National Budget

“Infrastructural Development for Accelerated Growth and Job Creation”

Macroeconomic policies that the Government has Reforms/Initiatives pursued over the last few years, have shown posi- The 2012 Budget tive results; a sustained drop in inflation to sin- The 2012 Budget includes several reforms and Statement and gle digit, a relatively stable currency against the policy initiatives designed to create an ena- Economic Policy major trading currencies and an improved budget bling environment for infrastructure develop- was delivered to deficit position (September 2011). This gives a ment, the inclusion of the private sector, espe- Parliament on solid basis for Ghana to optimise its potential as cially Small and Medium Enterprises (SMEs) Wednesday 16 an emerging lower middle income economy. and various revenue enhancement measures. November 2011 by Dr. Kwabena There is evidence of a sustained growth in Gross In the light of the recent set backs with major Duffuor, Minis- Domestic Product (GDP) from 4.0% in 2009 to infrastructure projects (e.g. STX, Accra- ter of Finance 13.6% in 2011. The increased access to credit, Kumasi Road Dualisation, the Gang of Six), it and Economic falling trends in lending rates and increased for- is imperative that planned initiatives to reduce Planning eign direct investments all suggest increased in- infrastructural deficit using the US$ 3 billion vestor confidence in the domestic market and an China Development Bank (CDB) facility should Outlined in this improving economic environment. It is no sur- be diligently and expeditiously executed to publication are prise that the International Monetary Fund achieve the desired impact . some of the prin- (IMF) considers Ghana as one of the fastest cipal matters in growing economies in the world today. Government recently launched its policy docu- the Budget State- ment on Public Private Partnerships (PPP) for ment: Interim data on implementation of the 2011 major projects. This policy framework should Budget over the first 3 quarters indicate that facilitate infrastructural development. It is In this issue revenues were above the budget target by 8.4 % vital that Government consistently applies while expenditures remained lower than the these policies to win the confidence and trust  Commentary budget estimate by 1.2 %. of the private sector.  Overall sum- The question is how sustainable is the improve- mary The sustained efforts of Government to deepen ment in fiscal/economic performance given that the activities of SMEs are commendable. SMEs The Econ-  most of the critical subsectors such as manufac- are a catalyst to growth and require significant omy turing, financial services, agriculture, and hospi- attention. Government plans to promote SME  Direct Taxa- tality did not achieve their 2011 targets? What listing on the Ghana Stock Exchange and ini- tion and VAT measures has Government put in place to shore tiatives by the Trade Ministry to provide access  Customs and up these sectors and not be over reliant on the to credit by way of grants are all steps in the Excise Oil and Gas (O&G) sub-sector to drive the accel- right direction.  Sectoral Out- erated growth and job creation agenda? look In response to the global economic downturn The 2012 Budget, which is the fourth for the cur-  Glossary and Government is placing increasing reliance rent administration, seeks to answer these ques- on internal funds, and this year’s Budget re- tions focusing on infrastructure development as flects further proposals to increase revenue We will point out the take off point. that in prior mobilisation through taxation. The extractive years, changes industry, mining companies in particular, It is estimated that meeting Ghana’s infrastruc- would be most impacted by the reforms. have often been ture needs over the next ten years would cost made to propos- approximately US$1.6 billion per year. For 2012, A tax amnesty is being introduced in 2012 to als in the Budget Government plans are underpinned by infra- Statement before Encourage those taxpayers outside the tax net structure investments across various sectors in- into the mainstream, bring structure to the the relevant bills cluding O&G, power, transport, roads and high- have been informal ways, water, housing, education, health and ser- sector, and to increase tax revenues. We note published and vices. enacted that the grace period allowed this time around is nine months which is an additional three The real economy for the various sectors grew by months compared to the 2006 amnesty grace 4.2% for Services, 2.8% for Agriculture and 32% period of six months. for Industry (due to Oil and Gas). The resident individual tax payer thresholds The 2012 Budget also highlights the traction have been widened for PAYE and this is ex- gained on stabilisation of the fiscal policy and pected to result in increased disposable income showcases the continued tax reforms in both the for employees and possibly enhanced standard personal and corporate tax arena, healthcare, of living for wage earners. food and agriculture sectors.

PwC Ghana 2012 Ghana Budget Highlights: Commentary 1 Commentary

Continuing with Government’s revenue mobilisa- The 2012 Budget has set the stage for Ghana’s tion strategies in this year’s budget is the pro- growth. Given the reported achievements of 2011, posed transfer pricing legislation. This the targets set for 2012 should be realisable as should guide multinationals on their cross border they are rather conservative. Alongside this, Gov- transactions with related parties and will affect ernment should ensure strict fiscal discipline so the corporate income taxes as well as the VAT as to sustain the gains achieved to date in light of payable by multinationals in Ghana. the fact that 2012 is an election year.

The 2012 Budget also provides for the exemption In conclusion the Budget sets out the road map of Capital Gains Tax on stocks traded on the GSE towards addressing the current infrastructure for another five years. The strategy with this ini- deficit. If successfully implemented it should tiative is to encourage transactions on the stock make Ghana an attractive destination for foreign exchange and in the long term make the securi- direct investments and also encourage domestic ties market more vibrant and fluid. investments participation. This should assist in realising the desired accelerated economic Corporate Ghana is again delighted to note the growth , improved infrastructure and job adoption of some of their recommendations in creation. the 2012 budget, including;

 Repeal of the National Fiscal Stabilisation Levy;  Prompt refund of VAT credits with guide- lines and timelines;  The consolidation of all tax laws into a single legislation;  Introduction of a mechanism for offsetting tax credit balances against other tax types (e.g. VAT credit against corporate tax pay- able);  Adoption of appropriate measures to en- sure that tax holidays serve as true incen- tives and are not abused by recipients;  Exemption of sub-contractors in the oil and gas industry from VAT or alterna- tively including them within the scope of the VAT relief purchase orders, currently available to contractors only.

Perhaps responding to public opinion, the Budget Statement has provided for a windfall profit tax for the mining sector and also increased the cor- porate income tax rate for mining companies to 35%. These new taxes ostensibly would cover all mining companies including those with Stabilisation Agreements, a scenario which would not augur well for investor confidence.

PwC Ghana 2012 Ghana Budget Highlights: Commentary 2 National Budget

“Infrastructural Development for Job Creation”

The Economy We believe however, that it would be prudent to manage the rate of growth of The theme for the 2012 Budget ‘’Infrastructural Development for Accelerated Growth and Job Ghana’s external debt as there is a real Creation’’ is reflective of the Government of Ghana’s opportunity to wean the country off donor continuing pursuit of its ‘’Better Ghana’’ agenda. The funds with the expected inflows from oil reve- nue. focus of the 2012 Budget is on the provision of key infrastructure in various sectors of the economy to stimulate growth and support the private sector to Economic objectives and policies for create more jobs to improve the incomes of Ghana- 2012 and the medium term ians. The 2012 Budget is aligned to Government’s It is also worth noting that Ghana has met all four con- strategy as laid out in the Ghana Shared vergence criteria (single digit inflation of 8.6%, exter- Growth and Development Agenda (GSGDA). nal reserves of 3 months import cover, fiscal deficit In fiscal year 2012 –2014 Government’s mac- excluding grants to GDP ratio of 1.9% and Central roeconomic policy will focus on three comple- mentary objectives, namely: Bank financing 0%) for the West African Monetary Zone (WAMZ) as at June 2011 for the first time since the programme commenced in 2001.  Preserving the gains of macroeconomic stabilisation and fiscal consolidation 2011 performance achieved since 2009;  Creating fiscal space for high-priority in- Description Target 2011 Projected vestments to spur long-term growth and outturn to development; and end of 2011  Maintaining inflation in single digits. Real GDP 7.5% 8% growth rate To achieve the above objectives, Government (excluding oil) plans to maintain fiscal deficits at levels that can be prudently financed without crowding Real GDP 14.4% 13.6% out private sector credit. There are also ef- growth rate forts to fill the country’s large infrastructure (including oil) gaps by accelerating and keeping consistent with the Ghana Shared Growth and Develop- 12 month CPI 8.7% 9% ment Agenda (GSGDA). inflation (average) The GSGDA 2012 – 2014 focuses on struc- End of period 9% 8.6% tural transformation of Ghana’s economy inflation through industrialisation, modernised agri- culture and natural resource development. Gross interna- Reserves not Reserves not tional reserves less than three less than three The key infrastructural projects to be imple- months of im- months of im- mented in 2012 are consistent with GSGDA port cover of port cover of and are principally in the areas of: goods and ser- goods and ser- vices vices  Electricity, Oil and Gas; Overall budget 5.1% of GDP 4.8% of GDP  Water and Sanitation; deficit  Railways, Roads, and Ports; and The performance of the economy during 2011 is deter-  Health, Education, and Agriculture. mined by the key indicators shown below: Source: 2012 GoG Budget Statement Fiscal year 2012 macroeconomic tar- gets A Debt Sustainability Analysis (DSA) showed that the solvency and liquidity conditions which demonstrate Government seeks to maintain the fiscal con- ability to service debt are favourable over the medium solidation achieved so far, notwithstanding to long-term. that 2012 is an election year.

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 3 Overall Summary

The 2012 fiscal targets are broadly consistent with In line with section 21 (5) of the Petroleum the targets for 2011. Revenue Management Act (PRMA), the ABFA amount will be spent in the following The fiscal deficit targets for the year has an over- four priority areas: arching aim of deficit reduction in both the oil and non-oil sectors of the economy. The fiscal deficit  Expenditure and amortisation of loans for reduction will be achieved through: oil and gas infrastructure;  Road and other infrastructure;  Further reforms in tax administration;  Agricultural modernisation; and  Managing the wage bill and implications of the  Capacity building (including oil and gas). implementation of the Single Spine Pay Policy; and Taxation  Controlling other recurrent expenditure. While recognising the strong revenue per- Debt management outlook formance in 2011, Government plans to sus- tain its revenue mobilisation efforts in order In line with the rising public debt levels, there are to provide the required funding to close the plans to rationalise the domestic debt auction cal- country’s infrastructural gap in 2012. To this endar and build higher benchmark bonds. Seven- end, Government has proposed a number of Year and Ten-Year fixed rate bonds will be intro- key initiatives aimed at enhancing revenue duced in 2012 to extend the yield curve, aimed at management, expanding the tax base and reducing liquidity in the short-dated instruments. improving efficiency of tax administration.

