2014 Budget Highlights -Final

2014BudgetHighlights

Rising to the Challenge:Re-aligning the Budgetto meet Key National Priorities

November 2013

www.pwc.com/gh

NationalBudget

Rising to the Challenge: Realigning the budgetto meet key national priorities is the themefor the Governments 2014 Budget and Statementof Economic Policy. The Minister for Financeand Economic Planning noted that the adoptionof this theme is to ensure progress against thefollowing goals:

Enhance the resilience of the economyagainst risks;

Promote accelerated growth and develop-ment; and

Create jobs.

This years theme is set against the backdrop thatnone of the key 2013 macro-economic targets aregoing to be realised! The theme for the 2014Budget is an admission that, as currently struc-tured, the national budget will fail to adequatelydeliver on the Governments Better Ghana Agen-da, if it is business as usual. The Minister statedpublic sector compensation should not putfurther stress on the fiscal envelop. The Budgetmust leave room for infrastructure developmentand other priority programmes. It is not diffi-cult to figure out what Governments key budgetpain is in the short-term. The fact that publicsector pay is estimated at approximately 70% ofnational revenue says it all.

However, will the realignment deliver on the long-term strategic objectives of the country? AtPwC, we hope that this question is central to thedebate on the budget. What do we proposeshould be done?

First, we urge that every key stakeholder especially the Executive, Parliament and SocialPartners consider how best to effectively imple-ment the policies outlined in the budget toachieve the outcomes as related to the four pillarsof the Ghana Shared Growth Development Agen-da (GSGDA).

The four pillars of the GSGDA comprises: Putting people firstfocus around access

and quality of healthcare and education,jobs, productivity and the vulnerable;

A strong and resilient economy - macroe-conomic stability, private sector competi-tiveness, trade and industry , agriculturalmodernisation and natural resource man-agement;

Strategic infrastructure expansionoiland gas, roads, ports and developmentzones; and

Transparent, decentralised and accounta-ble governancecorruption, decentralisa-tion and citizen service.

In building consensus, all stakeholders shouldclosely examine the announced realignmentsor adjustments in the 2014 budget to deter-mine if they will be effective in directing thecountrys limited resources and energies to-wards realising (or setting us on a journey torealise) these four pillars.

Focusing on effective implementation, stake-holders could consider the following: What are the realistic time frames with-

in which the outlined programmes canbe implemented?

How should they be structured? How should they be sequenced to opti-

mise their interdependencies? How should they be tracked and moni-

tored? What will indicate success or otherwise

to inform change/enhancement in im-plementation strategy?

There are many more questions to be askedand debated to provide clarity to these pillarsthat we have selected to propel us towardslong-term prosperity.

The Minister mentioned the following initia-tives aimed at maximising revenue and con-trolling expenditure: A gradual shift to the automatic price

adjustment mechanism for petroleumand utility prices;

Review of the Petroleum Revenue Man-agement Act 2011, to enable allowableexpenditures to be aligned to nationalpriority infrastructure programmes;

Further interventions to manage PublicSector compensation;

Restrictions on new borrowing; A restructuring of debt through refi-

nancing to improve tenure and burdenof repayment;

Clearance of outstanding commitmentson counterpart funds to enable comple-tion of pipeline projects and limits onnew contract awards;

Implementation of Programme BasedBudgeting; and

Taxationnew taxes, increases in exist-ing tax rates and some exceptions too.

The main goal is to rein in the fiscal deficit,which is at 8.5% of GDP at the end of Septem-ber 2013. Successful achievement of this goalwill depend on : These tools being the right ones; and The implementation resolve of Govern-

ment.

PwC Ghana 2014 Ghana Budget Highlights: Commentary 1

Commentary

The initiatives/tools announced in the 2014budget, without doubt have been thoroughly con-sidered and evaluated. What often has been ourchallenge as a country has been our implementa-tion discipline. Sometimes too this is because westretch our capacity too thinly in an attempt todeliver on multiple fronts.

In summary, we offer our own views and sugges-tions on the 2014 budgets, focusing on what weconsider to be potentially big impact areas, in theshort and long-terms. These are not new ideasGovernment has already presented its policiesand initiatives in these areas. We, however see aneed for Government to put in place structuresthat will facilitate effective implementation andmonitoring to achieve the desired outcomes in atimely manner. We suggest the following:

Public sector payas currently being imple-mented, the Single Spine Salary Structure (SSSS)poses a significant risk to the countrys economicstability, as it contributes to the high fiscal deficit-to-GDP levels. Probably, not the same case, butGreece offers us a rather chilling example ofwhat could happen to a country that does notspend within its means. Initiatives to implementinclude: clean-up of the public sector payroll;implementation of effective performance man-agement and performance-based pay systemsthat together ensure that the public sector retainsand rewards high performers for optimal yield ontax payers contributions, implementation of atraining system that better guarantees improvedpublic sector productivity.

Powerquality of supply, access and affordabil-ity are all issues to consider, given that powersimply cannot remain a public good. Govern-ment lacks the resources to provide electricity atless than cost recovery tariffs. Private capital isneeded, but requires cost-plus rewards. If busi-nesses will thrive, power is necessary. Govern-ment should implement a long-term strategy thataddresses in acceptable sequence the questions ofaffordability, access and quality, leveraging PPPs.The question of electricity is intricately linkedwith the discussion of gas and related infrastruc-ture.

Infrastructureroads and ports, in particularare important to open up any economy. Urbanand rural infrastructure, especially roads, differwidely in nature, cost and purposes. For exam-ple, are we concerned about improving urbanmobility or improving all-year round access tofarmlands?

It is important that, as a country, we determinewhat we need at this stage of our socio-economic development and communicate ourpriorities to private sector investors throughthe mix of policies and incentives we put out.Such understanding should help to inform theeconomics we should take into considerationwith regard to the different infrastructure pro-jects. In summary, Government must be a lotmore focused on how it is implementing itsinfrastructure programme to optimise benefits.

Agriculture, industry and tradeinitiatives must be planned to have long-termachievement focus. Agricultural modernisationshould be comprehensive, not sporadic. Thereshould be forward-integration with export-ledmanufacturing initiatives. Over time, thisshould lead to high agricultural productivity, astronger private sector, more jobs with betterpay, domestic capital formation, and a strongercurrency.

The above noted enablers coupled with effec-tive project and programme management isnecessary for success. Value for money alsoneeds to be one of the priority criteria formeasuring success and should be main-streamed into procurement processes and im-plementation reviews.

As we move to entrench, our middle incomestatus, we expect the private sector to take on amore active role in various economic activities.In this regard, we note that the setting up ofthe Ghana Infrastructure Fund and other probusiness activities are in the right direction.Unfortunately the Budget is silent on theenhancement of the case for Ease of DoingBusiness. This could be facilitated by the en-actment of the new Companies Code and otherrelevant business environment laws.

In conclusion, we urge the august House ofParliament to adopt a non-partisan approachin its debate of the budget, a budget whoseeffective implementation will consolidate ourmiddle income status.

Felix AddoCountry Senior PartnerPwC Ghana

PwC Ghana 2014 Ghana Budget Highlights: Commentary 2

NationalBudget

THE ECONOMY

The 2013 Budget was based on the Ghana SharedGrowth and Development Agenda (GSGDA: 2010-13) which lapses this year. There is a successorplan for the next term (GSGDA II: 2014-17) whichis being finalised and will incorporate the medium-term vision and strategy for the country. In the2013 Budget, one of the primary objectives ofGovernment was to deal with the high budget defi-cit caused by overruns stemming from five mainareas; shortfalls from corporate income taxes fromthe petroleum sector, subsidies on petroleumproducts and utilities, significant delays in in-flows from Development Partners, a significantwage and salary bill and finally, increases in inter-est payments on Government debt. Essentially,2013 was a challenging year for the economy asthe nation would fail to meet its targets highlight-ed below:

However, both the Industry and Services sectorsappear to be on track to exceed their sectoral tar-gets, the exception being the Agricultural Sector .

Economic Objectives and Policies for 2014and the Medium Term

As the nation seeks to Rise to the Challenge: Re-aligning the budget to meet key national priori-ties, the strategy remains the same as for theprior year:

Putting people first; Building a strong and resilient economy; Expanding infrastructure and Ensuring transparent and accountable

governance.

Medium Term Targets for 20142016

The medium term objective and strategic direc-tion under the new Medium Term DevelopmentPolicy Framework (MTDPF) is to expand oppor-tunities for all and reinforce the foundation forthe socio-economic transformation of the coun-try, in partnership with the private sector. Targetsfor the period 20142016 are as follows: non-oil real GDP growth of at least 8%; overall real GDP (including oil) growth of

8%; an inflation target of 9% within the band of

2%; overall budget deficit of 6% of GDP by

2016; and Gross international reserves of not less

than 4 months of import cover of goodsand services by 2016.

The specific macro economic targets for 2014 arealso set out below:

Debt Sustainability Analysis

Total Public Debt amounted to US$23.5billion as atSeptember 2013 compared to US$19.2billion for thesame period in 2012. The total public debt to GDPratio increased significantly from 49.3% in 2012 to52.0% in 2013.

