and government’s strategic pillars for the 2019 fiscal year will be analyzed.

  • General overview
  • Macroeconomic targets
  • Revenue targets
  • Expenditure targets
  • Debt Management
  • Strategic Pillars as captured in the budget
  • Conclusion


The 2019 government of Ghana’s budget which was presented to Ghana’s 7thparliament by Hon. Finance Minister Ken Ofori Atta was themed “A Strong Economy for Jobs and Prosperity”. This budget, the third of Nana Addo’s administration dubbed “Mpotuo” budget per the Finance Minister seeks to drive the needed growth in order to create the necessary jobs for the teeming unemployed citizens. The government is of the view that the targets set in the budget are feasible for looking at the gains made from the “2017 Asempa” and “2018 Adwuma budgets”.

The two (2) preceding budgets were both aimed at stabilizing the economy and putting the economy back to track. Aside from attaining stable macroeconomic environment, all three budgets focused/are focusing on easing hardship on Ghanaians through programs and policies like:

  • Abolishing nuisance taxes
  • Reduction of electricity tariffs
  • Free SHS
  • Review of 35% tax for earners within 10,000 income band to 20,000 cedis band.
  • Absorbing registration fees for BECE candidates and enrolling final year day students on the Free SHS programme.

Generally, the target for Ghana’s GDP for the end period of 2018 was 5.6%. The period, however, witnessed some economic turbulence and downfalls leading to a GDP of 5.4% in the rebase series as of September, same year. The GDP growth rate for the 2019 fiscal year is targeted at 7.6%. It is worthy of notice that this GDP growth is achievable since there is going to be a massive investment in infrastructure, planting and rearing for food and jobs. All other things being equal, with a sanitized banking sector coupled with a business-friendly environment and private sector friendly policies, the GDP growth rate target for 2019 is achievable.

The overall budget deficit as a percentage of GDP targeted at 4.5% in 2018, ended in the rebased series at a rate of 3.0%. The reduction in budget deficit was attributed to the cap by IMF as well as the austere fiscal policies implemented during the year under review.  It is therefore expected that in 2019, the government will again achieve its target of keeping the deficit within the range of 3% – 5% as it did in 2017 and 2018.


Irrefutably, the macroeconomic conditions have improved for the past 22 months. The inflation rate, Treasury bill rate, Bank of Ghana policy rate, GDP growth figures show remarkable improvements. It is therefore not surprising that the government is predicting a 7.6% of real GDP, 6.2% non-oil growth, 8% inflation rate and 4.2 fiscal deficit. Achieving these targets will further ensure confidence and predictability for the business community including strategic foreign partners.

On the sectoral front, agriculture which remains the mainstay of the Ghanaian economy has started recovering. To this extent, a 7.3% growth projection for 2019 is mildly unambitious considering the investments and interventions slated for 2019. Considering the food needs of the country and the drive for agro-based industries, 7.3% growth might be inadequate.


The government seeks to raise GHS 58.9 billion in revenue to finance its 2019 budget. Though this represents about 25% more than the 2018 revenue realized and government has for the past 2 years achieved either a 15% or 20% improvement of the previous revenue figure, this revenue target is, therefore, an admission of government’s weakness in raising revenues as promised in 2016 electoral campaign and budgets in 2017 and 2018. It further shows government’s weakness in effectively digitizing the economy and leveraging same to raise substantial property rates, rent tax and capturing the chunk non-tax paying informal sector operators within the tax net.

The government, as a matter of urgency, has to put some serious efforts in making the digital addressing system useful in its revenue mobilization drive. Government must review its strategy on the digital addressing system and must admit that the sluggish implementation of this all-important project will not accrue the needed benefits to the state. The new strategy for government must, among other things, include efficiently deploying NABCO employees to aggressively encourage citizens to get on board this project. Again, NABCO employees and the officials of Land Valuation Board should liaise and ensure every home is profiled and sufficiently valued for the necessary property tax and rent tax to be collected. At least, government can start with the main cities (Accra, Kumasi and Takoradi) and later scale up organically. It must be added that the approach towards the issuance of the Ghana Card is revisited to make the card robust to ensure tax compliance by citizens. Again, government should stop paying lip service to the current abusive exemption regime and ensure that the over GHS 5 billion in exemptions given to private businesses including multinationals is halted.


As is the norm, expenditure is expected to exceed revenue target (i.e. GHS 73.4 billion versus GHS 58.9 billion revenue target). Out of this, GHS 19.4 billion is earmarked for wages and salaries, GHS 6.3 billion for goods and services, GHS 18.6 billion for interest repayments (out of which 77% relates to domestic repayments) and GHS 8.5 billion CAPEX (2.5% of GDP). The amount budgeted for interest repayments represents about 45% of domestic tax revenue. This shows the dire debt stress we find ourselves as a country. Although the CAPEX budget is an improvement over the 2018 figure, looking at our needs, it is still inadequate. Out of this amount, GHS 3.2 billion constitutes domestically-financed CAPEX. That means the country will generate more loans in the future in order to finance capital expenditure.