Government intends to hedge interest rates Direct Taxation through SWAP arrangements to allow for en- hanced predictability of debt service obligations. Some key proposals and steps taken in light of the above objectives include the following: Petroleum Revenues – Outlook for 2012  Increase in corporate tax rate of mining The total revenue expected from crude oil sales in companies from 25% to 35%; 2012 fiscal year is projected at GHS,1,239.82 mil- lion. This amount comprises royalty payments,  A 10% windfall tax levy on mining compa- income from Government carried and participating nies; interest and corporate income tax as detailed be-  A uniform regime for capital allowances of low: 20% for five years for the mining sector, as is the case for the oil and gas industry; Description Amount(GHS  Widening of the personal income tax million) thresholds and brackets; Abolishment of the National Fiscal Stabili- Royalties 236.87  sation Levy; Carried and Participating 618.84  Reduction in the corporate tax rate for the Interest hotels and hospitality industry from 22% to 20%; and Corporate Taxes 384.11  Broadening of the tax net through the es- Total receipts 1,239.82 tablishment of the Employment Income Tax Revenue Enhancing Project.

Government intends to submit to Parliament for Value Added Tax approval, a proposal for the Annual Budget Financ- ing Amount (ABFA) from oil revenues for fiscal In an effort to improve efficiency in tax ad- year 2012 to be set at 70% of the benchmark reve- ministration, the Government has raised the nue. VAT registration threshold from an annual turnover of GHS90,000 to GHS120,000. Businesses with turnover less than GHS120,000 over the twelve month period will pay a presumptive tax of 6% of turnover.

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 4 Overall Summary

Customs & Excise Sectoral Outlook

Some key policies are to be implemented to increase Ministry of Food and Agriculture (MoFA) revenue generation from customs and excise duties. Against the back drop of increased revenue after the For the year 2012, Government is focused reduction of ad-valorem duties on alcoholic and non- on accelerating the modernisation of agri- alcoholic beverages to 2.5% in 2011, Government plans culture to transform the economy through to further reduce the rate as the industry increases the the continuous introduction of technology. use of local raw materials in production and further MoFA will continue with its mandate to investments in capital, technology and employment of implement programmes and projects in labour. the Medium Term Agricultural Sector In- vestment Plan (METASIP). As a matter of priority, Government proposes to grant excise duty reduction on a sliding scale to companies A Fisheries College would be established using local materials as substitutes in the production at Anomabu in the Central Region in col- of excisable goods. laboration with the University of Cape Coast. In addition, a fish processing plant Government also plans to reduce the environmental will be established at Elmina and the Ma- tax on plastic packaging materials in 2012, with ex- rine Fisheries Research Division will also emptions for the pharmaceutical and agricultural sec- be rehabilitated. tors. Ministry of Energy Other initiatives The Ministry will continue to pursue pro-  The Tax Administration Bill, Internal Revenue grammes and projects aimed at ensuring Bill, Customs, Excise and Preventive Bill and the secure, safe and reliable supply of energy VAT Amendment Bills are expected to be passed to meet Ghana’s development needs. in 2012; The Rural Electrification Project will con-  Government has offered a nine-month tax am- tinue with it’s aim of attaining universal nesty commencing January 2012 to individuals access to electricity. Work is also expected and companies that have evaded taxes. During this to start on the construction of the Tema period, the GRA also intends to conduct a registra- Natural Gas Secondary Network System tion and re-registration of tax payers as part of its which will distribute gas to Independent efforts to increase the tax base; Power Producers (IPPs) and industrial facilities in the Tema zone.

 Government has extended the existing twenty year The Ministry has procured a GHS80 tax holiday of the Ghana Stock Exchange (“GSE”) million facility from local banks to be used by five years to enable the GSE meet the industry to purchase cables and conductors from capitalisation expectations. Similarly, Government local manufacturers. This forms part of has extended the Capital Gains Tax exemption for Government efforts to enhance local par- gains on sale of listed securities by a further five ticipation and local value addition. years in order to promote investments and deepen activities on the GSE; Ministry of Trade and Industry

 The GRA would adopt an accounting system to The Ministry aims to develop a vibrant allow taxpayers offset tax refunds against other tax technology driven and competitive indus- obligations; trial sector that significantly contributes to economic growth and employment crea-  In order to track and account for containers and tion. consignments arriving at the ports, a Ghana Inte- grated Cargo Clearance System (GICCS) is ex- One way the Government seeks to achieve pected to be introduced by the GRA; and this is via the Micro, Small and Medium Enterprises Development (MSME) project.  To improve revenue collection, Government, The Ministry, through this project, will through the GRA plans to broaden the coverage of provide matching grants to businesses via the database of prices of goods imported into the the Business Development Services (BDS) country. This is to serve as a basis for comparison Fund. with the Final Classification and Valuation Report (FCVR) issued by the Destination Inspection Com- panies (DIC).

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 5 Overall Summary

Ministry of Roads and Highways Government plans to continue the Kotoka International Airport (KIA) Phase Three and The Ministry will maintain its present focus Regional Airports Rehabilitation Projects. on routine and periodic maintenance activi- ties. Accordingly, the Road Fund will ensure With Government’s effort to improve and that projects are in the order of priority of modernise the railway system, it plans to routine maintenance, periodic maintenance, complete the Railway Master Plan in 2012. road safety and other works. Government plans to complete rail networks which have started while rehabilitating ex- Government is committed to the implemen- isting lines. tation of the Eastern Roads Corridor project and will secure donor funding of US$1.5 bil- The reconstruction of the Western Line un- lion to fully execute the project. der the China Development Bank (CDB) facility will also commence in 2012. One of the proposed projects involves the construction of five new steel bridges to im- To improve and enhance intra and intercity prove access from Volta Region to the North- passenger bus services, the Ministry will ern Region. Also, the construction of Burma continue to assist the Metro Mass Transit Camp Road, Giffard and Maate Tsuru roads (MMT) and Inter-City STC (ISTC) to acquire in the eastern corridor of Accra will com- new buses and also support the private sec- mence. tor to renew their fleet.

In the long term, Government should plan Ministry of Water Resources, Works and to establish assembly plants for these buses Housing in strategic regional centres. This will en- sure a consistent supply of buses with local The Ministry mainly intends to continue technical support and parts to keep the sys- planned projects targeted at ensuring 68% of tem running. the Ghanaian population has access to safe water. Ministry of Environment, Science and Technology With respect to housing, Government will continue to ensure that the objectives of the Government aims to procure an additional National Housing Policy are achieved to sup- 6,000 laptops for distribution and training port the private sector to increase housing of youth in assembling and repairs of ICT delivery in the country and to improve mort- equipment. In addition, Government plans gage affordability. to support the use of local materials in the construction industry. In addition, Government will continue to sustain the channel opening, widening and This is an area where collaboration with deepening of most drains at flood prone ar- local companies would be beneficial. It will eas within the Accra-Tema Metropolis, other also allow Government to direct regional capitals and selected district capitals resources into specific ICT sub-sectors that to improve upon the environment and to it considers critical to the ‘’Better Ghana’’ protect life and property. agenda.

Ministry of Transport Ministry of Communications

Government will continue to encourage pri- The Ministry will continue initiatives started vate sector participation in the investment in 2011 especially relating to the implemen- and management of aviation infrastructure tation of a number of e-applications that and services. have been adopted to facilitate efficient and effective service delivery to the public. The Ministry plans to seek Cabinet and Parliamentary approval to enable Ghana Civil Government also plans to promote the ex- Aviation Authority (GCAA) and Ghana Air- tension of voice, data and video services to ports Company Limited (GACL) to have rural and underserved areas. Special incen- enough funds for infrastructure develop- tives will be offered existing Telecom com- ment. panies to enable them realise positive re- turns on capital invested.

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 6 Overall Summary

Ministry of Tourism Other Policy Initiatives

Government plans to complete tourist facili- Other key policy initiatives include: ties currently under construction to enhance patronage and boost revenue among benefici-  The US$3.0 billion facility from China Devel- ary communities. opment Bank ( CDB) will be utilised to reduce the infrastructure deficit of the country; Also the Ministry plans to organise National Chocolate Day and World Tourism Day  Viability Gap Schemes will be used to provide among others to generate foreign exchange financial support for Public Private Partner- and revenue for local communities, District ship (“PPP”) projects that are economically Assemblies, boost businesses and local SMEs. essential but not commercially viable; Ministry of Lands and Natural Resources  The Ghana School Feeding Programme will be Government will continue with its objective of extended to cover an additional 500,000 pu- ensuring land and sustainable natural re- pils from the current 1,040,000; and sources management for accelerated wealth creation.  Government will support the Ghana Stock Exchange to create an alternative market Key activities for 2012 to be carried out in- where simplified rules of entry will allow clude; decentralisation of land administration SMEs to list. to the district level and building of staff ca- pacities at all levels to facilitate integration in the delivery of land administration services.

In addition, Government will support small scale miners to improve their operational ac- tivities as well as identify and initiate Alterna- tive Livelihood Projects in mining communi- ties.

Also Government plans to develop Keta into a salt winning enclave for prospective investors. To this end, fiscal incentives will be provided to attract investors.