PwC Ghana 2014 Ghana Budget Highlights: Overall Summary 3

Sectorial Performance for 2013Sector Growth

Rate Tar-get %

Outturn% **

% of GDP

Agriculture 4.9% 3.4% 21.3%

Industry 8.7 % 9.1% 28.1 %

Services 8.5% 9.2% 50.6%

Description Actual*2013

Target2013

Real GDP Growth (non-oil)

5.8% 6.5%

Overall real GDP(including Oil) Growth

7.4% 8.0%

End of period inflation 11.9% 9.0%

Fiscal balance deficit 8.4% 7.2%**

Gross international re-serves

Not less than2.9 months ofimport cover

Not less than3 months ofimport cover

Source: MoFEP Budget Statement 2014* Provisional estimates, Sept. 2013** September 2013 Target



Description Target 2014

Real GDP (excluding oil) 7.4%

Real GDP (including oil) 8%

12 month CPI inflation(average) with a band of(+ 2%)

9.5%

Gross international reserves Reserves not less than 3months of imports ofgoods and services

Overall budget deficit 8.5%

Overall Summary

The significant increases in public debt result-ed from the following:

Disbursement of US$750 million from theEurobond proceeds;

Drawings of US$383.5million from theChina Development Bank; and

Issuance of 7-year domestic bonds.

In September 2013, external debt constituted45.9% (2012 47.8%) and Domestic debt consti-tuted 54.1% (201252.2%) of total public debt.According to the 2013 Debt SustainabilityAnalysis (DSA) conducted by the IMF and theWorld Bank, Ghanas risk of debt distress hasrisen. Per the DSA, the debt service-to-revenue ratio is projected to average about9.1% of GDP between 2013-2018.

Governments debt management strategyseeks to achieve a cost-efficient access to exter-nal and domestic debt for efficient debt man-agement.

This will be executed via the following: Liquidity Management; Revenue Generation from Self Financ-

ing Projects On-Lending and Escrow Account ar-

rangements with MDAs/MMDAs; Financing Capital Expenditures with

long-term Debt ; Loans-to-Priority Projects Programme;

and Long-term financing from the external

capital markets.

Petroleum Revenues Outlook for 2014

Government expects to generate a total ofUS$777million in gross revenue from petrole-um receipts in 2014 which is about 34% higherthan the budget for 2013. Government projectsto allocate about US$175million to the GhanaPetroleum Fund (GPF) in 2014 which repre-sents 30% of the total benchmark revenue(that is after accounting for transfers to GhanaNational Petroleum Corporation). The remain-ing 70% will be allocated to the Annual BudgetFunding Amount(ABFA).

Taxation

The tax proposals in the budget reflect Govern-ments intention to improve internal revenuemobilisation through tax effectiveness andefficiency by way of tax modernisation pro-grammes to be undertaken by the Ghana Reve-nue Authority (GRA) to ensure the recovery ofuncollected taxes. Some of the key proposalsand initiatives in this regard are as follows:

Direct Taxes Increasing the withholding tax rate on com-

mercial rent from 8% to 15%; Undertaking transfer pricing audits to reduce

transfer pricing abuse; Increasing the withholding tax rate on man-

agement and technical service fees from 15%to 20%;

Expanding the scope of capital gains tax tocover petroleum operations; and

Reintroducing the Windfall Tax Bill to bepassed by Parliament.

Government also plans to have an early ter-mination of the: National Fiscal stabilisation levy

(June 2014 as opposed to December2014)

Special Import Levy (end December2014 as opposed to June 2015)

Special Import Levy on agricultureand fishing inputs (immediately)

Indirect Taxes 2.5% increase in VAT rate to be allocated to

the Infrastructure Fund; Introduction of special Electronic Point of

Sale Device Scheme (EPOS) to reduce VATleakages;

Introducing Special Import Levy (SIL) ex-emption for agriculture and fishing inputs,medical supplies, educational materials, andenergy saving bulbs;

Providing import duty and VAT waiver/exemption for raw materials imported forlocal printing of textbooks and exercise booksand for local production of HIV/AIDS drugs;

Introduction of tax stamps on selected excis-able products; and

Change the basis of petroleum excise dutyfrom specific to ad valorem; and

Increase in the road fund levy.

Tax Administration Harmonisation and simplification of the ex-

isting tax laws into a single Tax Administra-tion Bill;

Review of existing exemptions granted induties and other taxes;

Customs Division of the GRA to improve itscoverage under the Valuation Assurance Pro-gramme with the ultimate aim of acquiringits own valuation model;

Automation and improvement in the opera-tional processes of the GRA; and

Establishment of Free Income Tax Assess-ment Bureau to assist traders (and othersmall businesses which are not limitedliability companies) with basic record

keeping assistance.


Overall Summary

SECTORAL OUTLOOK

Highlights of key sectoral programmes and activ-ities outlined in the 2014 budget to re-align thebudget to meet key national priorities are as fol-lows:

Ministry of Food and AgricultureKey initiatives include: Implementation of the Block Farm, Live-

stock, Poultry and Agri-business initia-tives under the Youth in Agriculture Pro-gramme;

Facilitating the expansion of private sectorled Agricultural Mechanisation ServicesEnterprise Centres;

Construction of modern farmers marketsin the Brong Ahafo and Northern Regionsto focus on grains and tubers respectively;

Public Private Partnership arrangementsand collaboration to develop AgricultureEstates on the Accra plains and other ex-isting state lands. These private partner-ships are also meant to support the reha-bilitation of existing irrigation schemes topromote all year round farming; and

Scaling up the Agricultural insurancescheme to cover more crops, regions andconsequently protect farmers against loss-es.

Ministry of Energy and PetroleumGovernment resolves to develop and ensure relia-ble high quality energy services at a minimumcost to all sectors of the economy. The followinginitiatives in the two sub sectors are expected todeliver this objective :

Petroleum Sub Sector Development of a framework to provide a

basis for the construction, operation andmaintenance of Liquefied Natural Gas(LNG) facilitate to meet anticipated short-falls; and

To attain peak oil production of 120,000barrels of oil per day in the Jubilee Fieldin the upstream petroleum subsector.

Power Sub SectorThe key target is to increase electricity accessfrom 75% to 80% in 2014 and attain completionof : the first phase of the following: 220MW

Kpone Thermal Power Plant (KTPP) pro-ject, 110MW T2(Tico Expansion) projectand the VRA 12MW Solar PV Project inline with Government objective to achieve5,000 MW generation capacity by 2016(including 10% from renewable sources);

the 161KV Tumu-Han-Wa Transmis-sion Project; and on-going projects suchas construction of ECG 33/11KV prima-ry sub-station at four stations in Ashan-ti Region, construction of a new BulkSupply Point at Tema Smelter II) andthe installation of 70,000 split-prepaidmeter for ECG.

Ministry of EducationGovernment intends to increase access to dis-tance learning programs, interactive lessonsand open schooling, as well as deployment ofpersonnel to the educational sector and im-proving affordability by subsidising basic edu-cation for JHS, SHS and technical trainingamongst others.

Ministry of HealthThe Ministry hopes to strengthen public finan-cial management and health data collection,improve monitoring and supervision of thedigital e-Health Solution Project. The Ministrywill also: replace equipment in selected health

facilities, accelerate the maternal healthsupport programme to improve mater-nal health,

scale up membership authenticationand the e-claims systems to enhanceefficiency and reduce false claims,

increase health care infrastructure byconstructing polyclinics in the variousregions of Ghana as well expandingKorle-Bu teaching hospital and lastlybridging equity gaps in access to healthcare and ensure sustainable financingarrangements to protect the poor.

Ministry of Gender, Children and SocialProtectionThe Ministry will finalise and disseminate theNational Child Protection Policy as well as re-view and implement the Early Childhood Careand Development Policy. Under the DomesticViolence (DV) and Human Trafficking (HT)programme, the Ministry will set up and oper-ationalise the HT and DV Funds, operational-ise rapid response team for HT and DV mattersand provide professional psychosocial supportfor HT and DV victims.

Ministry of Trade and IndustryInitiatives to be undertaken during the yearinclude: Management and marketing support

for 1,500 horticultural producers inselected towns in the Volta Region;


Overall Summary

Developing skills of 1,000 exporters par-ticularly in the Small and Medium Enter-prise (SME) sector to enable them succeedin foreign market;

Establishment of new market opportuni-ties for exporters especially in the Europe-an Market; and

Setting up of a new SME fund to boostsupport for the SMEs.

Ministry of Justice and Attorney-GeneralsDepartmentThe Law Reform Commission has produced threedraft laws for consideration. These are: Criminal Injuries Compensation Law; Marriage Registration Law; and the Law Reform Act.

The Intestate Succession Bill and Property Rightsof Spouses Bill are being reviewed by the LawReform Commission to correct the anomalies inthe current Regulations.

As part of the Legal education programme, theGeneral Legal Council will license 1,750 Lawyersand 300 law firms to aid proper regulation ofprivate legal practice in Ghana.

The Ghana School of Law will also train 40 law-yers in specialised Commonwealth LegislativeDrafting to aid the enactment of good laws.

INFRASTRUCTURE

The 2014 budget allocates GH1.5 billion to in-frastructure. The main areas of infrastructureexpansion in the 2014 budget are Water Re-sources, Works and Housing, Transport, Roadsand Highways and Communications. Govern-ment intends to pursue Public Private Partner-ships to fund some of the infrastructure projects.

WaterPrograms to be implemented for the supply ofwater include developing projects to expand andrehabilitate water treatment plants, transmissionpipelines, expansion of water supply systems andintake facilities, improved access to water andsanitation for 600,000 people in 66 districts inselected regions and development of a rain waterharvesting strategy as a supplement to water ser-vice delivery amongst others.

HousingThe budget will focus on reducing the housingdeficit across the country and this will beachieved by creating an enabling environment forprivate sector participation to deliver affordablehousing units, improving mortgage affordabilityand facilitating the completion of the variousaffordable housing projects.

