CCIFG, KPMG deliberate on 2018 budget …and its implication on businesses

The Chamber of Commerce and Industry France Ghana (CCIFG) in conjunction with KPMG has organised a business breakfast meeting in Accra to give participants an understanding of the 2018 budget, its implications and opportunities for businesses across sectors.

Attended by 70 business executives comprised of both members and associates of the CCI France Ghana, the event was facilitated by Robert Dzato, KPMG’s Financial Services Strategy and Operations Lead in Ghana.

The presentation began with, Mr Dzato, sharing the global economic outlook, saying the world economy growth will be led by emerging markets growth.

The global economic growth he said had been influenced by a number of geopolitical events; including but not limited to the rise of nationalisms and trade wars, terrorism, Brexit amongst others.

Giving a macroeconomic overview of Ghana and comparing 2016 to 2017, he highlighted that the country was coming from a difficult recent past towards a period of stability, however the macro fundamentals need to be sustainable.

He mentioned that, based on the 2018 Budget Statement, 2017 saw a positive GDP growth of 7.9 per cent with 6.8 per cent projected for 2018 against 3.7 per cent (2016).

Nevertheless, he said the government’s growth projection could be more ambitious, not less than seven per cent for 2018.

The Fiscal deficit dropped from 8.7 per cent in 2016 to 4.6 per cent in 2017 with 4.5 per cent projected for 2018.

On price stability, he indicated the 2016 exit inflation rate of 15.4 per cent dropped to 12.4 per cent in 2017 with 9.8 per cent being projected for 2018.

On monetary policy rate, he indicated that albeit the rate has reduced by 450 basis points to 20 per cent as at the end of 2017, the lending rates of banks remain stubbornly high and there is no “pass-through” in lending rates to the real economy due to high non-performing loans in the banking industry.

According to Mr Dzato, the size of the Ghanaian economy is estimated at GH₵202 billion, led by the services sector, which accounts for 53.4 per cent. Industry and Agriculture account for 23.6 per cent and 23 per cent respectively.

Mr Dzato said based on a pre-budget survey conducted by KPMG comparing concerns of the business community in 2017 to 2018, there were a number of issues affecting businesses.

In the survey, which gathered views of business leaders (chief executive officers and chief financial officers), utility costs; cost and access to credit; taxes and levies and the volatility of the cedi were the major concerns of businesses.

He stressed, while there have been a number of tax reforms and initiatives in 2017 and 2018 budgets, challenges remain across sectors of the economy.

Touching on recapitalisation of banks, he indicated the need for local banks to be strong to support the transformative projects in the economy.

He pointed out critical imperatives that should drive accelerated growth.

“These include digitalisation of the economy to achieve efficiency, encourage lending to the real economy (SMEs) at lower interest rates; investing critical infrastructure; driving public sector efficiencies; diversifying the economic (ensuring non-oil growth); depoliticising flagship national initiatives and building core institutional capacity as enablers,” he said.




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