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 7 National Budget

The Economy—Delivering the “Better Ghana” agenda through “Infrastructural Development for Accelerated Growth and Job Creation”

Overview Ghana achieved single-digit inflation of 8.6%, external reserves of 3 months import Globally, growth in In 2011, the following key targets were set for cover, fiscal deficit excluding grants to GDP quite a number of economic performance: ratio of 1.9% and Central Bank financing of large economies 0%. stalled in 2011  Real GDP growth (excluding oil) of 7.5% ;  Real GDP growth (including oil) of 14.4% ; However, there was no improvement in the performance on the secondary convergence Economies in the  Average inflation of 8.7% ; criteria. Convergence performance of other WAMZ generally  End-period inflation of 9.0%; WAMZ countries are: Liberia (4), The Gam- performed very  Fiscal balance of a deficit equivalent to 5.1% bia (3); Guinea (3); Nigeria (3); and Sierra well, driven by of GDP; and Leone (2). strong growth in agricultural and  Gross international reserves equivalent of not Economic development framework industrial sectors. less than 3 months of import cover of goods and services. Government continues to pursue the objec- Based on provisional data at the end of the first tives of the “Ghana Shared Growth and Devel- opment Agenda” (GSGDA). In the medium Ghana out per- three quarters of the year, expected out turns for term, Government’s macroeconomic policy formed her peer 2011 are: agenda is expected to focus on three comple- WAMZ countries, mentary objectives: meeting all four  Real GDP growth (including oil) of 13.6% ; primary conver-  Average inflation of 8.4% ; gence criteria. Li-  Preserving the gains of macroeconomic  Fiscal balance of a deficit equivalent to 2.0% stabilisation and fiscal consolidation beria is the only of GDP; and other country that achieved since 2009;  Gross international reserves equivalent to 3.6 satisfied all four  Making fiscal space for high-priority in- months of import cover of goods and ser- criteria. vestments to spur long-term growth and vices. development; and These expected out turns indicate that  Maintaining single digit inflation. The three key Ghana would achieve its key economic per- planks of Ghana’s formance targets for 2011 Middle income country status medium term devel- opment strategy The World Economy The rebasing and revision of the national ac- include: stability counts measurement in 2010 has raised preservation Growth prospects in, emerging and develop- Ghana’s national income by more than 60%, Encouraging high ing countries remained resilient in 2011 with moving the country to lower middle-income priority invest- many sub-Saharan African economies grow- status. ments single digit ing at rates close to their pre-crisis averages . inflation Advanced economies in Europe and the US Middle income status has its benefits as well are projected to grow minimally on the as- as its drawbacks; the net position depends on sumption that policies will remain sufficiently how Government manages the country’s total strong to keep the financial turmoil under resource base and opportunities. However, Ghana is now a control. middle income status may exclude Ghana lower middle in- from accessing some types of aid, especially come country The West African Monetary Zone grants and loans priced at concessionary (WAMZ) rates.

Preliminary results from the half-year surveil- Conversely, middle income status will make lance report prepared by the West African Mone- the country more visible to international in- tary Institute (WAMI) indicates that the overall vestors, thereby attracting FDIs with its as- economic performance in the WAMZ re- sociated benefits of employment creation and mained strong with real GDP expected to ex- an increment in the country’s domestic capi- pand by 8% in 2011, compared to 7.7 % in 2010. tal in the short-to-medium term. The strong growth in 2011 is being driven by in- creased activities in the agricultural and indus- trial sectors in member countries.

PwC Ghana 2012 Ghana Budget Highlights: The Economy 8 The Economy

Real GDP growth The Industry Sector

Provisional esti- Provisional estimates put real GDP growth The Industry Sector recorded the highest output mates at Septem- (including oil) at 13.6% at the end of September growth this year due mainly to the debut produc- ber put real GDP 2011, suggesting that the economy is on track to tion of oil from the Jubilee Fields. The output of growth at 13.6% achieve the 2012 target of 14.4%. In 2010, real the Mining and Quarrying subsector, which in- and on track to GDP growth was 7.7%; in 2012, it is projected to cludes O&G, grew by 225.4% over of 2010. achieve the 2012 be 9.4%. target of 14.4% In spite of the astronomical growth rate, the It is generally expected that the Oil and Gas Mining and Quarrying subsector (powered by (O&G) industry will continue to spawn confi- the newfound oil) still fell behind the Construc- dence in the country’s future and therefore help tion subsector within the Industry Sector in Growth in the In- to sustain high real GDP growth rates in the terms of contribution to GDP. dustry Sector was near and medium terms. However, perceptions phenomenal, of prudential management of the sector’s reve- Of concern is the low growth achieved by the powered by the nue will be important for sustaining such confi- manufacturing sub-sector – the provisional out- commencement of dence. turn of 1.7% is a dismal performance compared production from to the target of 7%. It would seem that in spite the Jubilee Fields of the increased credit to the private sector, the country’s manufacturers still face difficulties, one of which is cheap imports from countries that are fast assuming the profile of major devel- opment partners to Ghana e.g. China. While the Services Sector remains The Services Sector the largest con- tributor to GDP at The Services Sector grew by 4.2% and contrib- 43.1%, key sub- uted 48.1% to GDP, still making it the largest sectors such as contributor to GDP. The Hospitality sub sector Financial Inter- shrank significantly (negative 11%) compared to mediation shrank budgeted growth of 13.5%; financial intermedia- by as much as 11% tion also performed poorly (1%) relative to its target (17%). Business and other service activi- ties experienced a contraction of –1% against a target of 10% growth.

Provisional data Fiscal performance indicate revenue out performed Provisional data on implementation of the budget by 8.4%; Budget for the first three quarters of 2011 indi- expenditure fell cate that revenues were above the budget by behind budget by Source: GSS/PwC Analysis 8.4%. Expenditure was lower than the budget 1.2%, resulting in estimate by 1.2%. Total revenue and grants for a better than Summary of sectoral performances the first three quarters of the year amounted to planned deficit GHS8,798.2 million (equivalent to 15.5% of GDP), compared to a target of GHS8,119.9 mil- The Agricultural Sector lion (equivalent to 14.3% of GDP). For the year as a whole, total revenue and grants are projected Domestic reve- The sector expanded by 2.8% against a target of at GHS12,825.0 million. nues as at end 5.3% for the year; the actual outturn in 2010 was September 2011 5.3% . Growth in the Fishing sub-sector was sig- Domestic revenues for the first three quarters was GHS8.18bn; nificantly lower than expected with the Forestry comprising tax and non-tax revenue, totalled equal to 14.4% of and Logging sub-sector experiencing a contrac- GHS8,177.0 million, equivalent to 14.4% of GDP. GDP and better tion of 14%. The outturn was 15.9% higher than the budget than budget for estimate of GHS7,055.0 million. the period by Government should create policies that 15.9% target accelerated growth in the sub-sectors that are experiencing lower than expected growth as it has done for the cocoa sub-sector.

PwC Ghana 2012 Ghana Budget Highlights: The Economy 9 The Economy

Total tax revenue was GHS6,596.0 million, The overrun in recurrent expenditure is princi- equivalent to 11.0% of GDP. This was higher than pally the result of the higher than anticipated Total tax revenue the target of GHS5,676.7 million by 16.2%, and cost of personnel emoluments arising from the as at the ninth 49.6% higher than the outturn recorded during implementation of the Single Spine Salary Struc- month was 11% of the first three quarters of 2010. For the year as a ture (SSSS). The ability to more accurately esti- GDP. This repre- whole, total tax revenue is projected at mate the public sector wage bill will be very im- sented a 16.2% GHS9,614.0 million, against a budget estimate of portant for managing inflation in 2012, which over performance GHS8,527.1 million. could be a year that presents significant compared to the challenges for prudent fiscal management. In Budget for the Provisional disbursements of grants (project and particular, Government’s success at managing same period programme) from development partners pressure from various stakeholder groups in budget amounted to GHS621.2 million, against a target 2012 will help not to destabilise the foundation of GHS1,064.9 million. Total grant disburse- built so far. ments at year-end are projected at GHS989.4 million, 26.8% lower than the budget estimate for Fiscal deficit Total expenditure 2011. at end September Fiscal deficit at the end of September 2011 was 2011 was World economic developments e.g. low growth 2.0% of GDP, lower than the target for the nine- GHS10.41billion rates of some large and powerful economies month period of 4.4% and the full-year target of which was 18.3% and the crisis of the Euro Zone accounts for the 5.1%. Based on the projected revenues and ex- of GDP. This rep- relatively low level of development partners’ penditures up to the end of 2011 fiscal year, the resented 1.2% disbursements. fiscal deficit for the year is expected to be behind budget GHS2,740.5 million, equivalent to 4.8% of GDP, At September 2011, total expenditure amounted and well within the budget deficit target of 5.1% to GHS10,412.3 million, equivalent to 18.3% of of GDP. GDP. The outturn was 1.2% lower than the target of GHS10,543.8 million. Total expenditure for Monetary Sector the year is projected at GHS15,565.5 million, As at September 8.1% higher than the 2011 budget estimate of Broad money supply, including foreign currency 2011, the fiscal GHS14,397.4 million. deposits (M2+) grew by 41.9% year-on-year to deficit was 2%, GHS15,851.3 million compared with growths of much smaller Recurrent expenditure for the period totalled 28.0% and 33.8% for the ninth month and full than the targeted GHS7,121.7 million, exceeding the target of year periods September and December 2010, 4.4% for the same GHS6,808.0 million. For the year as a whole, respectively. Growth in bank outstanding credit period revised projections put recurrent expenditure at to public and private institutions at September GHS10,155.5 million, compared to a budget esti- 2011 rose by 14.1% on a year-on-year basis, com- mate of GHS9,222.5 million. pared with a decline of 5.7% recorded at Septem- ber 2010. Total capital expenditure for the three quarters to Outstanding bank September also amounted to GHS2,168.3 million, Outstanding bank credit stood at GHS8,377.0 credit to the pri- equivalent to 3.8% of GDP. This compares with a million at the end of September 2011, of which vate sector as at budget estimate of GHS2,887.5 million, equiva- GHS7,752.4 million represented outstanding September 2011 lent to 5.1% of GDP. Total capital expenditure for credit to institutions in the private sector. stood at GHS the year is projected to be GHS3,681.9 million, 7.7bn, represent- 14.6% lower than the 2011 budget estimate of The Ghana Cedi traded weaker on both the Inter- ing almost 93% GHS4,311.5 million. Bank and Forex Bureau markets during the nine- total bank credit month period from January to September 2011, to both public and The level of capital expenditure continues to be compared to the corresponding period in 2010. private institu- low compared to the recurrent expenditure; this tions expenditure mix or balance does not support Interest rates continued their downward trend Government’s medium-term infrastructure during 2011, in line with declining inflation and transformation plans, especially when infra- inflationary expectations. structure development is a pivotal element in its short to medium term plans for economic The Bank of Ghana (BoG) policy rate which stood growth and development. at 18% in December 2009 was lowered progres- sively to 13.5% in July 2010 and further reduced by 50 basis points each in May and July 2011 to bring the rate to 12.5% where it remained as at the end of September 2011.