Roads and HighwaysThe proposed initiatives are targeted towards: Developing the Public Private Partner-

ship (PPP) model for the financing,construction and management of thefollowing key road projects: rehabilita-tion and expansion of the Accra-TemaMotorway, Accra Kumasi road duali-sation and the Western Corridor roadsPhase 1 (Elubo-Sunyani);

Routine maintenance on 11,600km,16,000km feeder and 4,200km urbanroad networks respectively;

Periodic maintenance activities on892km trunk, 1500km feeder and1200km urban roads of the trunk roadnetwork respectively; and

Implementation of electronic tolling ofroads to improve revenue generationinto the Road Fund.

TransportActivities for 2014 shall emphasise amongstothers the: Expansion of the Kotoka International

Airport (KIA) terminal building project; Construction works on the upgrade of the

Tamale Airport as an alternate to KIA; Development of the ports infrastructure

at Akosombo, Buipe and Yapei; and Continuation of rehabilitation and mod-

ernisation of existing railway lines.

CommunicationThe key policy initiatives are: Developing and maintaining an educa-

tional portal for teachers, students, par-ents and researchers, with the expecta-tion that quality education will be deliv-ered to the doorsteps of all.

Implementing the e-Parliamentary Sys-tem, under which members will be able tofile their queries to the Executive;

Continuing installation of the fibre opticinfrastructure and constructing a datacentre and a managed services compo-nent to ensure security of data on theentire network;

Implementing and deploying well-functioning unique national biometric IDsystem under the e-Transform project;

Continuing the installation of fibre OpticBroadband Backbone infrastructure onthe Eastern corridor to accelerate devel-opment and access to Information andCommunication Technology (ICT).


NationalBudget

Structural bottlenecks ininfrastructure, labourmarkets, and decliningcommodity prices havecontributed to a slow-down in the growth mo-mentum in many emerg-ing and developing econo-mies.

Inflation has been rela-tively higher in majoremerging market econo-mies as a result of ex-change rate depreciationin recent months.

Ghana has experienced amixed effect from develop-ments in the global econo-my. Increasing unrest andgeographical tensions inthe Middle East and NorthAfrica led to spikes in oilprices. Conversely, de-mand for gold decreasedas unemployment rates inadvanced economies re-mained high particularlythe Euro Zone.

Overview

The expected performance of the economy during2013 as determined by the key indicators are asfollows:

An examination of 2013 economic resultsrelative to targets indicates the need foreffective monitoring of policies aimed atarresting the increasing deficit. Govern-ment should increase efforts to curb publicspending which is increasingly preventingeffective balancing of the budget.

The World Economy

The IMFs World Economic Outlook (WEO,Oct. 2013) projects a sluggish global eco-nomic growth in 2013, estimated at 2.9%less than the 3.2% recorded in 2012.

The decline resulted from a weaker thanexpected performance from emerging mar-kets and developing economies and a sloweconomic recovery in advanced economies.

The IMF projects global growth of 3.6% in2014. The projected growth will be drivenmore by advanced economies particularlythe United States, where activity will moveinto higher gear as fiscal consolidation eas-es.

In the Euro Zone growth is expected to re-main sluggish in 2014 as a result of bottle-necks in credit. However, policy actionsshould reduce major risks and stabilisefinancial conditions. The region is expectedto gradually pull out of recession, withgrowth reaching 1% in 2014.

Growth in emerging markets and developingeconomies is expected to remain strong at5% in 2014, supported by solid domesticdemand, recovering exports, and supportivefiscal, monetary and financial conditions.Commodity prices will continue to boostgrowth in many low-income countries, in-cluding those in sub-Saharan Africa

Inflation is expected to remain generallystable in advanced countries,supported by a slowdown in commodity pricemovements.

In major emerging developing economies,however, inflation has been relatively higher,a problem that has been magnified by theexchange rate depreciation in 2013. The ex-ternal financing conditions that have led tothe weakening of currencies in emergingand developing economies in recentmonths could also drive up inflation.

Source: IMF WEO, Oct. 2013

Spill-overs from sluggish external demand,reversal of capital flows and declines in com-modity prices pose threats to growth prospects inGhana for short to the medium term. In order toensure that the medium term growth targets aremet, Government needs to pay priorityattention to pipeline infrastructure invest-ments, deepen the ongoing structural reforms andgive priority to non-traditional exports.

PwC Ghana 2014 Ghana Budget Highlights: The Economy 7

3.2% 2.9%3.6%

4.9%4.5%

5.1%

1.5% 1.2%2.0%

0%1%

2%3%

4%5%6%

2012 2013 2014

Global GDP Growth (%)

World

Emerging Markets and Developing Countries

Advanced Economies

DescriptionActual2013*

Target2013

Real GDP growth (non-oil) 5.8% 6.5%

Overall real gr0wth(including oil) 7.4% 8.0%End of period inflation 11.9% 9.0%Fiscal balance deficit 8.4% 7.2%**

Gross InternationalReserves

Not less than2.9 months ofimport cover

Not less than3 months ofimport cover


The Economy

The West African Monetary Zone (WAMZ)

Economic growth in the West African MonetaryZone (WAMZ) was 6.7% during the first half of2013 compared to 6.4% during the same periodin 2012. The trend was driven by economic activ-ities in member states as follows;

In Nigeria the economy expanded by6.6% largely on account of increasedactivity in Industry and Agriculture.

Economic growth is expected to increasein The Gambia from 3.9% in 2012 to6.4% in 2013 as a result of expansion inagriculture, while Liberias growth is pro-jected to record a marginal increasefrom 8.3% to 8.4% on account of in-creased mining activities.

Guinea and Sierra Leone, however,projected growth slowdown from 3.9%and 15.2% in 2012 to 2.9% and 14.6% in2013, respectively.

Ghanas real GDP growth slowed from11.1% in the first half of 2012 to 6.4% inthe corresponding period in 2013 due toreduced activity in the industrial sector,especially energy and manufacturing, aswell as slower growth of the agriculturalsector.

During the first half of 2013, WAMZ infla-tionary pressures in the Zone eased consider-ably as zone-wide inflation declined to 9.3%at end-June 2013, from 12.6% at end-June2012.

Even though Ghana, Guinea and SierraLeone recorded double digit inflation of 11.6%,12.0% and 10.8% respectively, single-digitinflation rates of 5.8%, 7.0% and 8.4% rec-orded by The Gambia, Liberia and Nigeriaensured an overall inflation rate of 9.3% inWAMZ.

The WAMZ gross external reserves positionimproved with an aggregate stock of reservesof US$51.4 billion at end-June 2013, com-pared to US$41.1 billion during the same peri-od in 2012.

The stock of external reserves increased infour member states, with Nigeria and Gha-na recording the largest increases of 27%and 20.1% over that of end-June 2012 toUS$45.0 billion and US$4.9 billion, respec-tively, at end-June 2013. In Guinea andLiberia, the gross external reserves posi-tion deteriorated by 13.2% and 13.3%, toUS$669.7 million and US$231.4 million,respectively.

Convergence Criteria

The WAMZ primary convergence criteriaare as follows;

As at end-June 2013, Nigeria was the onlymember state that satisfied all the four pri-mary criteria. Liberia and Sierra Leonesatisfied three of the criteria each, with Libe-ria missing out on the external reserves cri-terion, whiles Sierra Leone did not meet theinflation criterion.

The Gambia and Guinea satisfied two criteriaeach. The Gambia missed fiscal deficit andcentral bank financing criteria whiles Guin-ea was unable to meet the inflation andfiscal deficit criteria.

Ghana met only the central bank financingas a percentage of previous years tax reve-nue criterion.

Source: West Africa Monetary Institute

Given rising inflation and public sector wagescoupled with external shocks, Government mustenforce tighter fiscal and monetary policies tobe able to meet the convergence criteria ofWAMZ in the short to medium term.


Ghanas real GDP growthrate fell to 6.4% by end ofJune 2013 from 11.1% endof June 2012. Nonetheless,the country recorded thesecond largest increase inexternal reserves in theWAMZ economies fromJuly 2012 to June 2013.

Despite better perfor-mance in previous years,Ghana is the only countryin the WAMZ to havemissed three of the fourprimary convergence cri-teria for the Zone as atJune 2013.

Primary criteria

1. A single-digit inflation rate at the end ofeach year

2. A fiscal deficit of no more than 4% of theGDP

3. A central bank deficit-financing of nomore than 10% of the previous years taxrevenues

4. Gross external reserves that can giveimport cover for a minimum of threemonths

The Economy

A summary of the WAMZ Secondary Conver-gence criteria are as follows;

No member state of the WAMZ satisfiedall the secondary criteria. Nigeria sat-isfied three criteria which were non-accumulation of arrears, salary mass overtax revenue and exchange rate stabil-ity.

Guinea met salary mass over tax rev-enue and investment from domestic re-ceipts criteria, whiles Liberia compliedwith non-accumulation and liquidation ofdomestic arrears and tax revenue over GDPcriteria.

The Gambia and Sierra Leone did not satis-fy any of the secondary criteria. Ghana metthe criteria on real interest rate and exchangerate stability.


Inflation and fiscal deficitremained the more chal-lenging criteria for Memberstates, whiles central bankfinancing and external re-serves were mostly satisfiedby Member States.