As the expenditure budget exceeds revenue target for 2019, the nation will have to find GHS 14.5 billion to finance the deficit. Per the budget, this gap will be financed by issuing GHS 9.6 billion worth of sovereign bonds and GHS 4.8 billion domestic debts.

After the rebasing, the debt to GDP ratio has moved from little below 70% in 2017/2018 to 57.4% (including debt issues to finance the banking mess). Technically, the country has the capacity to borrow taking into the expansion of its GDP base after rebasing. But in reality, continuous borrowing will further spell doom for the prospects of the economy. Debts countries contract is financed by tax revenues not necessarily GDP. An increase in GDP base, all other things being equal, should increase government’s capacity to mobilize revenues. In the case of Ghana, the GDP base is expanding but the Tax to GDP ratio has plummeted to 12%. This means while debt to GDP stands at 57%, a proportion of Tax revenues in relation to GDP is 12% hence any increase in borrowing without aggressively mobilizing revenue will put the economy back to its existing situation (high debt to GDP ratio; distress situation) before rebasing.

Government intends to raise debts including the issuance of sovereign bonds. While applauding the lofty desire of government to raise long-term bonds to finance infrastructure, it is worth stating that the government get the basics right. Thus, mere promises of building infrastructure through long-term loans are not enough justification for the issuance of century bond. In fact, the story and justification has always been the same since 2007 when we made the first appearance at the Eurobond market but after 11 years of borrowing, less can be shown as projects from long-term debts. Focusing attention on building internally vibrant revenue collection regime so that debt servicing in the future will be done with relatively less ease must be our immediate preoccupation.



The 2019 budget is hinged on six (6) thematic areas. These are:

  • Infrastructure
  • Agriculture
  • Industry
  • Entrepreneurship
  • Social Interventions
  •  Protecting the public purse

For the purpose of this review, not all thematic areas will be analyzed but each will be briefly touched on in the conclusion of this review.


The “Mpotuo” budget is drafted around massive infrastructural projects. Government intends to raise in excess of USD 2 billion to finance many projects, particularly in the road and railway sectors. Government is highly commended for the attention the railway sector is receiving. It is obvious that an improved railway sector will free the roads from stress and damage caused by haulage tracks that cart goods from the Southern sector to the Northern sector including other neighbouring countries.

Building these infrastructures will expand the economy, boost production, relatively cut post-harvest losses and also drive the needed investments in the tourism industry. As government has instituted a regime to standardize road and construction contract costs, it also must ensure strict adherence to quality assurance so these projects have longer life-spans.


The commitment of this government to make education free at least at the SHS level has faced serious scrutiny. Though many have questioned the sustainability of the current model (i.e. financing this programme using between 60-70% of the Annual Budget Funding Amount of the oil proceeds), the government’s resolve to push this programme through is commendable. For 2019, about GHS 1.7 billion is earmarked for free SHS. Massive reliance on a commodity that is subject to the vagaries of the global dynamics (global geopolitics in this volatile global world) is very problematic. Again, since there is no robust data to inform targeted subsidy of this free SHS programme, it is incumbent on government to be creative in fashioning innovative ways of raising revenue to serve as a buffer for this programme. Government is therefore urged to pay some serious attention to setting up the Voluntary Educational Fund.

The government also intends to securitize GETFUND proceeds for a USD 1.5 billion loan to fund all outstanding projects. Obviously, this move will go a long way to start/complete many infrastructure projects which will eventually eliminate the double-track system. Again, it will lead to massive expansion of the tertiary institutions in record time to absorb huge numbers from the free SHS programme. This, notwithstanding, government must find a healthy way of partnering private universities to expand their capacities. For instance, in the 2018 budget, government sought to free private universities from corporate taxes so they could reinvest their profits into infrastructure projects on their campuses to absorb the numbers. Following through this policy (monitoring their books and ensuring that they do not divert these cash flows) will avert the impending danger that lies ahead.

In the 2019 budget, much attention (at least on paper) has been given to technical education. Government intends to upgrade 10 Technical Universities, 13 Technical Institutes, train some lecturers from these institutes, build 20 state-of-the-art TVET centres, and upgrade 34 vocational Technical Institutes and STEM/Multimedia labs. It is a fact that Ghana is currently losing out in the artisanal space to neighbouring countries. Embarking on an aggressive TVET initiative will go a long way to reduce unemployment and strengthen the local economy. The sad reality is that promises made by successive governments to the TVET educational sub-sector are not carried through.