PwC Ghana 2012 Ghana Budget Highlights: The Economy 10 The Economy

Banks have generally been slow in lowering Gross international reserves their base rates in response to reduction in the Bank of Ghana (BOG) policy rate. It is refresh- At US$4.98 billion (end October 2011), gross ing to note that BOG will continue to apply international reserves is higher than the Decem- moral persuasion to get commercial banks to ber 2010 balance of US$4.68 billion, and offers Inflation rates— harmonise their base rates and also respond more than 3 months cover for 2012 projected year-on-year and quickly to reductions in the policy rate. imports. This was driven principally by favour- average—both able price movements in gold, cocoa beans and remained single Inflation rate cocoa products. It is envisaged that there will be digit. September a further build-up in the gross international re- average inflation Average inflation for the 9 month period between serves to an average of US$7.5 billion over the was 8.4% and January to September 2011 (8.40%) was better medium term (estimated to cover 4 months of better than period than period target (8.7%) and well within end of imports) on the back of oil production. target year target of 9%. Average inflation for 2012 is targeted to be 8.7% with; end-period inflation This is good news, as the Ghana Cedi can be- projected to be 8.5%. come more stable allowing households and businesses to more reliably make projections. Government has been successful in maintaining inflation in the single digit range over an Financial stability extended period of time. The performance of single inflation could however be at risk , as his- Ghana’s financial system is fairly well-diversified. torically, Government has been liberal in spend- The banking system has seen steady growth over ing in a General Election year. The temptation to the years and remains fairly well capitalised, sol- do so should be tempered with the long-term vent and profitable. The banking system’s assets- policy objective of a low inflation economy that to-GDP ratio has seen consistent growth, from encourages business investment planning and under 30.0% of GDP in 2008 to 43.5% as of Au- growth. gust 2011. In terms of the ownership structure, the split is 55.4% to 44.6% between foreign and Interest rates local control respectively.

Interest rates generally have continued to trend Concentration within the banking system, meas- downwards. Developments within the money ured by the share of the top 5 banks in total as- market have led to the correction of the market’s sets, has declined consistently over the years inverted interest rate yield curve. The BOG’s reaching 45.3% in August 2011, from over 70.0% policy rate has been reduced twice already in in 2005. 2011 to signal the Central Bank’s policy in money markets. Interbank weighted average rates have Over the medium term, BOG aims to continue to also declined to 10.59% (September 2011) from implement measures towards addressing chal- 11.65% (December 2010). Some banks also re- lenges in the banking system with the view to duced their base rates in the course of the year, ensuring a safe, sound and stable banking system signalling a fall in borrowing costs. to support broad based economic growth. At present, the Central Bank has issued two guide- In a relatively low inflation environment as the lines on Risk Management and Intervention in country is experiencing now, low commercial Troubled Institutions. The former is aimed at lending interest rates would help to provide improving risk management in banks, while the business with the impetus for rapid growth, thus latter sets out criteria for intervening in weak powering the economy in the direction desired. banks. The concerns of banks with regard to interest rates should however be taken into account Public debt when solutions are being considered. The total public debt increased from US$11,247.7 External sector million 37.8% of GDP as at September 2010 to US$14,766.72 million 38.98% of GDP by the end The Balance of Trade (BOT) recorded a deficit of of September 2011, representing an increase of US$1,685.8 million (4.5% of GDP) for the first 1.1% of GDP over the period. As at end Septem- nine months of 2011, against a deficit of ber 2011, external debt was US$7,103.41 million, US$2,016.4 million (8.7% of GDP) during the representing 19.1% of GDP and 49% of the total corresponding period of 2010. public debt stock, while domestic debt amounted to US$7,521.59 million, representing 19.9% of GDP and 51% of the total public debt stock.

PwC Ghana 2012 Ghana Budget Highlights: The Economy 11 The Economy

Debt Sustainability Assessment

The Debt Sustainability Analysis (DSA), updated in November 2011, showed that public debt stood at 33.6% of GDP in December 2008. This is esti- mated to rise to 37.8% of GDP in 2015.

Part of Government’s debt management strategy is to keep the total public debt ratio below a ceil- ing of 50% of GDP. Government also proposes to introduce long-dated fixed rate bonds (seven-year and ten-year) in 2012.

PwC Ghana 2012 Ghana Budget Highlights: The Economy 12 National Budget

Review of Personal Income tax bands resident Ghana entity or whether it will include appreciation in local subsidiaries as a result of Government has proposed revised income tax changes in ownership structure of their non- bands on employment income. resident parent entities.

The proposed revision in tax bands follows a Financial Services Sector previous tax band increment announced in the 2011 Budget Statement but which was not The tax holiday granted to the Ghana Stock Ex- passed into law until a year later. change as an entity which expired in 2010 is to be extended by another 5 years. The proposed income thresholds and brackets are as follows: In addition, the Capital Gains Tax exemption on gains made on the GSE has been extended by 5 Chargeable income years. The exemptions are expected to promote GHS Tax Rate investment activities on the GSE.

First 1,440 Free The extension of the exemption period for Capital Next 720 5% Gains Tax in respect of gains made on the GSE will encourage investors to increase their partici- Next 1,008 10% pation in securities traded on the GSE. It is also Next 25,632 17.50% expected to make the securities market more vi- Exceeding 28,800 25% brant.

Widening of personal income tax bands is a There is however the need for clarity as to step in the right direction as it will result in whether capital gains made in the 2011 year of increased disposable income for employees, assessment would be covered by this exemption which should in turn enable them to enhance since the initial exemptions expired in November their living standards. 2010.

Hotel and Hospitality Industry VAT exemption

The corporate tax rate for the hotel and hospi- Government proposes that Mutual Funds and Unit tality industry has been reduced from 22% to Trust Funds that invest in shares listed on the GSE 20%. will be exempted from VAT on financial services.

Government has completed the review of in- The VAT Act currently exempts from VAT, finan- centives granted under LI 1817 (Ghana Invest- cial services with the exception of professional ment Promotion Centre, Promotion of Tourism services such as investment advice. This an- Instrument), which will be incorporated in nouncement will therefore also specifically ex- Internal Revenue Act of 2000 (Act 592). The empt these funds from VAT on their professional Ghana Revenue Authority (‘’GRA’’) is expected services. to publish the full list of incentives available to the hotels and hospitality industry in due Tax Refunds course. Government has recognised through its 2012 For the tax incentives to achieve the desired Budget the problems that taxpayers have always effect of attracting investments into the indus- encountered on VAT refunds and duty drawbacks. try, the GRA should publish the list of tax in- centives without any delays. It has been proposed that the GRA will adopt an accounting system that will allow taxpayers to off- Capital Gains Tax on appreciation in the set tax refunds against other tax obligations. value of a company Prior to this development it was difficult for tax- The appreciation in values of companies as a payers to plan with any certainty regarding their result of transformation in ownership structure tax refunds, which in turn impacted adversely on and control of aspects of their business would their cash flow planning. Some corporate tax be subject to Capital Gains Tax . payers ended up with significant tax refunds due to them whilst at the same time making tax pay- What is not clear is whether the Capital Gains ments on their Corporate Tax obligations. Tax tax would be applicable only when there is a payers should welcome this proposal as a poten- change in the ownership structure of the tial solution to their challenges. More guidelines on the mechanism, however needs to be provided to aid taxpayers.

PwC Ghana 2012 Ghana Budget Highlights: Direct Taxation and VAT 13 Direct Taxation and VAT

Taxation of professionals and the informal Ring Fencing sector A project has been Government has proposed to review the princi- Government in fulfilment of its statement in the set up to increase ples of ring fencing applicable to the petroleum 2011 Budget to focus attention on revenue contri- the tax contribu- and mining sector. With effect from year 2012, bution from the self-employed, has set up the tion from self- losses on one site will no longer be offset against “Self-Employment Income Tax Revenue employed profes- profits from another contract area or site Enhancing Project”. The project is aimed at sionals (belonging to the same company) in determining broadening the tax net. chargeable income for income tax purposes.