Secondary criteria

1. Prohibition of new domestic default pay-ments and liquidation of existing ones

2. Tax revenue should be equal to or greaterthan 20 percent of the GDP

3. Wage bill to tax revenue equal to or lessthan 35 percent.

4. Public investment to tax revenue equal toor greater than 20 percent

5. A stable real exchange rate

6. A positive real interest rate

The Economy

Summary of Sectoral Performance

Agricultural Sector

The Agricultural Sector grew at 3.4% in2013. This was markedly higher than 2012s1.3%, but still below the 2013 target of 4.9%

Agricultural growth was driven mainly bythe Fishing sub-sector, which grew by 8.9%in 2013 relative to a growth rate of 4.7% in2012. The performance of the Fishing sub-sector is primarily due to the strong growthin the aquaculture industry.

The importance of the Agriculture Sector in thesocio-economic development of Ghana cannot beoveremphasised. The President in his State of theNation Address outlined some policy initiatives(such as focus on fishing and aquaculture devel-opment, incentives for cocoa farmers), gearedtowards accelerating agricultural modernisa-tion for job creation. Beyond these policy initia-tives, Government should put in place practicalimplementation steps in the agriculture sector toenable the economy achieve the full benefitsassociated with these policy initiatives.

The Forestry and Logging sub-sector have his-torically exhibited declining trends, having con-tracted by 14% and 4% in 2011 and 2012 respec-tively. With a 0.8% growth in 2013 mainly dueto the investments in reforestation activities,Government appears to have taken a positivestep towards reviving the Forestry and Loggingsub-sector. Government should ensure that ro-bust Monitoring and Evaluation (M&E) andperformance management systems are imple-mented along with these initiatives to optimisethe resources being expended to revive growth ina sector with such high value potential.

Industry Sector

The Industry Sector recorded a growth of9.1% in 2013, up from 7% in 2012 and abovethe 2013 target of 8.7%.

The performance of the Industry Sector wasmainly on account of a 37.5% growth in pe-troleum activities which fed into a 17.6%growth in the Mining and Quarrying sub-sector, up from 5% in 2012.

The Manufacturing sub-sector, however,posted a growth of 2.5%, down from 5%growth in 2012, mainly due to the powercrisis which was experienced in the first halfof the year.


The Services Sector ac-counted for the largestcontribution of 50.6% tothe size of GDP in 2013;Industry contributed28.1%; while Agriculturecontributed 21.3%.

In spite of the improvedgrowth in the AgricultureSector in 2013 comparedwith that of 2012, the sec-tors share of GDP de-clined from 22.7% in 2012to 21.3% in 2013 due tostronger growth in boththe Industry and ServicesSectors.

5.0 5.0 5.06.0

2.33.0

3.7

5.3

0.8

8.9

-123456789

10

Crops Cocoa Livestock Forestry andLogging

Fishing

%

Agricultural Sub-sector performance

Target Actual**

Source: MoFEP Budget Statement 2014


The Economy

Growth within the Industry Sector has over thepast 3 years (2011-2013) been driven mainly bythe Petroleum sub-sector. All the other sub-sectors (relative to performance in 2012) record-ed marginal growth and in some instances de-cline in 2013 relative to performance in 2012,underscoring the need for Government to re-vamp activities within the other sub-sectors andalso avoid the Dutch Disease.

Having attained lower middle income status, itis imperative for our economy to move fromexporting primary products towards industriali-sation to enable the creation of more value forexports, thus expanding our manufacturing baseand creating more jobs.

The Electricity sub-sector was reported to haverecorded less-than-targeted growth, drivenmainly by the sector-wide challenges that wereevident in the first half of 2013. This under-scores the fact that demand for power is veryhigh and the generation deficit must be fixedpermanently. It is a relief to note the entire MCACompact 2 funds is expected to be channeled topower generation which will facilitate growthand expansion within the Industry Sector.

Services Sector

The Services Sector which has over thepast years contributed the largest propor-tion of GDP maintained its high growthrate posting a 9.2% growth in 2013, higherthan the targeted growth of 8.5% butdown from 10.2% in 2012.

The five sub-sectors that drove thegrowth of the Service Industry are as fol-lows:

The Service Sector has over the past years con-tributed the largest share of GDP. A key con-cern has been that the Services Sector lacks thecapacity to generate as many jobs as the agri-cultural sector would and might focus on thosemeeting some minimum educational standards.Expansion and growth in the Agriculture sectorcould be the panacea to the rising unemploy-ment in Ghana particularly for the youth.


10.0 12.013.0

6.0 8.513.7

24.7

12.1 11.2 9.5

-5

1015202530

Hotels andRestaurants

Information andCommunication

FinancialIntermediation

Health andSocial Work

Transport andStorage

%

Sub-sectors in the Service Sector which experiencedgrowth

Target Actual**


The Economy

Fiscal Performance

**Provisional estimates, Sept, 2013Source: MoFEP Budget Statement 2014

Revenue

The shortfall in total revenue and grants hasmainly been attributed to lower than antici-pated domestic revenue collection and partlyas a result of low disbursement of grantsfrom our development partners.

The weak revenue performance in all taxtypes, except corporate income tax from theoil companies, accounted for the shortfall indomestic revenue.

The lower than expected tax revenue perfor-mance according to Government relates tolower import volumes, decline in commodityprices on the world market and the slowdown in economy during the first half of the2013, due partly to the energy crisis. Particu-larly, the decline in gold prices resulted inlower than expected company taxes and min-eral royalties.

Government will have to improve domestic reve-nue mobilisation efforts in 2014 in order to re-verse the high budget deficit.

Expenditure

Total expenditure over the nine month period toSeptember 2013 was 6.6% lower than the budgettarget and 25.5% higher than the correspondingperiod in 2012. The growth in expenditure wasmainly due to the increase in interest costs andgrowth in public sector wage bill during 2013.

Interest payments in 2013 totalled GH3.3m,39.5% higher than budget target and 111.1%higher than the actual for the corresponding pe-riod in 2012. Of this amount, domestic interestwas 47.2% higher than the budget target. On ayear-on-year basis, domestic interest grew by140.4% reflecting very high domestic borrowingin 2012 to finance the deficit.

Total capital expenditure was 4% of GDPand compares with the budget target of 4.1%of GDP. The shortfall in capital expenditurewas due to the slow disbursement of someproject loans. To ensure that growth is notfurther negatively impacted by a reduction incapital spending due to shortfall in revenue,part of the proceeds from the Eurobond is-sue has been earmarked to fund capital ex-penditures in the Budget.


Total revenue for the ninemonth period ended Sep-tember 2013 was 15.1%below target with expendi-ture also 6.6% below tar-get, resulting in an overallbudget deficit of 8.4% ofGDP against a targeteddeficit of 7.2% of GDP.

The shortfall in total reve-nue has been attributedmainly to lower than an-ticipated domestic revenuecollection and partly dueto low disbursement ofgrants from developmentpartners.

Domestic revenue whichcomprises tax and non-taxrevenues, accounted for96% of total actual reve-nue over the first threequarters of 2013.

Tax revenue was belowtarget as a result of lowerimport volumes, decline incommodity prices on theworld market and slowdown in economic activi-ties during the first half of2013 due partly to the en-ergy crisis, thus all culmi-nating lower companytaxes and mineral royal-ties.

The lower than expectedgrants was due to the non-disbursement of budgetsupport from our Multi-Donor Budget Supportpartners.

2013Target

(Jan-Sept)GHmillion

Actual **(Jan-Sept)

GHmillion % ChangeTotal Revenue 16,341.90 13,868.20 -15.1%Total Expenditure and Arrears Clearance 22,710.30 21,202.80 -6.6%Overall Fiscal Balance (6,368.40) (7,334.60) 15.2%

Domestic Revenue 15,285.90 13,333.90 -12.8%TaxRevenue 12,122.30 10,005.00 -17.5%Non-Tax Revenue 3,040.90 3,222.90 6.0%

Others 122.70 106.00 -13.6%Grants 1,056.10 534.30 -49.4%

Total Revenue 16,342.00 13,868.20 -15.1%

Total Expenditure 20,917.00 18,743.40 -10.4%Recurrent 15,448.80 12,817.50 -24.0%Capital 3,674.90 3,466.50 -5.7%

Arrears Clearance 1,793.30 2,138.20 19.2%Discrepancy - 321.20 0.0%

Total Expenditure and Arrears Clearance 22,710.30 21,202.80 -6.6%

The Economy

Fiscal Deficit

Against a backdrop of a high fiscal deficit in 2013,fiscal policy outlined in the 2014 Budget aimed toachieve fiscal prudence, in order to achieve sus-tainable debt limits and a reduction in the budgetdeficit. Government intends to reduce the budgetdeficit from 8.4% of GDP in 2013 to 6% of GDPby 2016.

To enable it achieve the targeted fiscal bench-marks, Government plans to reduce the budgetdeficit through improved revenue mobilisationand other initiatives. Specifically, its fiscal policywill focus on: Improving revenue mobilisation through

the Ghana Revenue Authoritys on-goingModernisation Programme;

Realigning key budget items and enhanc-ing the efficiency of public expendituresthrough the ongoing Public FinancialManagement (PFM) reforms, includingGIFMIS

Reviewing capital expenditures and thestrategies for financing them (in collabo-ration with Bank of Ghana)

Focusing on the completion of pipelineprojects to reduce medium term fiscalrisks; and

Refinancing and extension of tenure ofdebt.

The fiscal deficit at the end of 2013 is estimatedat GH8,905 million, equivalent to 10.2% ofGDP. This means that Government must put inplace pragmatic measures to address the in-creasing budget deficit.

We note that financing the deficit will be fromboth domestic and foreign sources. Financingthe deficit from domestic sources (i.e. throughborrowing) will result in a crowding out effect,leading to higher interest rates on the domesticmarket.