On a balance, the Planting for Food and Job (PFJ) initiative has improved the prospects of the agricultural sector. The success notwithstanding, there are major issues such as the lack of focus in the agricultural sector and inefficiencies in distributing inputs under the PFJ initiative. Improving this initiative will make government’s industrialization program a reality and also avert the old-age import-based economy that cyclically impacts on the strength of the Cedi relative to foreign currencies.

In 2019, government projects, through the PFJ, to supply inputs to 1 million farmers compared to the 0.5 million figure in 2018. It also seeks to increase its warehousing capacity by about 80,000 metric tons. Following the success of the PFJ, government wants to introduce Rearing for Food and Jobs (RFJ), institute Tree Crop Development Authority to embark on massive cashew, Shea nut butter, oil palm and rubber productions.

While intensifying PFJ is commendable (thus help reduce USD 1 billion that went into rice imports, USD 320 million sugar imports and USD 374 million poultry imports in 2018 and also reduce poultry feed cost), it will be prudent for government to focus on eliminating the bottlenecks associated with the PFJ. Simply put, the state through the ministry should ensure timely release of fertilizers, provision of improved seeds, provision of dedicated extension services to farmers, marketing, e-agriculture and monitoring and reduce the creation of unnecessary bureaucracies in the agricultural sector. With the emergence of the Ghana Commodity Exchange, it will make economic sense for government to give the exchange deliverables as far as the other sectors (cashew, rubber, palm, grains, and cereals) are concerned rather than creating so many bureaucracies within the agriculture sector. Again, the Exchange should work hard to position itself to reduce post-harvest losses, make agriculture especially cocoa farming attractive to the youth since the average age of Ghanaian cocoa farmer is around 55 years and also make foodstuff affordable all year round.

Again, the introduction of GHS 400 million (with GHS 14 million cedis from AfDB) Ghana Incentive-Based Risk Storage system for lending (GIRSAL) to guarantee loans to the agriculture sector is commendable. It is worthy of note that in 2018, a similar promise was made under the AAPET initiative but little was done about it hence government is entreated to ensure that this initiative comes to fruition in 2019.

Undoubtedly, government is lagging in fulfilment of its 1V1D promise in the North. For 2017, no dam was constructed despite the promise in the budget. In 2018, though work has started the enthusiasm in making sure this critical policy fully materializes have been low. Looking at the impact this irrigation initiative will have on the standard of living of farmers in the three Northern regions and overall food production in the country, government must give this initiative some seriousness especially during the dry season in 2019.


The industry sector grew at 15.7% in 2017 which was mostly driven by the 30.8% increase in the Mining and Quarrying and the 80.3% growth of the Upstream Oil and Gas activities from Sankofa-Gye Nyame (SGN) and increased production from the Tweneboa-Enyenra-Ntomme (TEN) and the Jubilee fields.

The government resolves to continuously pursue the 1D1F by completing 79 factories through the provision of the required facilitations. It is believed that the construction sub-sector which in the past recorded steady decline will recover considering the infrastructural agenda of government in 2019. Furthermore, government has promised zero VAT on garments and promised to affix tax stamps on garments to curb smuggling. Strict compliance of this policy may go a long way to revive the 30,000 workers (currently employing less than 5,000 people) industry that has collapsed during the past decade.

Again, since 2017 government has been trumpeting its resolve to build an integrated bauxite industry. Considering the move of government to improve the capacity of VALCO and finding strategic partners to make it economically viable, the formation of GIADEC and earnest pursuit of the USD 2 billion Sinohydro loan, it shows Ghana is on the move to have an integrated aluminium industry.

In 2018, many Memoranda of Understanding were signed. They included MOUs with Nissan, VW and Sinotruck to build assembling plants in Ghana. Again, government signed an MOU with a Polish firm to build assembly plants for agricultural inputs including tractors. Government must pursue these business intentions so that Ghana can reap the necessary dividends from these strategic business alliances.


It is fair to admit that the government in the past 22 months has made positive strides as far as the management of the macroeconomic fundamentals are concerned. The improvement of the macroeconomic fundamentals, however, does not reflect in the standard of living of the average citizen. Government must find a reasonable balance between ensuring favourable macroeconomic fundamentals and improving the standard of living of citizenry. It is therefore commendable that about GHS 200 million has been allocated to MASLOC. This will improve the activities of the informal sector operators, with strict enforcement to ensure that monies disbursed as loans are repaid in full.

The 2019 budget shows that government will embark on aggressive expansionary fiscal policy. The Bank of Ghana (BoG) must therefore critically balance its inflation targeting objective with the expansionary fiscal policy of government so that the macroeconomic fundamentals are not thrown off balance.


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