Government’s should speed up measures to en- Prior to this proposal, mining and petroleum hance the identification of self-employed per- Increase in VAT companies were allowed to offset costs and prof- sons in the informal sector to be able to track all threshold and in- its from different sites. This approach was easier taxable persons and make them contribute their troduction of turn- to administer. The proposed approach is likely quota in taxes to Government revenue. over tax. to result in increased administrative procedures especially for mining entities with different con- Increase in VAT threshold tract sites under various stages of development Entities affected will be expected to ensure each Government proposes to raise the threshold for Transfer Pricing contract area or site maintain separate account- VAT registration from an annual turnover of regulation drafted ing records for tax purposes. This may also come GHS90,000 to GHS120,000. Businesses with by Government to with increased compliance costs due to require- turnover of less than GHS120,000 will be regulate growing ments to prepare separate reports for account- expected to pay a presumptive tax of 6% of turn- casino operations ing purposes and associated tax calculations for over and will also fall into the category of small to increase tax filing with the GRA. taxpayers. revenue Natural Resource Taxation The increase in the VAT threshold should help reduce the administrative burden on small busi- Government commented on the inadequacy of nesses. tax revenues and social benefits generated from Ring fencing in the mining sector and to address these, made the energy and min-  The GRA should as a matter of urgency, issue following proposals: ing sector — for administrative guidelines operationalise the income tax pur- 6% turnover tax,;  Increase the corporate income tax rate for poses, costs in- mining companies from 25% to 35%; curred in one site  It should also clarify whether the 6% tax on not to be offset turnover would replace the corporate tax for  Re-introduction of a windfall profit tax at against profits small business; and 10%; and from another site of the same com-  And lastly whether the recent taxpayer seg-  Alignment of the method of granting capital pany mentation criteria of the Domestic Tax Reve- allowances with that operated in the oil and nue Division of GRA will be revised as a result gas sector. This will result in the capitalised of increase in the VAT threshold to costs of qualified assets owned by mining GHS120, 000. companies being spread evenly over a 5-year Revision in corpo- period through the capital allowance system. rate tax rates and Transfer Pricing introduction of the The above proposals may indeed improve tax windfall tax for Government intends to reduce revenue loss income mobilised from the mining sector al- mining entities. through transfer pricing and has consequently though it should be acknowledged that some drafted regulations to strengthen existing tax implementation issues are bound to be encoun- legislation to deal with taxation of multinational tered. Issues to be addressed include constraints companies and minimise the incidence of trans- in stabilisation agreements of existing mining Changes in the fer pricing. companies that protect these companies from rate and method adverse consequences of newly introduced laws of granting capital Betting and gaming and amendments. allowances for qualifying assets Government intends to take an active interest in Mining entities had previously been granted of mining compa- the growing gaming and betting industry in capital allowance deductions at 80% on initial nies. Ghana. Government therefore intends to develop addition of assets and subsequent allowance of regulations to streamline activities in this indus- 50% which critics cited as being generous and try and to ensure efficient mobilisation of tax often resulted in little or no chargeable income to revenues from casino operations. be subjected to corporate taxes.

It is expected that most of these businesses would The proposals may be viewed as a major be captured under the proposed re-registration disincentive to mining companies. exercise next year.

PwC Ghana 2012 Ghana Budget Highlights: Direct Taxation and VAT 14 Direct Taxation and VAT

National Fiscal Stabilisation Levy (“NFSL”)

The NFSL that was introduced in 2009 and fur- National Fiscal Sta- ther extended to the 2011 year of assessment will bilisation Levy be revoked from 2012. abolished. The NFSL was intended to be a temporary levy mainly aimed at the fiscal stabilisation of the economy for the years 2009 and 2010 and there- fore a repeal of this Act is in line with the origi- nal intent of the law and the expectations of tax- payers.

Tax amnesty— Tax Amnesty

Government offers Government has offered a tax amnesty to indi- a 9-month window viduals and companies that have evaded taxes . for taxpayers to This exercise will run for nine months from Janu- declare their tax ary 2012 to 3o September 2012. During this pe- liabilities. riod, the GRA also intends to conduct a registra- tion and re-registration of tax payers as part of its efforts to increase the tax base.

Government conducted a similar exercise in 2006 for six months. The nine months offered Tax Administration this time is expected to be sufficient for taxpay- Bill and the CEPS ers to regularise their tax affairs. Bill are expected to be presented to Par- It is also proposed that after the nine month liament for consid- window, the GRA will go ahead and conduct eration their audits and any irregularities would be sub- ject to interest and penalties applicable under tax laws amnesty period. Under these circum- stances, it would be difficult for the GRA to grant waivers of interest and penalties to taxpayers who fail to declare their taxes during the amnesty period.

This is a good opportunity for businesses to re- assess their tax affairs and ensure compliance.

Bills expected to be passed during 2012 include the following:

 Tax Administration Bill (to consolidate the common procedures of all the tax laws);  The Internal Revenue Bill;  The Customs Excise and Preventive Bill; and  VAT Amendment Bill.

PwC Ghana 2012 Ghana Budget Highlights: Direct Taxation and VAT 15 National Budget

Resource Mobilisation Initiatives The sliding rate concept was previously used in determining applicable mineral royalty rates. A Reduction of envi- The focus of revenue management in fiscal year reason for the change to a fixed rate was the ronmental excise 2012 is to expand the tax base and improve the difficulty in determining the applicable rate for a tax on plastic pack- efficiency of tax administration. In the area of mining company for a particular year. aging materials Customs and Excise administration, increased To avoid such difficulty in the case of excise du- and products from monitoring is expected to be a key driver for reve- ties there is the need to fully evaluate how the 20% to 15% with nue mobilisation. sliding rate will be implemented for producers exemption for agri- that use local raw materials. cultural and phar- As part of measures to strengthen the Customs maceutical sectors Division (CD) of the GRA, a Tax Administration Air Transport and Aviation Development Bill and a CEPS Bill are expected to be presented Levy to Parliament for consideration. Proposed changes to Customs and Excise duties for the A committee to propose modalities for funding Companies using 2012 fiscal year are as follows: the expansion and modernisation of Kotoka In- local raw materials ternational Airport (KIA) and other regional air- in the production of Environmental excise tax on plastic and ports is to be set-up by Government. This is excisable goods are packaging materials aimed at reducing the congestion and pressure on to be granted a existing infrastructure and facilities at the air- reduction in the The environmental tax charged on plastic pack- port. excise duty rate aging materials and products is expected to be reduced from 20% to 15% with exemptions for To finance the expansion of the KIA, a levy as the pharmaceutical and agricultural sectors. mentioned above is likely to be introduced in the near future. Re-organisation of There is the need for guidelines on how the customs bonded exemption for pharmaceutical and agricultural With Government’s recent adoption of a PPP warehouses in sectors will operate, areas to consider include: policy, the committee should consider developing Ghana any additional airport or aviation infrastructure  tracking the production of packaging materi- using PPP models and associated funding als for use in the pharmaceutical and agri- mechanisms. cultural sectors; Widening the data-  how producers of plastic packaging materi- Re-organisation of customs bonded ware- base of prices of als for the sectors exempted and other sectors houses imports of the economy should calculate excise duties; and Government proposes to re-organise and reduce to a reasonable number the more than 300 cus-  how operators in the exempt sectors should toms bonded warehouses in Ghana. The remain- Increased monitor- seek exemption from the purchase of plastic ing customs bonded warehouses will be re-zoned ing of Free Zones packaging materials. and sub-offices created to ensure effective reve- Operators nue collection. Review of Excise Duty Rates Proposed expansion Customs Valuation of Imported Goods and modernisation In addition to the general 2.5% reduction in ex- cise duty rates in 2011, Government will consider of KIA and other GRA will broaden the coverage of the database of granting further reductions in excise duty rates regional airports prices of goods imported into the country. This is on a sliding scale for persons using local raw ma- to serve as a basis for comparison with the Final terials as substitutes in the production of excis- Clarification and Valuation Report (FCVR) issued able goods. by the Destination Inspection Company (DIC). The relevant Government agencies should en- Government should work towards minimising sure that the production capacity for such raw delays in release of FVCR by DIC for valuation materials is expanded to prevent shortfalls and of goods that are cleared at the ports to reduce supplies. The proposed incentive would be ex- compliance time for customs matters. pected to result in increased demand for such local raw materials. The proposal may not only Monitoring of Free Zone Operators contribute to reduced production cost for af- fected businesses in the industry, but also serve The GRA is expected to step-up monitoring of as an incentive which could potentially boost Free Zones Operators to ensure that at least 70% production and utilisation of local raw materi- of production in the Free Zones is exported and als. the maximum of 30% for the local market is ad- hered to.

PwC Ghana 2012 Ghana Budget Highlights: Customs and Excise 16 Customs and Excise

Government should ensure that the monitoring Duty drawbacks and tax refunds exercise does not unduly affect the day-to-day business of entities in the free zones enclave. The Ministry of Finance and Economic Planning (MoFEP) will ensure that there are enough funds Introduction of Introduction of GICCS available for refunds and duty drawbacks. Ulti- Ghana Integrated mately, the GRA in its administrative improve- Cargo Clearance In order to track and account for containers and ment will adopt an accounting system that will System for tracking consignments arriving at the ports, GICCS is ex- allow taxpayers to offset such refunds against and accounting pected to be introduced by the GRA. other tax obligations. purposes. The GRA needs to indicate how the GICCS will The opportunity to set-off refunds against other link with GeGov’s—a PPP to deploy an eGovern- tax obligations will help improve the cash flow ment solution in Ghana — and other electronic position of taxpayers and also reduce time in systems for automating and integrating various settling refunds. government agencies. Government should con- tinually engage with stakeholders to ensure a We expect that the Tax Administration Bill which smooth implementation of the system. seeks to consolidate the common procedures of all the tax laws will help to achieve this setting- off process. Imposition of stan- Import duties on Teak products dard duty rates on teak products im- To support rural electrification and augment lo- ported into the cal production, teak products used as electric country poles for the Self Help Electrification Project (SHEP) were exempted from import duties. How- ever, over the years, domestic supply has signifi- cantly improved and Government proposes to restore the duties at the standard rate when local Migration from HS production capacity is adequate. Code 2007 to HS Code 2012 Government should give an indication of when the local production capacity is expected to be adequate for consumption by SHEP. This will encourage indigenous producers while restrict- ing the dumping of imported products on the Ghanaian market. This will also contribute to- wards improving the country’s balance of pay- Taxpayers to offset ments position when it comes into force. drawbacks against liabilities of other Migration from HS Code 2007 to HS Code tax types. 2012

The ECOWAS Commission is working on the migration from the HS Code 2007 to HS Code 2012 which the World Trade Organisation (WTO) recommends all countries to migrate onto to en- sure harmonised global trading system. The aim is to have individual country HS Codes replaced by the regional Central External Tariff (CET) tar- iff structure throughout the sub-region.