With its proposed strategies of addressing thehigh debt service cost (such as adopting a refi-nancing scheme to lengthen maturities of con-tracted loans, obtaining better terms for out-standing loans as well as contracting new loanson exception basis only); Government will needto ensure some amount of fiscal discipline inorder to keep the overall budget deficit withindesirable limits.


Government aimed toreduce the budget deficitfrom 11.8% of GDP in 2012to 9% of GDP in 2013.

Government aims toachieve this through fiscalprudence and debt sus-tainability such as im-proved revenue mobilisa-tion, rationalising andenhancing the efficiency ofpublic expenditures aswell as reviewing financ-ing methods.

The Economy

Oil and Gas

Oil production and petroleum receipts: Crude oil production from the Jubilee Field

averaged about 102,503 barrels of oil per day(bopd) for the first three quarters of 2013.

Indications are that, the average daily produc-tion from the Jubilee Field is likely to exceedthe current average of 102,503 bopd by the endof the year owing to development work beingexecuted in the Field.

The actual total volume of oil produced for theperiod January to September 2013 is estimatedat 27.1m barrels which is 89.1% of the full- yearestimate of about 30.4m barrels.

Out of the total volume produced in the first 3quarters of 2013, GNPC lifted about 4.97mbarrels which about the same level as the full-year volume lifted for 2012 (2012 full year:4.9m barrels).

By end of September 2013, GNPC had madefive lifting on behalf of the State. This totalled4,977,922 barrels which resulted in a total reve-nue of US$533.9m.

Government expects to generate a total ofUS$777m in gross revenue from petroleumreceipts in 2014 which is about 34% higherthan the budget for 2013.

Given the provisional estimates for the firstthree quarters of 2013, assuming an averageproduction of 102,503 bopd, it is possible for the2013 full year production volumes to hit 36mbarrels by the end of the year as against a fullyear projection of 30.4m barrels for 2013.

Source: MoFEP budget statement & PwC analysis

Source: MoFEP Budget Statement 2014 & PwC analysis

In 2012, Government did not generate any cor-porate tax revenue from companies with interestin the Jubilee Field as profits made by these com-panies were used to offset their investmentmade prior to commencement of production.However, 2013 results showed marked improve-ment in revenues and the Jubilee partners havestarted to pay corporate income tax. This pre-sents good prospects for Governments revenuesgoing forward.



Composi-tion of pe-troleum re-ceipts

2013budg-

et

Jan-Sep

2013Actual

2014budg-

et

%

Var

%

Var

(A) (B ) (C) B-A C-AUS $mil-lion

US $mil-lion

US $mil-lion % %

Royalties 143.7 149.0 158.8 4% 10%Carried andparticipatinginterest 372.0 385.2 410.7 4% 10%Surface rent-als 0.42 0.8 0.8 90% 89%Corporateincome tax 55.9 172.2 187.2

208%

235%

Gas receipts 9.8 19.4-

100% 99%

Total 581.7 707.3 777.0 22% 34%

Distributionof Petrole-um Receipts

2013budg-

et

Jan-Sep

2013Actual

2014budg-

et%

Var%

VarA B C B-A C-A

US $mil-lion

US $mil-lion % %

Transfer toGNPC 191.4 186.1 192.6 -3% 1%BoG netreceipts fordistribution toAnnual Budg-et FundingAmount(ABFA) &Ghana Pe-troleumFunds (GPFs) 390.3 521.2 584.4 34% 50%Total 581.7 707.3 777.0 22% 34%

The Economy

Utilisation of the Annual Budget FundingAmount (ABFA) The ABFA is part of the national budget and is

treated as part of the consolidated fund. Thepriority expenditure areas for the ABFA for theperiod 2011 2013 are expected to remain thesame in 2014. Actual spend for the first threequarters of 2013 totalled GH392.94m andwere in respect of the following priority areas: Road and other infrastructure- GH142.34m

(47.5%) Expenditure and amortisation of loans for oil

and gas infrastructure- GH119.88m (40%) Capacity building- GH32.58m (10.9%) Agricultural modernisation- GH4.6m (1.5%)

Actual spend of the ABFA over the first threequarters of 2013 shows that, about 47.5%(GH142.34m) was for road and other infrastruc-ture which shows Governments commitment toprioritise infrastructural development to accel-erate economic growth.

Government estimates to generate aboutUS$584m in Benchmark Revenue (i.e. revenuenet of transfers to GNPC) from petroleum re-ceipts in 2014, out of which 70% will be allocat-ed to ABFA with the 30% allocated to the Gha-na Petroleum Fund (GPF).

In 2013, about 76% of ABFA for the first threequarters was spent on public investment ex-penditure, which was greater than the mini-mum 70% prescribed by Section 21 (4) of thePetroleum Revenue Management Act (PRMA).The other 24% was spent on goods and ser-vices.

ABFA made significant improvement in 2013as revenue targets were met and the Jubileepartners commenced the payment of corporateincome tax.

This compares favourably to 2012 when alloca-tions to ABFA fell short of the target byUS$96.9m due to shortfalls in production tar-gets as well as the non-realisation of corporateincome tax.

Utilisation of the Ghana Petroleum Fund The Ghana Petroleum Fund (GPF) which

amounted to a total of US$316.09m in 2013is constituted by the Ghana Heritage Fund(GHF) and the Ghana Stabilisation Fund(GSF).

Results for the first three quarters of 2013showed that the GPF received about 6% morein revenue than the ABFA (2012: 92% lessthan the ABFA). However, Government pro-jects to allocate about US$175m to the GPFin 2014 which represents 30% of the totalBenchmark Revenue (i.e. after accounting fortransfers to GNPC).

Key policy initiativesIn accordance with Provisions in PRMA whichrequires policy reviews every three years, the2014 budget proposes the following key policyinitiatives: A 10 percentage point downward revision

(from 40% to 30%) of GNPCs share of car-ried and participating interest, net of equityfinance cost. This is in light of the increase involumes of crude oil exports.

Formally linking ABFA and the proposedGhana Infrastructure Fund

Capping GSF at $250 million (subject to pe-riodic review) and utilising excess amountsfor debt repayment and setting up a Contin-gency Fund of $50 million to meet urgentunforeseen expenditure. This propositionwas informed by the relatively low invest-ment income on the GSF compared to thehigh borrowing cost for infrastructure pro-jects. The use of the excess amounts for debtrepayment is expected to free capital for in-frastructure development

Reviewing the range of instruments for in-vestment to include higher yielding instru-ments for accumulated funds in GPFs. Thiswould be based on the advice of the Invest-ment Advisory Committee.

Government needs to ensure that its attempt tobridge the infrastructural gap is not done atthe expense of key sectors such as Agriculture.The 15% ABFA allocation to Agricultural mod-ernisation should be maintained and subse-quently increased to prevent a possible Dutchdisease.


In 2014, Government pro-poses to allocate about 15%(GH136.4m) of the ABFAto agricultural modernisa-tion which is markedlyhigher than the 1.5% allo-cated in the first threequarters of 2013.


The Economy

Monetary Sector

Broad money supply including foreign cur-rency deposits (M2+) grew by 17.7% fromJanuary to September 2013, a decline from28.8% over the same period 2012.

There was a slower growth in reserve mon-ey in 2013 (21%) compared to 2012 (49.3%and 2011 (37.8%). This resulted from thereduced growth of 30% of Net DomesticAssets (NDA) ( 2012352%).

2012 Net Foreign Assets (NFA) increasedby 15.6% although there was a significantdecline 0f 24% for the same period in 2012.

Credit extension by the banking sector tothe private sector increased nominally by26% as at September 2013 compared to thesignificant expansion by 43.8% in Septem-ber 2012

Government plans to focus on improvingforeign exchange stability and pursue poli-cies to boost credit accessibility.

Broad money supply continues to grow ata declining rate indicating the lingeringeffect of the high rates for Government in-struments from 2012.

Inflation rate

The inflation rate increased from 10.1%in January 2013 to 11.8% in July 2013. Itrose to 13.1% in October 2013.

The double digit inflation recorded in2013 is attributable to the pass-througheffect of fuel and utility price hikes andthe rebasing of the Consumer Price Index(CPI) and the revision of the CPI basketin May 2013, which included an increasein the weight of transportation from6.2% t0 7.2%.

Source: Ghana Statistical Service (GSS) & BoG

Considering the impact of the full effect of thefuel price increases, increase in VAT from12.5% to 15% and the imposition of a with-holding tax on rent (15% for commercialbuildings and 8% for residential buildings),inflationary pressures could worsen. Thiswill result in some uncertainty as to the at-tainability of the 9% average inflation targetfor 2014.


There was a year-on-yeardrop in growth of broadmoney supply by about7%

The economy has beenunable to revert to itssingle digit inflation levelsince January 2013, andinflation has worsenedfrom 10.1% in January2013 to 13.1% as at Octo-ber 2013

The Economy

Interest rates

The monetary policy rate was increased byone percentage point in April 2013 from 15%to 16% and was maintained at 16% in Sep-tember 2013.

The 91-day Treasury bill, 2-year note, and 5-year bond maintained at the December 2012levels of 23.1%, 23% and 23% respectively.

The rates on the 182 day bill, 1 year note and3-year bond however declined marginallyover the period.

The Interbank weighted average rates de-clined from 17.5% as at December 2012 to17.1% as at August 2013.

Bank base rates, have increased from arange of 12.3% t0 26.5% as at December2012 to a range of 14.1% to 29.5% as at June2013.

