Fitch Solutions has observed that Ghana’s 2023 budget is one of the most expansionary ones in the country’s economic history.
This means the government would be spending a lot.
In its latest February 2023 Africa Monitor Report, Fitc said: “While the government aims to implement some expenditure reforms – including a hiring freeze for public servants and placing a cap on salary adjustments at state-owned enterprises – the Finance Minister did not announce large-scale spending cuts”.
“Indeed, the government aims to keep capital expenditure and grants to government units elevated – areas that we had expected the authorities would cut back on”, the report said.
“As such”, it noted, “the government aims to spend a total of ¢205.4 billion, a 51.5% increase on the 2022 target, making the 2023 budget one of the most expansionary budgets in Ghana to date”.
Also, Fitch Solutions projects a budget deficit of 7.5% of Gross Domestic Product (GDP) in 2023 — higher than its earlier forecast of 6.7%.
Fitch noted that stronger tax collection will improve outlook in 2023 but spending will remain high.
Fitch Solutions emphasised that the 2023 budget details spending targets that were “more expansionary than we had anticipated, suggesting the budget deficit will remain wider for longer”.