This is another step in furthering integration with the sub-region through a framework for the same nomenclature of goods

PwC Ghana 2012 Ghana Budget Highlights: Customs and Excise 17 National Budget

ECONOMIC SECTOR Key activities to be undertaken during the year include: Government’s key areas of focus in the Economic Sector for the medium term are: enhancing com-  Decentralisation of land administration to the Government to con- petitiveness of Ghana’s private sector, accelerat- district level to facilitate integration in deliv- tinue policies to ing agricultural modernisation and natural re- ery of land administration services; support cocoa and source mobilisation and the development of the  Establish plantation development pro- coffee sectors Energy, Oil and Gas industry. grammes to promote ecological balance and job creation; Ministry of Food and Agriculture  Undertake geographical investigations for Government intends to focus on accelerating the small scale mining to reduce environmental Land administra- modernisation of agriculture to transform the degradation and initiate Alternative Liveli- tion to be decentral- economy through continuous introduction of hood Projects in mining communities; and ised to the district technology. Programs for 2012 include:  Provide the necessary infrastructure and fiscal level incentives to attract investors in the salt in-  Implementation of main policy interventions dustry. such as fertilizer subsidy, irrigation, buffer stock management, seed improvement and Ministry of Trade and Industry quality standardisation; Government will continue to pursue programs  Expansion of the Agriculture Subsidy Aggressive market- under the Private Sector Development Strategy, ing and promotion  Programme to include liquid fertilizers (bio- the Industrial Sector Support Programme and the of Ghana as a pre- fertilizer) and improved seeds. 165,000 metric National Export Strategy to improve competitive- ferred tourism des- tonnes of chemical and liquid fertilizer will be ness of businesses and job creation. Initiatives to tination subsidised; be taken during the year include:  Continue with the policy of providing one Agricultural Mechanisation Service Centre  Implementation of programmes to assist the (AMSEC) per district with the full comple- manufacturing sector to become competitive ment of machinery and equipment along the and build efficient supply chains; value chain;  Upscale the Rural Enterprises Project;  Rehabilitation of 50 breached dams and dug-  Provide matching grants to businesses in Mi- outs in the 3 Northern Regions, Greater Accra cro, Small and Medium Enterprises (MSME) and Volta Regions. Additional works on Weija through Business Development Services and Okyereko will be completed; (BDS); and  Rehabilitation of Ashaiman Soil Laboratory  Construction of storm drain at Tema Export and Vea Irrigation Scheme; Processing Zone.  Establishment of project implementation units and a National Steering Committee to Ministry of Tourism improve the investment climate for agri- business and developing inclusive Public Pri- Government’s aim is to make Ghana the pre- vate Partnerships (PPPs); and ferred tourist destination in Africa and making  Continue to implement policies to support the the sector a major foreign exchange earner and Cocoa and coffee sector. The Cocoa Disease employment provider for the country. Pro- and Pest Control Programme (CODAPEC) will grammes and activities will focus on: continue to be pursued to mitigate the risks associated with the incidence of disease and  marketing and aggressive promotion of the pest attacks on cocoa. country in key markets in Europe, America and emerging markets in Korea and China; Ministry of Lands and Natural Resources and

Government is committed to ensuring sustain-  Completion of tourist receptive facilities, con- able management and utilisation of the nation’s tinuing with the United Nation’s Industrial lands, forests, wildlife and efficient management Development Organisation-United Nations of mineral resources for the socio-economic World Tourism Organisation (UNIDO- growth and development of the country. UNWTO) Collaborative Actions for Sustain- able Tourism (Coast Project) to reduce the environmental impact from coastal tourism and develop eco-tourism around Ada.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 18 Sectoral Outlook

To achieve these objectives, the Government In addition, work is expected to start on the con- should also focus on the hospitality industry, struction of the Tema Natural Gas Secondary which contracted in 2011 (-11%). In the long Network System which will distribute gas to In- term, it may be necessary to invest in training dependent Power Producers (IPPs) and Indus- colleges/institutions that focus on hospitality trial facilities in the Tema zone. A new 70 kilome- services – hotels, restaurants, tour ter (12-inch) twin petroleum pipeline linking the operators etc which are crucial to the tourism Accra Plains Depot to the Akosombo Depot will First 133MW out of industry. also be constructed as part of the Depot Expan- the 400MW from sion Programme. Bui Power Project Ministry of Energy to be commissioned The speedy delivery of additional power is cru- into the national Government’s emphasis will be to continue pur- cial to fill the current power gap to meet the grid suing programmes and projects aimed at ensur- needs of the fast expanding economy. ing secure, safe and reliable supply of energy to meet Ghana’s development needs. Government should also continue to focus on renewable energy sources. Power Sub Sector Ministry of Environment, Science and The first 133MW out of the 400MW Bui Hydro Technology project and 132MW Takoradi 3 Thermal Project 132MW from will be released into the national grid in 2012. Government will implement projects and pro- Takoradi Thermal Government will continue to implement meas- grammes that focus on biodiversity, reduction of Plan to be commis- ures to improve system reliability and reduction the impact of climate variability and change, ap- sioned of system losses, such as the Transmission plication of science and technology, enhancing Improvement Projects and Distribution System environmental quality and ensuring proper spa- Improvement Project. tial organisation for sustainable development as outlined in their Medium Term Development Also, Government will rehabilitate, upgrade and Plan. construct various ECG primary sub-stations in Accra and Tema and link all the Electricity Com- Specific initiatives include: pany of Ghana (ECG) sub-stations.  Establishment of Science Technology and Government intends to boost rural electrification Innovation Fund; through the connection of over 2,800 communi-  Initiation of the National Science and Tech- ties across all the regions of Ghana. nology Theme Park Project;  Implementation of the Mathematics, Science Science Technology Petroleum Sub Sector and Technology Scholarship Scheme and Innovation (MASTESS); and Fund to be estab- Government intends to continue with the devel-  Utilisation of local building materials. lished opment of the Gas Commercialisation Master Plan and the management of block acquisition in INFRASTRUCTURE SECTOR the upstream petroleum sub-sector. Construction of 150,000 cubic meter capacity tanks for gaso- The role of the infrastructure sector has become line, diesel and kerosene storage for the Bulk Oil more critical in propelling economic growth and Storage and Transportation Company (BOST) sustained poverty-reduction. In recognition of Government to fo- Petroleum Terminal will commence in 2012 in that role, Government will focus on infrastructure cus on the infra- the downstream sub-sector. The project will also development for accelerated growth and job crea- structure develop- include 20,000 cubic meter storage tanks for tion; accordingly, priority will be given to the ment for acceler- Liquified Petroleum Gas (LPG) and Methane expansion of existing social and economic infra- ated growth and job Coalbed (CBM) which will facilitate import and structure to ensure that services provided are creation export of products reliable, affordable and efficient so as to enable the acceleration of growth and achieve job crea- To maximise the benefits of the oil and gas re- tion. source, Government will ensure the conversion of the Local Content and Local Participation Policy into legislation.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 19 Sectoral Outlook

The ministries under the infrastructure sector are Government should make rail transport a prior- Water Resources, Works and Housing ity for the transportation of food stuffs. This will Government to (MWRWH), Transport (MOT), Roads and High- help reduce carriage cost and result in lower tackle perennial ways (MRH) and Communications (MOC). food prices. flooding in the Ac- cra-Tema Ministry of Water Resources, Works and New Acts to be introduced to adequately address metropolis Housing regulatory issues in relation to the oil find. These include Marine Pollution Bill, Draft Shipping Government targets 68% access to safe water by Services Providers Regulations, draft regulations Housing sector con- vigorously pursuing interventions intended to on inland waterways and draft regulations to li- tinues to receive provide safe water with emphasis on small town cense shipping agencies. Government’s water schemes and boreholes. These are expected priority to be achieved by development and implementa- A new road traffic regulations to be enacted to tion of appropriate regulations by the Water operationalise the Road Traffic Act 2004 (Act Resources Commission (WRC) for effective and 683). Rail transport to be sustained utilisation and development of water expanded and resources. 24,000 boreholes are to be sunk over Government to ratify various international con- China to provide the next five years for rural water as well as ventions and to continue its policy of liberalising most of funding continuing with the on-going urban water pro- the legal and regulatory framework by reviewing jects and negotiating Bilateral Air Services Agreements New Acts to address with its trading partners. marine pollution Access to safe water is a necessity and Govern- and Bills to be ment should consider the participation of the Government to review the Airport Passenger Ser- drafted for shipping private sector for efficiency. vice Charge to enable the Ghana Civil Aviation manning agencies Authority and Ghana Airport Company Limited licensing and Government is expected to sustain the channel have enough funds for infrastructure develop- inland water ways opening, widening and deepening of most drains ment. at flood prone areas within the Accra –Tema Me- tropolis, other regional capitals and selected dis- Airport charges in Ghana are already consid- trict capitals to improve upon the environment ered high. Government must therefore consider and protect life and property. the review of the proposed charges carefully so A new road traffic as not to make Ghana an expensive destination regulations to be Flooding in the Accra-Tema metropolis has be- for air travel, which could negatively affect tour- enacted. come a perennial occurrence and Government ist and business travel to the country. efforts to widen and deepen most drains could minimise floods. However, it is important that Ministry of Roads and Highways the human activities which also contribute to flooding addressed to bring a holistic solution to Government to expand the electronic tolling of Ratification of In- the problem. roads to other sections of the road network in ternational conven- anticipation of improved revenue generation into tions for the nego- Government is to ensure that its objective for the the Road Fund for the maintenance of the road tiation of Bilateral National Housing Policy is achieved. It plans to network. Air Services Agree- support the private sector to increase housing ments with trade delivery to improve mortgage affordability. In Coordination and supervision of donor funded partners this regard, it will continue to facilitate private projects to be enhanced to in order to improve sector to commence the construction and delivery the disbursement process. It is expected that this of safe, decent, and low income affordable hous- will enable the quick commencement of such ing. projects and matching of funds as well as com- pensation payments to be made in a timely man- The implementation of the Affordable Housing ner. Project as planned across the nation will create massive employment and accelerate economic Road projects in the Western oil and gas enclave growth if the objective of the housing policy is to commence. Along side that, Government will achieved. continue to improve major road corridors to pro- mote trade and economic activities. Ministry of Transport Government to show commitment to implement- Reconstruction of the Western Railway Line is to ing the Eastern Corridor Roads project by secur- commence under the China Development Bank ing donor funding of US$1.5 billion for its full (CDB) Facility. The Tema port expansion project execution. and the Multi-Modal Transport project that links the Tema Port by rail to the Volta Lake will also be undertaken under the same CDB facility.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 20 Sectoral Outlook

