In its assessment of the 2024 budget, global accounting and auditing firm PwC has advised against premature celebrations of an economic revival, cautioning that the journey to recovery is far from complete.
“At PwC, we accept that we might be turning the corner. However, it is our view that we are still quite some distance from the finish line. The next lap could be the hardest section yet to run”, noted PwC.
The assertion by PwC follows statements made by the Finance Minister during the presentation of the 2024 budget on November 15, 2023, on the economy “turning the corner” when “inflation started declining from 54.1 percent in December 2022 to 35.2 percent in October 2023; when, despite a 1.5 percent projected growth, the economy galloped at a remarkable pace, and clocked an average of 3.2 percent growth in the first two quarters of the year,” he stated.
“When the currency, which had been under severe pressure over the past two years, depreciated by a modest 6.4 percent cumulatively from February to date, compared to 53.9 percent over the same period in 2022; when the Banking industry started to record and report a profit-after-tax growth of 43.8 percent (GH¢6.2 billion); when in record time we completed the IMF 1st Staff Review of 6 Performance Criteria, 3 Indicative Targets and 3 Structural Benchmarks,” the Finance Minister added.
While acknowledging the inclusion of socio-economic development programs, notably the Planting for Food and Jobs Phase II, PwC highlights the need for meticulous implementation to ensure the realization of desired outcomes such as strengthened local businesses and job creation.
The firm expresses concern over the potential impact of 2024 election spending, identifying significant threats to disciplined budgetary execution that could impede progress towards overarching medium-term targets of recovery and growth.
PwC’s advice to the government emphasizes the adoption of sound project selection and implementation strategies, cautioning against excessive generosity in the application of social protection principles that may not foster self-sustainability.
“Specifically, we urge Government to avoid the temptation to be overly generous in its application of “social protection and poverty reduction principles” during the 14-month first phase of the five-year Growth Strategy. Such social protection principles are likely to have populist appeal but would simply dissipate scarce financial resources in arrangements where project beneficiaries consider them as “handouts” and do not have sufficient incentive to generate results that could be self-sustaining and eventually grow to support an ever-increasing number of beneficiaries”, PwC stated.
Amidst recognition of the ambitious targets set in the budget, including a total revenue and grants target of GHS 176.4 billion, PwC underscores the necessity for innovation, discipline, and transparency.
The call for careful execution extends to the realm of Public Financial Management (PFM) reforms, identified as a critical component for effective budget implementation.
“Despite being ambitious, we believe the 2024 Budget contains tangible promise. But to realise that promise, the government needs to be innovative, have discipline, consult widely and sincerely, and be transparent and accountable in its dealings with its stakeholders. The Public Financial Management (PFM) reforms will be a critical piece in the efforts to achieve such effectiveness in budget execution”, it stated.
In a proactive stance, PwC offers its support to the government, expressing a willingness to contribute its knowledge and experience to aid in the successful execution of PFM reforms.
In conclusion, while acknowledging the promise inherent in the 2024 Budget, PwC’s analysis underscores the imperative of strategic execution and fiscal prudence to navigate the challenges ahead and realize the envisaged economic recovery.