Financial institutions continue to increase theirlending rates, despite the relatively stable trendin Government treasury rates and the BoGPrime rate. This could be an indication of declin-ing confidence in the creditworthiness of theprivate sector coupled with the relatively attrac-tive rates being offered on risk-free Governmentinstrumentsleading to a higher cost of funds.

Exchange rates

The Ghana Cedi depreciated against all itsmajor trading currencies. The Ghana Cedidepreciated by 4.12%, 9.97 and 14.1%against the US dollar, the pound sterlingand the Euro respectively.

The Ghana Cedi made a better showing in 2013against the US dollar and Pound Sterling onthe inter currency market, although it still de-preciated against all three currencies. Thismay be the result of the impact of the stringentpolicies adopted by the BoG to curb the freefallof the Ghana Cedi in 2012. Government mustconsider its external debt service obligationsand put measure in place to ensure that therewill be less pressure on foreign exchange in themedium term. A stronger Ghana Cedi in 2014will improve confidence in the economy


The Cedi continued todecline against all themajor currencies in 2013albeit not as steeply as itdid in 2012

Average bank lendingrates increased from25.7% as at December2012 to 27.4% as at June2013




The Economy

External Sector

As at September 2013, the trade deficit wasUS$2,744 million, compared US$3,052.3million end of 2012

Receipts from merchandise exports mar-ginally increased to US$10,329.4 millionfor the nine-month period to September2013, compared to US$10,235.7 millionend of 2012, driven by oil, timber and othernon-traditional exports.

Crude oil exports increased by 41.8% in2013 as a result of the 48% increase involumes of exports as production levelsrose.

As at September 2013 imports wasUS$13,073.5 million, a marginal declinefrom the 2012 position of US$13,205.3million. The drop was attributable to non-oil imports as there was a 1.3% increase inoil imports.

The balance of payments deficit is projectedto reduce to US$884 million in 2013 as aresult of improvement in the capital andfinancial account (2012deficit ofUS$1,210.9 million).

Source: Ghana Statistical Service

Gross International Reserves

Gross International Reserves decreasedto US$5,212.1 million as at September2013, equivalent to 2.9 months of im-port cover. (end of 2012US$5,349 mil-lion, equivalent to 3 months of importcover).

Government has projected a minimum of3 months import cover as at the end of2013.

It is evident from the 9-month results that Gov-ernment must accelerate efforts to increase localproduction in order to boost export volumes, asthe declining world market prices for our keycommodities have impacted negatively on ourimport cover.

Additionally, Governments plans to invest inPrivate sector development via the setting up ofthe SME Fund could increase production bysmall manufacturing companies leading to anincrease in consumption of locally producedgoods thus reducing the countrys reliance onimported consumer products.


Decline in global marketprices of some of Ghanaskey commodities goldand cocoa coupled with adrop in their export vol-umes impacted exportearnings negatively. Goldprices declined by approxi-mately 20% fromUS$1,657.5 in December2012 to US$1,326 in Sep-tember 2013, resulting in a14% decline in the receiptsfrom sale of gold over thesame period.

Government expects toachieve its export targetsfor 2013 however year-endimports are expected to be5.3% below the budgetedamount.

The Economy

Public Debt Total Public Debt amounted to

US$23,498.7 as at September 2013 com-pared to US$19,150.7 as at 2012

The total public debt to GDP ratio increasedsignificantly from 49.3% in 2012 to 52.0% in2013

The significant increases in public debtresulted from the following: Disbursement of US$750 million

from the Eurobond proceeds Drawings of US$383.5million from

the China Development Bank Issue of 7-year domestic bond


In 2013, External debt constituted 45.9%(2012 47.8%) and Domestic debt consti-tuted 54.1% (201252.2%) of total publicdebt.

The increasing trend in domestic debt issuanceindicates that Government is further crowdingout the private sectors access to credit whichcounteracts Governments intention to focus onthe development of the private sector. Govern-ment should consider diversifying the sources oflong-term financing to help improve the fiscalsituation and minimise any adverse impact onthe availability of credit to the private sector.

Additional Debt Commitments in 2013 There was a net issuance of

US$3,056.9million of domestic debt as atSeptember 2013. Additionally, loansamounting to US$1,793million (December2012US$2,286 million) were signedincluding US$1,000 million Eurobondto finance projects in the Health, Housing,Transport, Local Government and RoadSectors.

Debt Sustainability Analysis (DSA)

According to the 2013 Debt Sustainabil-ity Analysis ( DSA) conducted by theIMF and the World Bank, Ghanas riskof debt distress has risen, despite thefact that it remains below the recom-mended threshold.

Per the DSA, the debt service-to-revenue ratio is projected to averageabout 9.1% of GDP between 2013-2018.

Although the country has remained below therecommended threshold measures must be putin place to ensure that there is sufficient bufferto absorb the impact of any shocks. It is im-perative that revenue mobilisation is intensi-fied as outlined in the 2014 Budget. Addition-ally, plans of investing in self-financing infra-structural developments must be well imple-mented to reduce the debt service burden onpublic funds.

Debt Management Programme (DMP) Government has developed a debt man-

agement strategy to provide a more cost-efficient access to external and domes-tic debt for efficient debt management

The strategies include the following: Liquidity Management Revenue Generation from Self-

Financing Projects On-Lending and Escrow Account

arrangements with MDA/MMDAs

Financing Capital Expenditureswith long-term Debt

Loans-to-Priority Projects Pro-gramme

Long-term financing from theexternal capital markets

Government has shown signs that it is imple-menting some of the Debt management strate-gies with the issuance of the US$1,000 millionEurobond to finance long-term projects.Investor confidence in the country could how-ever be dampened by the deteriorating debt/GDP ratio. Overall economic performance issubdued by increased borrowing and this mayfurther deter international investment.


Total public debt has in-creased from US$19,150.7million as at the end of2012 to US$23,498.7 mil-lion as at September 2013representing a 23% in-crease.

The total public debt toGDP ratio increased from49.3% in 2012 to 52.0% in2013. For the 9-monthperiod to September 2013,a total amount ofUS$1,793 million worth ofnew loans were signed(2012US$2,286 million)

Government has devel-oped some key strategiesfor Debt Managementincluding efficient liquidi-ty management and in-vestment into self financ-ing projects

The Economy

Macroeconomic Targets for 2014

Real non-oil GDP growth of 7.4% Real overall GDP growth including oil of

8% Average inflation of 8.9% End period inflation of 9.5% within 2% Overall budget deficit equivalent to 8.5%

of GDP; and Gross International Reserves of not less

than three months of import cover ofgoods and services

Medium Term Real GDP Growth Projections

Source: Ministry of Finance

Based on the policies and strategies to be imple-mented by Government in the medium term, theeconomy is projected to grow at not less than 8%from 2014 to 2016.

The growth in the agricultural sector despiteerratic weather conditions in sub-Saharan Afri-ca is encouraging. A waiving of VAT on someagricultural products is likely to spur growthwithin the agricultural sector further.

Government has estimated an average GDPgrowth rate of 8% for the medium term to bedriven largely by 5.4% average growth in Agri-culture sector on the back of 5.3% growth inCrops subsector including Cocoa. However,with prices of commodities trending down in-vestment in the wider agriculture sector espe-cially forestry and fishing is highly recommend-ed.

Medium-Term Targets for 20142016The specific macroeconomic targets to be pur-sued for the medium-term will include: An average GDP growth rate (including

oil) of at least 8% per annum; An inflation rate target of 9% with a band

of 2% An overall average budget deficit equiva-

lent to 6% of GDP by 2016; and Gross International Reserves covering not

less than four months of import of goodsand services by 2016.


The contraction of growth in the manufactur-ing sub-sector was primarily due to the pow-er crisis experienced in the first half of theyear. This was primarily due to power gener-ation crises caused by the disruption of gassupply from Nigeria to Ghana under theWest African Gas Pipeline Project. With theGhana Gas Processing plant coming online in2014, there could be added energy security.This is likely to spur growth driven by localmanufacturing companies. The renewableenergy tariff gazetting and the increase inelectricity tariffs could attract foreign invest-ment into the power sector but could ad-versely affect local manufacturers.


Real GDP (including oil) isprojected at an average of8.7% from 2014 to 2016.

Government has also tar-geted an overall budgetdeficit of 8.5% in 2014with a further decline to6% by 2016.

ItemIncluding Oil (%)

2014 2015 2016Overall GDP 8.0 8.2 10.0

Agriculture 4.2 5.8 6.2Industry 9.1 7.1 12.6Services 8.9 9.3 9.6

NationalBudget

No change to personalincome tax bands pendingthe outcome of NationalDaily Minimum WageNegotiations

Transfer pricing audits

Proposal to increase with-holding tax rate on rent ofcommercial properties

Windfall Tax to be re-introduced to Parliament

Personal Income Tax

Government has over the years increased thepersonal income tax (PIT) bands as a way ofcushioning individuals from rising costs and pro-tecting low income earners. In the current budgethowever, Government intends to maintain thecurrent personal income tax bands. This proposalis in line with Governments bid to reduce theimpact on the wage bill and is subject to the out-come of negotiations on the National Daily Mini-mum Wage.

An increase in the personal income tax bandswill cause a reduction in Governments revenuesfrom PIT as well as result in an increase in thewage bill of Government since more money willbe paid to public sector workers. With the recentcomplaints from the general public and externalstakeholders about the size of Ghanas wage bill,this measure is a step in the right direction to-wards avoiding further wage bill increases.

It is unclear what Government plans to doshould minimum wage increase: (1) whetherGovernment will adjust the personal tax rates inorder to increase personal income tax collectionto fund the wage bill; or (2) whether Govern-ment will expand the tax-free (o%) income taxband to ensure that minimum wage remainsuntaxed.