Ministry of Communications Whilst addressing the infrastructural issues as- sociated with the public universities, government Government to con- Government to ensure transparent and account- should ensure the enabling environment is cre- tinue pursuing pro- able governance. In doing so, the Ministry will ated to ensure adequate number of lecturers and poor programmes continue to implement a number of e- professional staff to deliver quality teaching and to increase enrol- applications which have been adopted to facili- learning. ment figures in tate efficient and effective service delivery to the schools public. It is expected that national e-government Government would continue to provide adequate network infrastructure project will continue by resources to CSSPS to deliver improved services. utilising capacity from the National Communications Backbone Company. Since its introduction, the CSSPS has removed Government to con- some challenges encountered in the selection of tinue providing Government to facilitate a major uptake of e- schools for basic students. However with the infrastructural fa- government by formally establishing the public recent challenges encountered by the unit lead- cilities in schools to Internet Governance Registry and also come up ing to the delay in the placement of basic school be user friendly to with policy guidelines to guide the migration students in second cycle schools, Government people with disabil- from IPV4 to IPV6. would need to review the system to ensure the ity achievement of the intended objectives. Government will embark on a nationwide public- ity and communication campaign to educate the Ministry of Youth and Sports general public on the switchover to digital broad- casting to prevent panic buying. The public edu- The Ministry plans to complete the processes for Provision of Infra- cation will cover the entire lifespan of the digital the passage of the new National Youth Law, the structure for the broadcasting migration programme until ana- National Sports Law and also review the existing two new Universi- logue switch-off by December 2014. Sports Policy formulated in 1994. ties to pave way for the commencement The implementation of the e-government project Establishment of a mechanism to take advantage of the 2012/13 aca- which is now taking off at the Ghana Revenue of the regulation that will provide tax rebate/ demic year Authority and the Registrar Generals Depart- waiver for companies and individuals that make ment will go a long way to create efficiency in donations or import equipment for sports devel- the service delivery of these institutions thereby opment and promotion. This is expected to en- creating investor confidence in the systems and courage private sector participation in the devel- Adequate resources processes. opment of sports in Ghana. to enable the Com- puterised School SOCIAL SECTOR As part of sports Infrastructure development, Selection and Place- there are plans to commence the construction of ment System Ministry of Education two multipurpose Sports Halls for the Northern (CSSPS) to deliver and Southern sectors. improved services As part of the proposed 2012—2014 Education Sector Operational Plan, Government plans to Parliament is expected to pass the National Youth address the enormous infrastructural challenges Employment Programme (NYEP) Law before the Plans are in place to as well as human resource needs of the sector. end of 2012 to provide clear guidance on the im- pass a new Na- This would include the following initiatives: plementation of the NYEP. tional Youth and Sports law whilst  intensify the implementation of pro-poor Parliament should speed up the passage of this reviewing existing intervention programmes such as the capita- law when presented by the Ministry to serve as a Sports Policies tion grant, free school uniforms, free exercise guide to Government and development partners. books and subsidies to basic and senior high schools. This is expected to increase enrol- Private sector par- ment figures in basic schools.; ticipation in sports  Rehabilitated and newly constructed infra- development structure projects in secondary and basic schools would be done in line with the Dis- ability Act; and  Equip the two new public universities in Ho Construction of two and Sunyani with infrastructural develop- multi-purpose ment. It is anticipated that the first batch of sports halls for the students would be enrolled in 2012/2013 aca- Northern and demic year. Southern sectors

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 21 Sectoral Outlook

Ministry of Employment and Social Wel- To help promote gender equality, the Ministry Continuous dia- fare plans to continue dialogue with Microfinance and logue with all stake- Small Loans Centre (MASLOC) and other finan- holders to deepen Government is planning to have continuous dia- cial institutions to provide micro-credit on flexi- understanding of logue with all stakeholders to deepen under- ble terms to women groups and organizations. the SSPP standing of the Single Spine Pay Policy (SSSP). The Ministry's Re-engineering Action Plan is ex- Recent strikes by medical doctors, teachers and pected to be implemented in 2012 to enable other public sector workers on transfer to SSPP MOWAC to be effective and efficient at promot- A national labour requires Government to continue dialogue with ing gender equality and rights of women and chil- survey is planned to all stakeholders in finding a solution to this is- dren in Ghana. provide informa- sue. tion on the rate of ADMINISTRATION SECTOR unemployment The Ministry will collaborate with the Ghana Sta- tistical Service (GSS) and International Labour Ministry of Local Government and Rural Organisation (ILO) to conduct a National Labour Development Survey to provide information on the rate of un- Blood transfusion employment for more effective employment pol- The Ministry seeks to continue implementation of centres would be icy implementation. the Local Service and Skills Development Pro- constructed in gramme (LESDEP) in collaboration with the Korlebu and Komfo Ministry of Health private sector to create employment for the Anokye Teaching youth. About 6,000 youth will also be trained Hospital Government will focus on the following core through formal apprenticeship programmes in areas in 2012: Technical and Vocational Institutions through the Department for Community Development.  Continue to implement programmes to bridge Various infrastruc- Government is keen in its pursuit to sustain the equity gaps in access to health care and nutri- tural projects Ghana School Feeding Programme. A national tion services; planned to improve policy for the programme will be developed in health service deliv-  Ensure sustainable financing arrangements 2012 and steps taken to increase the number of ery in the country that protect the poor; pupils covered under the programme from  Strengthen governance and improve effi- 1,040,000 in 2011 to 1,500,000 pupils in 2012. ciency and effectiveness in the health system; The draft legislative  Improve access to quality maternal, neonatal, Start up capital of GHS1 million has been ear- instrument for the child and adolescent services; marked for each of 42 new districts created in operationalisation  Intensify prevention and control of communi- 2011 to enable them meet the initial infrastruc- of the Human Traf- cable and non communicable diseases; and tural needs. ficking Act is ex-  Strengthen institutional care including mental pected to be final- Office of the Head of Civil Service health service delivery. ised The Service will undertake initiatives for efficient Ministry of Women and Children Affairs management of its human resources. These in- clude: The Ministry plans to scale up its sensitisation  Development of comprehensive Civil Service and awareness creation programmes on Human Provision of credit Human Resource Plan; Trafficking (HT) to include five additional district facilities to promote  Development of comprehensive training plan; gender equality assemblies and outlying communities. The draft  Creation of Human Resource database for all Legislative Instrument for the operationalisation Civil Servants; of the HT Act will be finalised and the dissemi-  Operationalisation of the Annual Performance nated and existing database on HT updated. Reporting System; and  Review of the Civil Service Code of Conduct MOWAC’s Re- and Rules and Regulations. engineering Action Plan is expected to be implemented in 2012

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 22 Sectoral Outlook

With the Human Resource database, more infor- Electoral Commission (EC) mation will be available on the variety and lev- els of competencies and experience of civil ser- With the impending general elections in 2012, the vice personnel, and add to the richness of exper- EC will undertake biometric voters registration to Government com- tise for policy formulation, analysis and decision replace the existing voters register to ensure free, mits to sustain the making across sectors. The availability of such a fair and transparent election. Electronic verifica- School Feeding Pro- database will facilitate and enhance the efficient tion equipment will also be procured for easy gramme allocation of human resources. identification of voters.

National Pensions Regulatory Authority This will be the first time Ghana will be under- (NPRA) taking such an exercise and as such the relevant resources should be made available to the EC in Live transmission The NPRA will register existing pensions time. The biometric registration and electronic of Parliamentary schemes and licensed trustees for implementa- verification will boost confidence in the country’s proceedings to com- tion of the new pension policy. The existing con- electoral process. mence in 2012 tribution in the Temporary Fund Account will also be transferred to the registered schemes and Ministry of Foreign Affairs and Regional trustees. A regulatory body will also be estab- Integration Ghana is eligible to lished to supervise and help develop the pension apply for MCC industry. In pursuit of its strategy to promote the use of Compact II ICT under the National e-Governance Office of Parliament of Ghana Programme, biometric passport processing centres will be set up in selected missions abroad. In the effort to improve the legislative and over- This will ensure that online application system Biometric registra- sight functions of Parliament, there will be en- for biometric passport and visas are operational. tion and electronic hanced quality of information service to MPs and verification for parliamentary committees will have access to Economic strategy programme 2012 general elec- technical expertise. Infrastructure for the legisla- tions ture will be improved with the establishment of The Ghana Statistical Service will conduct the research centers in some regional capitals. Ghana Living Standards Surveys and Labour Force Surveys. The report and findings of the To further bring Parliament closer to the people, 2010 Population and Housing Census will be a dedicated television channel for the live broad- published by the Service in 2012. Biometric passport cast of parliamentary sittings and proceedings is processing centers planned. Parliamentary committee meetings will The results of the two surveys could provide rele- to be established in also be open to the public. vant data for key economic and social decisions. missions abroad The Service should be adequately resourced to The MPs constituency fund will be enshrined in perform its functions and publish the results on Ghana Living Stan- the relevant laws of the country and appropriate timely basis. dards and Labour guidelines and policies developed for proper dis- Force Surveys to be bursement while the office space for the MPs will Government will continue to strengthen the fi- carried out be completed in 2012. nancial markets through increased capitalisation of the banking and insurance sectors. Efforts will Millennium Development Authority also be geared towards attracting long term in- GSE to create plat- ( MIDA) vestments through provision of incentives for form to enable capital market institutions and enhancement of SMEs raise capital The Compact I awarded to Ghana ends in Febru- existing regulatory policies. The GSE will create ary 2012. This Compact focussed on agricultural an SME development market to enable SMEs transformation for effective and sustainable rural raise relatively cheaper capital. development. Ghana has been selected by Millen- nium Challenge Corporation (MCC) as eligible for Whilst listing of the SMEs on the exchange is Compact II and Government has accordingly commendable, the SMEs should be sensitised on submitted a Constraints Analysis for Compact II, the relevance of risk management standards and to the MCC for consideration. The Compact II if corporate governance to boost investor confi- awarded, will focus on the constraint of dence “inadequate and unreliable power supply”.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 23 Sectoral Outlook

