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Outgoing Ofori-Atta’s last budget freezes everything …Bans Gov’t jobs, hampers, diaries, new agencies, V-8 cars & others

25th November 2022

Those hoping to land government jobs will have to think again. The under-pressure Finance Minister, Ken Ofori-Atta, whose blood is being bayed for, has used what might turn out to be his last Budget and Economic Policy, to announce a ban on every government expenditure, including employment into the civil and public service effective January 2023.

For a country that is producing hundreds of thousands of professionals from both public and private universities, this is not the news many expected from the Akufo-Addo government.

President Nana Akufo-Addo, in opposition had criticized his predecessor for going to the International Monetary Fund (IMF) for a bailout and freezing public sector employment.

It is unclear, what happens to the many nurses, medical doctors and other health professionals angling to be absorbed into the public sector. Already there are reports that most of those engaged in the last three years, have not been paid, The Herald, has heard.

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Many teachers, have also been hoping and waiting to join the public service, but there is no space for them.

Mr Ofori-Atta, yesterday presented the 2023 Budget and Economic Policy to Parliament, christened “Nkabom budget” meaning unity budget as asking the 95 Members of Parliament (MPs) chasing him out of the Finance Ministry to rather be united behind him and President Nana Akufo-Addo, who is being asked to sack him for economic mismanagement.

Mr Ofori-Atta, also announced that the purchase of new vehicles shall be restricted to locally assembled vehicles, while the allocation of fuel coupons to political appointees and heads of MDAs, MMDAs and SOEs have been reduced by 50percent.

There will be no hampers from Municipal Metropolitans and District Assemblies (MMDAs) and State Owned Enterprises (SOEs) this year, will have their hopes dashed, because the government has slapped a ban on such expenditures.

“No new government agencies shall be established in 2023; there shall be no hampers for 2022;” Mr. Ofori-Atta stated.

He also announced the ban on the printing of diaries, notepads and calendars by MMDAs and SOEs from 2024.

“Mr Speaker, as a first step toward expenditure rationalisation, the Government has approved the following directives which take effect from January 2023: All MDAs, MMDAs and SOEs are directed to reduce fuel allocations to Political Appointees and heads of MDAs, MMDAs and SOEs by 50%. This directive applies to all methods of fuel allocation including coupons, electronic cards, chit system, and fuel depots. Accordingly, 50% of the previous year’s (2022) budget allocation for fuel shall be earmarked for official business pertaining to MDAs, MMDAs and SOEs;

“A ban on the use of V8s/V6s or its equivalent except for cross-country travel. All government vehicles would be registered with GV green number plates from January 2023; Limited budgetary allocation for the purchase of vehicles. For the avoidance of doubt, the purchase of new vehicles shall be restricted to locally assembled vehicles;

“Only essential official foreign travel across government, including SOEs shall be allowed. No official foreign travel shall be allowed for board members. Accordingly, all government institutions should submit a travel plan for the year 2023 by mid-December of all expected travels to the Chief of Staff;

“As far as possible, meetings and workshops should be done within the official environment or government facilities; Government sponsored external training and Staff Development activities at the Office of the President, Ministries and SOEs must be put on hold for the 2023 financial year; Reduction of expenditure on appointments including salary freezes together with suspension of certain allowances like housing, utilities and clothing, etc.

“A freeze on new tax waivers for foreign companies and review of tax exemptions for free zone, mining, oil and gas companies; A hiring freeze for civil and public servants. No new government agencies shall be established in 2023; There shall be no hampers for 2022”.

The presentation of the budget is a constitutional exercise to be carried out by the Finance Minister on behalf of the President, Nana Addo Dankwa Akufo-Addo.

“In accordance with Article 179 of the 1992 Constitution and section 21 of the Public Financial Management Act, 2016 (Act 921) the Minister for Finance will, on behalf of the President, lay before Parliament the 2023 Annual Budget Statement and Economic Policy of Government on Thursday, 24th November 2022,” a statement from the Finance Ministry announced.

The Government of Ghana, intends to spend a total amount of GH¢205.4 billion in 2023, including the clearance of its arrears.

This was disclosed by the Minister of Finance yesterday when he presented the 2023 budget statement and policy comment to Parliament.

This is despite government’s own revenue target of GH¢143. 9 billion – a situation which means government will have to borrow GH¢ 61.9 billion from external sources to make up the difference.

“Total Revenue and Grants is projected at GH¢143,956 million (18.0% of GDP) and is underpinned by permanent revenue measures – largely Tax revenue measures – amounting to 1.35 percent of GDP as outlined in the revenue measures. Mr. Speaker, Total Expenditure (including clearance of Arrears) is projected at GH¢205,431 million (25.6% of GDP). This estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures (commitment basis) compared to the projected outturn in 2022 and a demonstration of Government’s resolve to consolidate its public finances”, the Minister said.

While presenting the budget statement and economic policy, Mr Ofori-Atta, explained that out of the amount, GH¢45 billion will be spent as compensation for employees which represents 5.6percent of Gross Domestic Product (GDP).

He noted that, GH¢8.048 million, will be expended on goods and services which will cover 1.0percent of GDP adding “Interest Payment is projected at GH¢53 billion representing 6.6%”.

Mr Ofori-Atta added again that “Mr Speaker, grants to other government units are estimated at GH¢30,079 million, representing 3.8% of GDP. Mr. Speaker, Capital Expenditure (CAPEX) is projected at GH¢27.694 million representing 3.5% of GDP”.

“Mr Speaker, Other Expenditure, mainly comprising Energy Sector Levies (ESL) transfers and Energy Sector Payment Shortfalls is estimated at GH¢26,739 million”, the Minister of Finance mentioned.

During the 2022 budget review, total revenue and grants were revised to GH¢97 billion (16.4% of GDP) down from the 2022 Budget target of GH¢101 billion (20.0% of GDP) representing 3.7 percent reduction.

In the same presentation, total expenditure (including payments for the clearance of arrears) was revised downward to GH¢136 billion (22.9% of GDP) from the original budget projection of GH¢138 billion (27.4% of GDP).

Meanwhile, the current GDP of the country is expected to reach US$72 billion dollars by the end of 2022.

According to the Minister of Finance, the economic recovery of the country, is largely dependent on the outcome of the Russia-Ukraine war.

 “Mr Speaker, the external sector performance in the outlook will depend largely on the quick resolution of the Russia-Ukraine war and the outcome of recession fears in advanced economies. The thrust of the external sector will focus on rebuilding external buffers enough to cover at least three and half months of imports of goods and services to cushion the economy against adverse external shocks. This will be underpinned by, among others, bilateral support, and strong remittance inflows.”

The Minister said the medium-term outlook of the country’s financial restoration has greatly been impeded by the Covid-19 pandemic and the outbreak of the conflict in Russia-Ukraine in February this year.

He said the economic uncertainties have necessitated the Government to seek the intervention of the International Monetary Fund (IMF) with plans far advanced to Ghana securing a fiscal facility.

“Mr Speaker, Government and the IMF have agreed on programme objectives, a preliminary fiscal adjustment path, debt strategy and financing required for the programme to be in line with the Government’s Post-COVID-19 Programme for Economic Growth (PC-PEG). The PC-PEG is Government’s blueprint to restore macroeconomic stability, promote debt sustainability, sustain economic recovery and support structural reforms.”

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