2014 Budget: Relevant policy initiatives for businesses, investors
Below is a list of government policy initiatives in the 2014 Budget relevant to businesses, exporters, importers and investors.
Budget Theme: “Rising to the Challenge: Re-aligning the Budget to meet Key National Priorities”
Four Pillars
(i) Human Development,
(ii) A Strong and Resilient Economy
(iii) Expanding Strategic Infrastructure, and
(iv) Enhancing Transparent, Decentralized and Accountable Governance.
Macroeconomics
Inflation: currently 13.1% is expected to be 9%±2% by end 2013. An end 2014 inflation target of 9.5% within the band of ±2%
Interest rate: Bank of Ghana Policy Rate now at 16%. The 91-day Treasury bill rate, the 2-year note and the 5-year bond closed September at 23.1, 23.0 and 23.0 %, respectively, the same level as in December 2012. The 182-day bill, the 1-year note and the 3-year bond, however, declined by 0.1, 0.4 and 1.8 % to end September 2013 at 22.9, 22.5 and 19.2 %, respectively.
Exchange rates: Over the review period, the Ghana Cedi depreciated by 4.12 %, 9.97 % and 14.1 % against the US dollar, the pound sterling and the Euro, respectively, compared with depreciations of 17.9 %, 14.1 % and 13.1 % over the same period in 2012.
Taxation
· National Fiscal Stabilization Levy: The NFSL, which is expected to end December 2014, will now terminate at June 2014.
· Special Import Levy (SIL): to terminate end 2014 instead of June 2015. Before then, the following are exempted from the SIL : agriculture and fishing inputs such as cutlasses, outboard motors and fishing nets; medical supplies such as condoms; educational materials and energy bulbs.
· VAT (including National Health Insurance Levy) increased from 15% to 17.5%, Difference to be used for Ghana Infrastructure Fund.
· Ghana Green Fund – Proposed to generate environmental taxes.
Financial Sector
· Re-drafting of the Banking Act to strengthen supervision and address gaps in emerging exigencies in the banking sector, including deposit insurance.
· Bank of Ghana to continue to pursue policies to ease credit accessibility, bring transparency in the setting of lending rates and improve financial intermediation
· National financial inclusion strategy will be finalized in 2014
· Passage of credit union legislation
· Rural and Agricultural Finance to continue
· State Owned Enterprises to issue own corporate bonds
· Domestic rating agencies to be established through legislation
· District assemblies and statutory agencies to access domestic bond markets to raise capital
Private Sector
· New GHc50 million SME fund to boost support for SMEs.
· New export incentives including: non-cash export bonus facility redeemable voucher directly related to the proportion of export revenues earned by the exporters.
· EDAIF Act being revised to expand the resource envelope for private sector support of development particularly, manufacturing and start-ups.
· EDAIF to provide finance under a zero percentinterest rate credit facility to Small Holder Farmer Groups and Agro Processors.
Energy
· Second phase of MCC to focus on Ghana’s energy challenges.
· Government targets 5000 MW by 2016.
· 132 MW Takoradi T 3 Plant Completed.
· 2 out of 4 generating units of the Bui Hydro Project were commissioned to generate 266MW into the national grid at peak periods.
· Construction works for the expansion of the 110MW T2 Aboadze Plant was commenced.
· In 2014, an additional 342MW to the expected installed capacity of 2,845.5MW by completing the first phase of 220MW Kpone Thermal Power Plant (KTPP), 11MW T2 (Tico Expansion) and VRA 12MW Solar PV project.
· Renewable Energy in generation mix target of 10% by 2020 from current 0.01%.
Infrastructure
· Ghana Infrastructure Fund (GIF) is a quasi-fiscal body to be chaired by the Minister of Finance to generate long-term financing from domestic and international financial and capital markets.
· The GIF will encourage government agencies to borrow on their own balance sheets.
· The GIF will create investment opportunities for institutional and pension funds.
· The GIF is proposed to have funds from the 2.5% of the recently increased VAT, annual budget portion for amortization and infrastructure development.
Other sources include: Escrowed and on-lent funds from prior investments; private or public domestic and foreign funds from multilateral institutions and development banks; the capital markets (including Ghana Stock Exchange); pensions and mutual funds (including social security and insurance funds); and other funds.
By Dode Seidu