Public Financial Management Programme The efforts to enhance speedy and affordable access to justice through the weekend magistrate The Ministry seeks to complete the development courts and the Alternate Dispute Resolution of a Disaster Recovery Management System. The programme is a laudable initiative. Government intends to introduce the Ghana Inte- grated Cargo Clearance System (GICCS) to track Ministry of Defence GHS 1 million set and account for containers and consignments. An aside for Media online database will be installed to capture and Plans are underway to establish 2 naval detach- Development Fund report information on external resources. To ments at Ada and Elmina to strengthen sea pa- improve the capacity of staff, various training trols in line with Government’s plans to tighten schools under the Ministry and its agencies will maritime security in the new oil and gas industry. be merged under one umbrella, Ghana Fiscal A number of maritime infrastructural improve- Institute (GFI). ments were carried out in Sekondi in the past year in this regard. Ministry of Justice Ministry of Information and Attorney Gen- In the effort of improving the professional output 500 and 20 bed capacity blocks are expected to eral to create more and competence of the media, GHS 1 million has be constructed at the 37 military hospital and the awareness on its been set aside for establishment of a Media De- Medical Reception Centres respectively to im- initiatives velopment Fund to be managed by a Board of prove health care delivery. Trustees. Ministry of the Interior Appropriate legislation, policies and guidelines for accessing the funds should be developed to There has been infrastructural development and Quicker access to enhance its administration. capacity building over the 2011 fiscal year. The judicial services Ghana National Fire Service (GNFS) received its through ICT PUBLIC SAFETY SECTOR biggest logistical support since its establishment while the housing difficulties of Prisons Service Ministry of Justice and Attorney General has received some attention. For 2012, the Government has allocated GHS 406 million for To improve access to justice for all, Government various projects within the Ministry. plans to create more awareness through the Improvement in media on publication of new enactments, organ- maritime security ise public education activities as well as intensify To safeguard the gains achieved so far and to and protection of stakeholder education, drive an agenda for the spur further economic growth, the Ministry of the new oil and gas translation of laws into local languages and set up the Interior should continuously improve on its industry a Task Force of Attorneys to deal with the backlog service delivery to ensure rapid response to in- of remand cases. ternal security threats.

The Government also plans to set up the Witness Charter as part of plans to implement the Justice Enhancement of for all programs. health care delivery for security services While the departments and agencies under the Ministry of Justice focus on enhancing their visi- bility in the public space in 2012, it is important that the Ministry creates and utilises the re- quired systems and processes that will allow it to be seen as independent of Government in or- der to build public trust.

Judicial Service

The process of automating Magistrates Courts to facilitate performance of the family, juvenile and drug related courts, aimed at enhancing delivery of legal services and ensuring quicker access to justice is ongoing.

Government also plans to conduct regular train- ing for judges and staff of the Judicial Service to equip them with skills to improve service delivery.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 24 Appendix

Appendix 1 - Government revenue: projections, outturns, and variances for 2011 and 2012

2011 Pro- 2012 2011 Budget jected Out- Budget (Revised) turn Variance Variance Items (A) (B) (C) (D=A-B) (E=B-C) A. Direct taxes 5,656.18 3,935.39 3,972.11 1,720.79 -36.72

B. Indirect tax 3,463.15 2,500.91 2,920.63 962.24 -419.72

Value Added Tax 2,804.27 2,028.17 2,336.73 776.10 -308.56

Petroleum tax 440.66 330.00 425.20 110.66 -95.20

Other indirect taxes 218.22 142.74 158.70 75.48 -15.96 C. International Trade Taxes 1,973.34 1,411.30 1,631.04 562.04 -219.74

Import duties 1,898.72 1,349.12 1,568.85 549.60 -219.73

Export duty (duty) 74.62 62.18 62.19 12.44 -0.01 D. Import Exemp- tions 382.66 273.87 659.38 108.79 -385.51

D. National Health Insurance 682.14 495.41 530.20 186.73 -34.79 E. Other Revenue Measures 208.59 158.60 145.70 49.99 12.90

F. Non Tax Reve- 2,092.25 1,845.39 1,976.61 246.86 -131.22

TOTAL REVENUE 14,458.31 10,620.87 11,835.67 3,837.44 -1,214.80

Grants 1,156.01 1,346.48 989.36 -190.47 357.12 TOTAL REVENUE AND GRANTS 15,614.32 11,967.35 12,825.03 3,646.97 -857.68 A. Foreign Financ- ing 370.52 1,373.51 828.23 -1,002.99 545.28

Loans 1,323.10 1,997.03 1,456.53 -673.93 540.50

Amortisation (due) -952.58 -623.52 -628.30 -329.06 4.78 B. Exceptional Fi- nancing 130.59 122.25 123.18 8.34 -0.93 C. Domestic Fi- nancing (net) 1,665.92 1,545.28 2,361.08 120.64 -815.80

D. Other Financ- 1,201.80 -122.00 -572.00 1,323.80 450.00

TOTAL FINANC- 3,368.83 2,919.04 2,740.49 449.79 178.55

Source: 2012 Economic Policy & Budget Statement (Appendices 3A, 3C, 6A, and 6C)

PwC Ghana 2012 Ghana Budget Highlights: Appendix 1 Appendix

Appendix 2 - Government Expenditure: projections, outturns, and variances for 2011 and 2012

2011 2011 Pro- 2012 Budget jected Out- Budget (Revised) turn Variance Variance Items (A) (B) (C) (D=A-B) (E=B-C) A. Recurrent Expenditure 11,817.17 9,222.49 10,155.47 2,594.68 -932.98

Wages and Salaries 5,050.00 3,910.41 4,323.53 1,139.59 -413.12

Goods and Services 967.17 836.37 786.37 130.80 50.00

Transfers 3,208.78 2,383.44 2,944.82 825.34 -561.38

Interest payments 1,883.71 1,688.40 1,696.87 195.31 -8.47

Other recurrent expenditure 707.51 403.87 403.88 303.64 -0.01

B. Capital Expenditure 5,697.91 4,311.54 3,681.86 1,386.37 629.68

Domestic-financed 2,666.20 2,078.71 2,202.17 587.49 -123.46

Foreign-financed 3,031.71 2,232.83 1,479.69 798.88 753.14

C. HIPC and MDRI -financed 0.00 0.00 0.00 0.00 0.00

TOTAL EXPENDITURE 17,515.08 13,534.03 13,837.33 3,981.05 -303.30

D. Arrears clearance and tax refunds 1468.1 863.37 1,728.21 604.73 -864.84 TOTAL EXPENDITURE (INCLUDING ARREAR CLEARANCE AND TAX RE- FUNDS) 18,983.1814,397.40 15,565.54 4,585.78 -1,168.14

Source: 2012 Economic Policy & Budget Statement (Appendices 3B and 6B)

PwC Ghana 2012 Ghana Budget Highlights: Appendix 2 Glossary

ADR Alternative Dispute Resolution ABFA Annual Budget Financing Amount BDS Business Development Services BoG Bank of Ghana BOP Balance of Payment BOT Balance of Trade CBD Methane Coalbed CD Customs Division CDB China Development Bank CEPS Customs Excise and Preventive Service CET Common External Tariff CODAPEC Cocoa Disease and Pest Control Programme CPI Consumer Price Index CRIP Cocoa Road Improvement Project CSSPS Computerised School Selection and Placement System CST Communication Service Tax DIC Destination Inspection Companies DSA Debt Sustainability Assessment DTA Double Taxation Agreement EC Electoral Commission ECOWAS Economic Community of West African States EITI Extractive Industries Transparency Initiative FCVR Final Classification and Valuation Report FDIs Foreign Direct Investment GCB Ghana Commercial Bank GCNeT Ghana Community Network Services Limited GDP Gross Domestic Product GHS Ghana Cedis GICCS Ghana Integrated Cargo Clearance System GIFMIS Ghana Integrated Financial Management Information System GIPC Ghana Investment Promotion Council GPA Gross Payment Account GRA Ghana Revenue Authority GSE Ghana Stock Exchange GSGDA Ghana Shared Growth Development Agenda

PwC Ghana 2012 Ghana Budget Highlights: Glossary Glossary

HS Code Harmornised Code IBRD International Bank for Reconstruction and Development (World Bank Group) ICT Information Communication Technology IMF International Monetary Fund IPPs Independent Power Producers IRA Internal Revenue Act 2000 (Act 592) (as amended) JBP Joint Border Project KIA Kotoka International Airport MCC Millennium Challenge Corporation MDAs Ministries, Departments and Agencies METASIP Medium Term Agricultural Sector Investment Plan MMDAs Metropolitan, Municipal and District Assemblies MMT Metro Mass Transit MoC Ministry of Communications MOFA Ministry of Food and Agriculture MSME Micro, Small and Medium Enterprises NFSL National Fiscal Stabilisation Levy NITA National Information Technology Agency NYEP National Youth Employment Programme O&G Oil and Gas (Sub-sector) PPP Public Private Partnerships PRMA Petroleum Revenue Management Act RGD Registrar-General's Department SHEP Self Help Electrification Project SME Small and Medium Enterprises SSPP Single Spine Pay Policy TOR Tema Oil Refinery VAT Value Added Tax WAMZ West Africa Monetary Zone WTO World Trade Organisation

PwC Ghana 2012 Ghana Budget Highlights: Glossary Contact us

COUNTRY SENIOR PARTNER

Felix Addo Partner – [email protected]

ASSURANCE

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ADVISORY

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TAX

Darcy White Partner – [email protected] George Kwatia Partner – [email protected] Francis Adiasani Director – [email protected] Ayesha Bedwei Senior Manager – [email protected] Nana Afua Okoh Senior Manager – [email protected] Lydia Pwadura Senior Manager – [email protected]

OPERATIONS

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