As the Akufo-Addo administration delivered its 2024 Mid-Year Budget Review, the stakes were high. Ghanaians are grappling with a cost of living crisis, inflation is squeezing household budgets, and businesses are struggling to stay afloat. With less than a year to the next general election, the question on everyone’s mind is: Has the government made real progress in fixing the economy, or is it just talk?
This article breaks down the facts, using data and economic trends to assess the real impact of the 2024 Mid-Year Budget.
“In effect, Mr. Speaker, we are living within our means. Indeed, consistent with our programme with the IMF, we are on course to achieving a primary surplus of 0.5 percent of GDP by end of the year”
Dr Mohammed Amin Adam, Minister of Finance at 2024 Mid-Year Budget Review
Ghana’s Economic Landscape in 2024
In the first half of 2024, Ghana’s economy continued to feel the aftershocks of the global pandemic, rising global interest rates, and the effects of geopolitical crises like the Ukraine-Russia war. Although some economies have seen partial recoveries, Ghana’s recovery has been slow due to a combination of high inflation, currency depreciation, and ballooning public debt.
By June 2024, inflation stood at 27.8%, an improvement from the peak of over 50% in 2022, but still far above the Bank of Ghana’s target range of 6-10%. The Ghana cedi has also seen gradual stabilization, though it remains vulnerable, with the currency trading at GH¢12.8 to $1 by mid-year.
With this background in mind, the 2024 Mid-Year Budget Review sought to address Ghana’s macroeconomic challenges while restoring confidence among the public and investors.
What Are the Key Budget Highlights?
The 2024 Mid-Year Budget introduced several measures aimed at fiscal consolidation and economic recovery, but were they enough?
1. Revenue Mobilization and Debt Management
The government is facing a public debt crisis, with Ghana’s debt-to-GDP ratio standing at 92% as of mid-2024. The budget outlined plans to enhance domestic revenue through tighter tax compliance measures, such as digitalizing tax collection processes and expanding the e-levy on electronic transactions.
Additionally, the government reaffirmed its commitment to the IMF bailout program, which aims to restore debt sustainability through reforms like expenditure rationalization and fiscal discipline.
What this means for Ghanaians: While these measures may improve the government’s revenue base, it’s unclear how they will translate into immediate relief for ordinary citizens. The cost of living remains high, and wage growth has not kept pace with inflation.
2. Public Sector Wages and Employment
One major point of concern for many Ghanaians has been the issue of public sector wages. The 2024 Mid-Year Budget announced that there would be no significant increases in public sector wages, citing limited fiscal space. This decision is expected to affect the purchasing power of public sector workers, especially those whose wages have not kept up with rising inflation.
What this means for Ghanaians: Public sector workers may feel the pinch even more in the coming months, with no major relief from the government. Expect continued discontent among labor unions, which have been agitating for wage increases to match inflation.
3. Inflation Control and Economic Stabilization
The budget revealed that inflation is expected to fall to 18-20% by the end of 2024, down from the current 27.8%. The Bank of Ghana’s monetary policy tightening, including high interest rates, is central to this forecast. In June 2024, the Monetary Policy Rate stood at 29.5%, a rate designed to combat inflation but which also makes borrowing more expensive for businesses and individuals.
What this means for Ghanaians: While controlling inflation is critical, high interest rates may stifle growth in the short term. The cost of credit remains prohibitive, especially for small and medium-sized enterprises (SMEs), and businesses are likely to scale back investments.
4. Growth Sectors: Agriculture and Industry
The government emphasized growth in agriculture and industry as key drivers of Ghana’s economic recovery. In particular, the budget made provisions for increased investment in agro-processing, mining, and manufacturing. Key agricultural projects, such as the Planting for Food and Jobs (PFJ) Phase 2, received an additional injection of funding, with the aim of enhancing food security and reducing the country’s reliance on imports.
What this means for Ghanaians: If these sectors see growth, it could create new jobs and improve local production capacities. However, the impact of these investments may take time to manifest, meaning immediate relief for struggling families and businesses could be delayed.
5. Energy and Utility Costs
Another critical aspect of the budget was the provision of additional subsidies for electricity and water for the poorest households. However, many middle-income households have expressed concerns over the high cost of utilities, particularly as the Electricity Company of Ghana (ECG) has implemented several tariff increases since 2023. The budget promised further efforts to manage energy sector debt but offered little detail on how this would translate into reduced tariffs for ordinary citizens.
What this means for Ghanaians: Despite government subsidies for the poorest, the middle class may continue to feel the strain of high utility bills. The energy sector’s debt and inefficiencies remain a significant obstacle to reducing costs for consumers.
Does This Budget Deliver Real Action or More Political Talk?
The 2024 Mid-Year Budget offers some hope in terms of fiscal consolidation and economic stabilization. However, the real impact on the lives of ordinary Ghanaians remains uncertain. While inflation is expected to decline and sectors like agriculture are set to receive a boost, the immediate effect on wages, employment, and cost of living may be minimal.
Key Data Points to Watch:
- Inflation Target: Will inflation fall to the projected 18-20% by year-end?
- Cedi Stabilization: Can the government and the Bank of Ghana stabilize the cedi, especially as election pressures mount?
- Debt Sustainability: How effective will the IMF reforms be in reducing Ghana’s debt burden?
Ultimately, Ghanaians will be watching closely to see whether these economic projections translate into real improvements in their pockets—or if this mid-year review is just another round of promises with little action.