Tax on Property and Property Use

The budget also proposes increasing the rate ofwithholding tax on the rental payments of com-mercial buildings from 8% to 15% in a bid to en-courage the provision of residential accommoda-tion to stem the existing housing deficit. The on-going street naming exercise is expected to facili-tate the identification and collection of the renttax. The GRA, MMDAs and other stakeholderswork on the Cadastral Project is also expected toenhance the valuation of properties for deter-mining property rates.

The increase in the withholding tax rate on com-mercial buildings appears to be a natural pro-gression of the 2013 budget in which Govern-ment bemoaned the conversion of residentialproperties into commercial ones thereby in-creasing the housing deficit further.

The increase in the withholding tax rate on com-mercial buildings is also likely to have a positiveimpact on Government tax revenue.

Commercial property owners are also likely toincrease the rent of their buildings in order topass on the tax to their tenants resulting in high-er costs for businesses.

Transfer Pricing Regulations

The GRA is currently streamlining the transferpricing regulations passed in 2012 into itsoperations mainly by training its staff. Thismove is expected to result in higher tax reve-nues as Government intends conducting ex-tensive transfer pricing audits commencingearly 2014 which it hopes will lead to a reduc-tion in transfer pricing abuses.

The focus on transfer pricing stems fromGovernments view that there is a materialloss of tax revenue a result of transfer pricingabuses and audits are being proposed to un-cover abuses.

The GRA has selected a number of taxpayersto file transfer pricing returns as part of theirstreamlining processes. It is unclear whetherthe audits to be carried out as indicated in thebudget, will cover all taxpayers who haverelated party transactions or only those whohave been selected to file transfer pricingreturns.

There also seems to be a high expectation thatthe impending transfer pricing audits willlead to a significant increase in tax revenues,on the basis that transfer pricing abuse al-ready exists, and that these occurrences willbe reduced. This may however be an inaccu-rate assessment of the current situation, andactual tax revenues realised as a result of thisexercise may be lower than expected.

Windfall Profit Tax

The Minister of Finance indicated that theWindfall Profit Tax will be reintroduced toParliament. There are likely to be revisions tothe Bill that will be presented to parliamentsince a committee is currently reviewing sta-bility agreements, incentives and the windfallprofit tax itself, in consultation with civil soci-ety groups.

The passing of this law still seems to be onGovernments agenda as it has featured inprevious budgets. Previously, the Chamber ofMines and mining companies shared con-cerns around the approach to calculating thetax. It is expected that the bill to be re-introduced to Parliament will address theseconcerns.

It is also unlikely that the bill, if passed intolaw will result in any additional tax revenuesgiven the falling prices of gold as well as in-creased mining related costs.

PwC Ghana 2014 Ghana Budget Highlights: Direct Taxation 21

Direct Taxation

Management and Technical Service Fees

The withholding tax rate on management andtechnical service fees is set to increase from 15%to 20%.

The change in rate is quite unexpected especiallysince the rate was originally 20% but was re-vised downwards a few years ago to 15% to beat par with the non-resident income tax rate.This proposal if passed will create a disparitybetween the management fee rate (20%) and thenon-resident income tax rate (15%). We envisagesome pressure on Government to negotiate addi-tional double tax treaties for more favourablerates to be agreed.

Construction Industry Scheme

Government intends introducing a ConstructionIndustry Scheme (CIS) in 2014 to regulatepayments made by contractors to subcontractorsin the building and other related businesses withparticular reference to self-employed subcontrac-tors. The purpose of the scheme is to determinehow to treat these payments for tax purposes.

Payments by contractors to subcontractors inthe building industry is currently subject towithholding tax at 5% (except where exempt)with subcontractors going ahead to pay corpo-rate income tax at 25% on chargeable income.The scheme could be one of Governmentsmeasures to widen the tax bracket and ensurethat the correct taxes are paid.

The scheme will be expected to clearly definewho qualifies as a contractor or subcontractoramongst other relevant details.

Reward to Informants

Government proposes to revamp a GRA schemewhere rewards are paid to individuals who reportsuspected tax evasion and corruption after suc-cessful collection of duties and penalties, reas-sessment of evaded or avoided taxes and under-declaration of VAT. Ghanaians are urged to as-sist in the fight against duty evasion, tax evasionand corruption as a patriotic duty.

It is expected that steps will be taken to protectmembers of the general public who act as in-formants to the GRA.

Further, GRA will need to put in place clear pro-cesses and procedures in relation to the schemeso that businesses are not subject to unnecessaryscrutiny.

National Fiscal Stabilisation Levy(NFSL)

The NFSL which was initially scheduled toend in December 2014 will now end in June2014.

The NFSL was introduced to aid in closingthe fiscal gap by generating additionalGovernment revenue. However, with thevarious new fiscal measures outlined in the2014 budget, it is likely that Governmenthas identified alternative sources of reve-nue and is terminating the NFSL earlierthan planned.

Reviewing the tax rate for free zonesenterprises

Currently, the Free Zone Act provides thatFree Zone Enterprises enjoy a 10 year Cor-porate Income Tax holiday as an incentivefor registering under the Free ZonesScheme. After the expiration of the tax holi-day, Free Zone Enterprises are entitled topay Corporate Income Tax (CIT) at a rate ofnot more than 8% of chargeable income inline with the rate applicable for incomefrom non-traditional exports of companiesin the domestic territory of Ghana. Further,Free Zone Enterprises are permitted to sell30% of their goods or services in the domes-tic market of Ghana.

Non-Free Zone Enterprises pay CIT at a rateof 25% of their chargeable income.

This CIT rate disparity in relation to domes-tic sales in Ghana (8% versus 25%) appearsto provide Free Zone Enterprises with anunfair advantage.

The proposed amendment seeks to even theplaying field. The domestic sales of goodsand services by Free Zone Enterprises willbe taxable at the same rate as supplies fromNon-Free Zone Enterprises while exportssales continue to be taxed at the conces-sionary Corporate Income Tax Rate cappedat 8%.

The proposed review of the Free Zones Actseems to be aimed at tightening any fiscalloopholes that currently exist and whichhave created unfair advantages for FreeZone Enterprises to the detriment of Non-Free Zone Enterprises. The Free Zone con-cept was created to encourage exportsfrom Ghana thereby expanding the manu-facturing sector with an indirect result ofcreating employment opportunities. Theproposed revision to the CIT Rate for do-mestic sales stays true to this concept.


Withholding on manage-ment fee to increase to20%

National Fiscal Stabilisa-tion Levy

Proposals to review thetax rate of free zones en-terprises

Proposal to introduce aConstruction IndustryScheme to regulate pay-ments to subcontractorsin the industry

The GRA is to revamp areward scheme in an ef-fort to increase the recov-ery of taxes and penal-ties and the general pub-lic is encouraged to pro-vide information leadingto the recovery of tax

Direct Taxation

Taxation of Capital Gains for PetroleumOperations

Government proposes to apply the provisions ofthe Internal Revenue Act, 2000 (Act 592) (IRA)relating to Capital Gains Tax (CGT) to petroleumoperations. The IRA provides that CGT is appli-cable on gains realised as a result of the sale ofchargeable assets including business assets andshares of a resident company. Currently, the Pe-troleum Income Tax Law (PITL) provides thatCGT shall not apply to petroleum operations.

By applying CGT to petroleum operations, Gov-ernment is likely to increase revenue by widen-ing the scope of CGT. The challenge will be toidentify and define petroleum assets whichwould qualify as chargeable assets, the types oftransactions and their basis of calculation. Also,harmonisation of the IRA, PITL and PetroleumAgreements with respect to CGT, will need to becarefully conducted to prevent any contradicto-ry provisions.

The proposed taxation of capital gains for pe-troleum operations is in line with similar devel-opments across Africa and may boost Govern-ment's revenue generating efforts.


Capital gains to be intro-duced to the petroleumsector.

NationalBudget

VAT increased to 15%

Waiver of taxes for ex-port oriented manufac-turers

Exemption from rawmaterials imported forthe local production oftextbooks, exercise books,and HIV/AIDS drugs

Verifications of salesusing special electronicpoint of sale devices.

Special import levy endsby December 2014

SIL exemption for agri-culture and fishing in-puts, medical supplies,educational materials,and energy bulbs in 2014

Additional VAT Collection to SupportInfrastructure and Development

Parliament on 15 November approved a newVAT Act which increased the VAT rate from12.5% to 15% (excluding 2.5% for NHIL). Thebudget proposes to dedicate the additional2.5%VAT collection to on-going infrastructureand developments under the proposed InfraFund.

The increase in VAT will impact prices of goodsand services and has the potential of pushingup inflation.

There is no doubt that Government has an ob-jective to increase VAT collection. Out of thetotal taxes on domestic goods and services,VAT is expected to generate GH 4,874.9 mil-lion which is about 29.4% above the 2013 esti-mate and 45.6% above the 2013 projected out-turn.

While acknowledging that the VAT mechanismis more efficient and that the level of accounta-bility leaves little room for doubt, Governmentseems to believe that loopholes continue to existin the VAT system which need to be blocked.The expectation of increased VAT revenue ap-pears to suggest that Government will takesteps to block the tax loopholes in 2014. One ofsuch proposals may be the implementation ofelectronic point of sale devices.

Reducing VAT Leakages through the useof Special EPOS

As part of efforts to reduce tax loopholes in thesystem, proposals will be submitted to parlia-ment in the year seeking to enforce the use ofelectronic point of sale (EPOS) devices verifia-ble by the tax authorities.

