The Chief Economist and Head of Research at Standard Chartered Bank, Razia Khan has indicated that the Ghana’s 2023 Budget must focus on fiscal consolidation programmes and broad based revenue mobilization measures.

Ms. Khan added that there must be some cuts in spending to help restore investor confidence in the economy and also demonstrate government’s commitment to taking bold measures to stabilize the economy. 

She disclosed this in an interview with JOY BUSINESS in London.

She advised government to demonstrate plans of restructuring Ghana’s debt.

“There should be some attempts by the government to curb expenditure growth looking at what has happened in the country when it comes to the local financing issues over the past months, “she said.

Touching on debt servicing, Ms. Khan stated that there is the need for government to show how it intends to achieve debt servicing in the budget as “most market participants will be using it to deduce what the plan is when it comes to debt restructuring”.

“This might be very necessary because of how the rising inflation rate had impacted on the economy over the past months”, she said.

Khan on Ghana cedi and inflation rate

Ms. Khan suggested a further hike in the policy rate by the Bank of Ghana to help stabilize the cedi and slow the inflation rate.

The advice is coming at time that the Monetary Policy Committee of the Bank of Ghana is meeting to review developments in the economy.

The meeting, which started on Monday November 21 is expected to end on Friday November 25, 2022. The Chairamn of the committee, Dr. Ernest Addison is expected to announce the decision on Monday, November 28, 2022.

Ms. Khan argued that liquidity tightening might be necessary, as well as further increasing in the cash ratio reserves due to its impact on the local currency and Inflation rate.

“Inflation is something that affects every Ghanaian, therefore the authorities’ efforts should truly focus on what is needed for the stabilization to take place”, she said.

Government on the 2023 Budget Presentation

The Finance Ministry, Ken Ofori-Atta earlier disclosed that the 2023 Budget will focus fiscal adjustment programmes, value for money and be influenced by the outcome of the current negotiations with the International Monetary Fund for an Economic programme.

Government is also expected to come up with programmes that will help deal with the fiscal deficit as well as the country’s debt stock.

Ghana’s debt stock is now more than ¢402 billion ending July 2022. 

Some economic observers have forecast that 2023 Budget will be a “tight one” with some already describing it as an Austere Budget.

One official with knowledge of the presentation noted that Government will also want to demonstrate it committed to fiscal consolidation based on other programmes.

“We will also come up with initiatives that will demonstrate government’s commitment for value for money next year” a source said.