Mid-Year Budget Review: Focus on short-term insufficient; post-IMF reforms unclear – PwC

Audit, assurance and tax advisory firm PwC Ghana says the short-term performance focus of the 2024 mid-year policy review statement is insufficient in addressing the concerns of those interested in Ghana’s long-term economic prospects.

The finance minister, Dr. Mohammed Amin Adam on Tuesday 23rd July 2024 during the mid-year budget speech described the economy’s recovery as fast and stronger than anticipated.

According to him, the rebound was a result of governments implementing policies and executing of key programmes under the ongoing PC-PEG IMF programme.

But in its opinion and digest of the policy review, PwC says although it agrees with assertions the economy is recovering, the short-term focus is insufficient.

“We agree with the Honourable Minister for Finance when he says of the statistics/data contained in his speech to Parliament that these point to a good recovery in the economy”, portions of the assessment read.

“That the country is on course to meet short-term, end-of-year programmed and budgeted macro targets for 2024 is also comforting news. However, for us, other citizens and/or businesses with a vested interest in Ghana’s long-term economic prospects, a focus on short-term performance is not sufficient”, it added.

The assessment believes the speech failed to lucidly explain reforms that would enhance the country’s economic prospects, especially after the IMF programme.

“We recognise that, constrained by the restrictions and conditions of an IMF programme, the Government has little room for fiscal laxity. The question we pose is: what will happen when these restraints are removed? Will the trajectory of our economic recovery continue into sustainable broad-based growth in real terms for the resultant benefits to be widely felt by businesses, households, and individuals? For us at PwC, the answer to that question is not as lucidly or convincingly explained in the Minister’s speech as would have helped to

provide the comfort that businesses seek,” it explained.

Emphasizing the importance of reforms PwC highlights concerns with the pace of reforms needed in key sectors, such as public financial management reforms, property tax, agriculture and energy sector reforms.

The firm is amongst others also questioning the rationale behind the proposed creation of an independent fiscal council as it believes the Fiscal Responsibility Act if respected should suffice.

“Our considered opinion is that a Fiscal Council will only layer on additional costs that could be avoided. The Fiscal Responsibility Act 2018 (Act 982)—if implemented to the letter— should help keep Government and Government representatives accountable and on the path of fiscal discipline”, it argues.

PwC warns delays in implementing the difficult reforms could permit the problem to fester some more and possibly have a future government return to the IMF with cup in hand.