This is one of the proposals to reduce tax reve-nue leakages. The implementation of EPOSmay have been one of the factors that informedthe expected increase in VAT revenue in 2014.

The timing of implementation needs carefulconsideration. It would be important that therequired proposals are put before parliamentand approved early enough to allow enoughtime for implementation including ensuringadequate taxpayer education.

Delays with the approval and implementationprocess may cause that the expected benefit ofincreased VAT revenue would rather accrue tofuture fiscal years2015 and beyond. Howev-er, the question remain as to the to the prepar-edness of the GRA to introduce this scheme asthis may require some technical training forGRA staff.

Maintaining Socially Sensitive VAT Ex-emptions and Promoting Manufactur-ing for exports.

The budget proposal tacitly acknowledges theimportance of using the VAT mechanism tosocially vulnerable groups by exempting prod-ucts from agriculture and fishing sectors,health, education and transportation are ex-empt from VAT. It is expected that the ex-emptions existing in the new VAT Act will bemaintained.

As additional incentive for export production,the waiver of taxes on raw materials for exportoriented manufacturing would be introduced.The waiver is expected to cover VAT.

Duty and VAT Exemption on Raw Mate-rials for Local Production of Text andExercise Books and on Raw Materialsfor Manufacturing HIV/AIDS drugs

Import duty and VAT waiver/exemption forraw materials imported for local printing oftextbooks and exercise books through tendersadministered by the Ministry of Education.This is being done as part of measures to makethe local industries competitive.

There is also import duty and VAT exemptionfor raw materials imported for local produc-tion of HIV/AIDS drugs under the supervisionof the Ministry of Health.

The above initiatives also align with theMDGs.

The Ministries of Education and Healthwould be expected to put appropriate proce-dures in place as well as determine the levelof logistical support is required to assist theselocal manufacturers.

Modification to the Enforcement of theSpecial Import Levy

With a commitment to maintain Ghanas lib-eral tax regime, the Special Import Levy (SIL)which was scheduled to end in June 2015 willnow end by December 2014.

In the meantime, a proposal is made to pro-vide SIL exemption for agriculture and fishinginputs such as cutlasses, outboard motors andfishing nets; medical supplies such as con-doms; educational materials and energy bulbsthat were exempted from import duty underthe original customs tariff.

The proposal to termination of SIL early (andalso NFSL even earlier) appears to suggeststhat Government expects improvement in the

PwC Ghana 2014 Ghana Budget Highlights: Indirect Taxation 24

Indirect Taxation

second half of 2014.

Introduction of tax stamps to collect ex-cise taxes.

Collections from excise duty is expected to in-crease in 2014. Out of the total taxes on domesticgoods and services, excise tax revenue is ex-pected to be GH 1,205.8 millionabout 33.4%above the 2013 estimate and 40.3% above the2013 projected outturn. It is unclear how theimplementation of tax stamps contribute to thisincreased excise duty collection. This move couldpotentially improve tax collection and ultimatelythe cash-flow position of the GRA.

Government intends to introduce tax stamps thisyear on selected excisable products as part ofmeasures on enforcing compliance. The modali-ties for implementation are left to be determinedby the Ministry of Finance in consultation withthe Ministry of Trade and Industry and otherstakeholders.

Like other revenue mobilisation initiatives, it isimportant that they are implemented early inthe year in order that the expected benefits willinure before the end of 2014.

Marginal increases in fuel taxes.

A proposal to change the basis of petroleum ex-cise duty from specific to ad-valorem in order toalign with current excise tax regime. In addition,there is a proposal to marginally increase in theroad fund levy. This will result in a slight increasein the ex-pump price for premium and gas oil.

The effect of fuel price increases reaches almostall sectors within the economy particularly be-cause of transportation which affects most eco-nomic activities and has the potential of increas-ing inflation.

Government should manage adjustments care-fully to ensure that the effects are controlled.

ECOWAS Common External Tariff

The final decision on the CET was ratified on 25October 2013 at the Extra-Ordinary Summit inDakar Senegal. It was decided that the full imple-mentation of the Ecowas tariff regime shouldcommence on 1 January 2015. Ghana, like othermember states, will have to ratify the ECOWASCET through Parliament before 1 January 2015.

The tariff regime prescribes import duty ratesranging between 0% and 35%. This applies toimports by member states from third countries.

PwC Ghana 2014 Ghana Budget Highlights: Indirect Taxation 25

Tax stamps on selectedexcisable products in 2014

Fuel taxes to increasethrough petroleum exciseduty and road fund levyadjustments

ECOWAS CET regime tobegin 1 January 2015

Tax Administration

Tax Administration

A number of administrative reforms are also be-ing considered. These include:

Harmonisation and simplification of theexisting tax laws into a single Tax Admin-istration Bill

Government has reiterated its objective ofharmonising the tax administration lawsinto a single Tax Administration Bill.

This is aimed towards enhancing the workof GRA as a one-stop shop for all tax issuesin the country.

When this all-inclusive Law is passed, it isexpected that there would be improved effi-ciencies in the general tax administrationprocesses.

Review of existing exemptions granted induties and other taxes

There are proposals to review existing taxexemptions as this has been identified byGovernment as one of the areas it appearsto be losing revenue.

This is an attempt by Government to tight-en potential loopholes and to raise addition-al tax revenue as applicable.

This move may result in some existing taxexemption agreements being terminated (aspermitted in the contracts) and new appli-cations for exemptions may not be easilygranted.

The potential risk here is that where Gov-ernment is perceived to be aggressivelypursuing revenue generation (in the form ofincreased taxes and minimal or no exemp-tions/incentives), this may erode investorsconfidence and Ghana may no longer beseen to be the preferred investment/business destination for foreign investors(including) multinationals.

Government might wish to reconsider thisagenda to ensure there is a fair balancebetween its drive to generate tax revenueand attract foreign direct investment.

The Customs Division of the GRA to improveits Valuation competencies under the Valua-tion Assurance Programme (VAP)

Currently the Customs Division of the GRAcharges import duties and VAT on importsbased on the values provided to it by approved

Destination Inspection Companies.However, Customs is taking steps toimprove the coverage of items under theVAP programme with the ultimate aimof developing its own valuation module.

This move will result in improved effi-ciencies in the clearing system as Cus-toms will be in charge of all the portclearing processes.

Automation and improvement in the op-erational processes of the GRA

This is in line with the GRAs long-termobjective of automating its administra-tive processes and procedures.

Establishment of Free Income Tax Assess-ment Bureau (FITAB)

FITB will be set up in the Small Tax Pay-ers Offices of the GRA or at standalonelocations where the concentration of in-formal sector operators is high.

FITAB would assist traders (and othersmall businesses), who are not requiredby Law to prepare audited accounts, withbasic record keeping.

This initiative would enable the GRAwiden the tax bracket and levy the rightamount of taxes on small businesses(especially in the informal sector).

Implementation and review of the provi-sions in the Petroleum Revenue Manage-ment Act, 2011 (Act 815) regarding theallocation and distribution of funds

Government will review issues involvingpetroleum benchmark revenue, qualifyinstruments, and membership of the Pub-lic Interest and Accountability Committee(PIAC).

It is expected that Parliament will makeamendments to the Petroleum RevenueManagement Act, 2011 (Act 815).

PwC Ghana 2014 Ghana Budget Highlights: Tax Administration 26

Harmonisation of the taxlaws into a Tax Admin-istration Bill

FITAB to assist smalltraders with basic recordkeeping

Review of existing taxexemptions granted

Customs to improve in itsvaluation competencies

NationalBudget

Government will continueto address challenges fac-ing the mechanisation ofagriculture along the val-ue chain

Government to facilitatethe passage of the Landand Land Use PlanningActs and improve custom-ary land administrationthroughout the country

The ministry will focus onimproving competivenessof industry domesticallyand globally with the aimof propelling the privatesector to assume leader-ship in industry and jobcreation

ECONOMIC SECTOR

Food and Agriculture 2014 Outlook

The importance of the Agriculture Sector in thesocio-economic development of Ghana cannotbe over-emphasised. It is in this light that the2014 Budget re-affirms Governments commit-ment to accelerate the modernisation of agricul-ture in a bid to improve the economy throughthe use of technology and research.

The key initiatives include:

Implementation of the Block Farm, Live-stock, Poultry and Agri-business initiativesunder the Youth in Agriculture Pro-gramme;

Facilitate the expansion of private sectorled Agricultural Mechanisation ServicesEnterprise Centres;

Construction of modern farmers marketsin the Brong Ahafo and Northern Regionsto focus on grains and tubers respectively;

Private partnership arrangements and col-laboration to develop Agriculture Estateson the Accra plains and other existing statelands; and

Scaling up the Agricultural insurancescheme to cover more crops, regions andconsequently protect farmers against loss-es.

The Agriculture sector accounts for 22% ofGDP and 50% employment of the economicallyactive population. It is worth noting that thissector is showing signs of recovery, albeitmodest from a marginal position of 0.8% in2011 to 3.4% in 2013. This sector has a signifi-cant employment potential particularly for theyouth. Initiatives to expand the Youth in Agri-culture Programme and the creation of modernmarkets are therefore employment centredgrowth strategies which would ensure thatemployment is expanded with production.

Ministry of Lands and Natural Resources

Government is committed to ensuring the effec-tive and efficient management of the nationsresources for the socio-economic growth anddevelopment of the country.

The key initiatives to be undertaken during theyear include:

The facilitation of the passage of the Landand Land Use Planning Acts;

R

2014 Budget Highlights -Final

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