ghana budget 2012 highlights

NationalBudget

Macroeconomic policies that the Government haspursued over the last few years, have shown posi-tive results; a sustained drop in inflation to sin-gle digit, a relatively stable currency against themajor trading currencies and an improved budgetdeficit position (September 2011). This gives asolid basis for Ghana to optimise its potential asan emerging lower middle income economy.

There is evidence of a sustained growth in GrossDomestic Product (GDP) from 4.0% in 2009 to13.6% in 2011. The increased access to credit,falling trends in lending rates and increased for-eign direct investments all suggest increased in-vestor confidence in the domestic market and animproving economic environment. It is no sur-prise that the International Monetary Fund(IMF) considers Ghana as one of the fastestgrowing economies in the world today.

Interim data on implementation of the 2011Budget over the first 3 quarters indicate thatrevenues were above the budget target by 8.4 %while expenditures remained lower than thebudget estimate by 1.2 %.

The question is how sustainable is the improve-ment in fiscal/economic performance given thatmost of the critical subsectors such as manufac-turing, financial services, agriculture, and hospi-tality did not achieve their 2011 targets? Whatmeasures has Government put in place to shoreup these sectors and not be over reliant on theOil and Gas (O&G) sub-sector to drive the accel-erated growth and job creation agenda?

The 2012 Budget, which is the fourth for the cur-rent administration, seeks to answer these ques-tions focusing on infrastructure development asthe take off point.

It is estimated that meeting Ghana’s infrastruc-ture needs over the next ten years would costapproximately US$1.6 billion per year. For 2012,Government plans are underpinned by infra-structure investments across various sectors in-cluding O&G, power, transport, roads and high-ways, water, housing, education, health and ser-vices.

The real economy for the various sectors grew by4.2% for Services, 2.8% for Agriculture and 32%for Industry (due to Oil and Gas).

The 2012 Budget also highlights the tractiongained on stabilisation of the fiscal policy andshowcases the continued tax reforms in both thepersonal and corporate tax arena, healthcare,food and agriculture sectors.

Reforms/Initiatives

The 2012 Budget includes several reforms andpolicy initiatives designed to create an ena-bling environment for infrastructure develop-ment, the inclusion of the private sector, espe-cially Small and Medium Enterprises (SMEs)and various revenue enhancement measures.

In the light of the recent set backs with majorinfrastructure projects (e.g. STX, Accra-Kumasi Road Dualisation, the Gang of Six), itis imperative that planned initiatives to reduceinfrastructural deficit using the US$ 3 billionChina Development Bank (CDB) facility shouldbe diligently and expeditiously executed toachieve the desired impact .

Government recently launched its policy docu-ment on Public Private Partnerships (PPP) formajor projects. This policy framework shouldfacilitate infrastructural development. It isvital that Government consistently appliesthese policies to win the confidence and trustof the private sector.

The sustained efforts of Government to deepenthe activities of SMEs are commendable. SMEsare a catalyst to growth and require significantattention. Government plans to promote SMElisting on the Ghana Stock Exchange and ini-tiatives by the Trade Ministry to provide accessto credit by way of grants are all steps in theright direction.

In response to the global economic downturnand Government is placing increasing relianceon internal funds, and this year’s Budget re-flects further proposals to increase revenuemobilisation through taxation. The extractiveindustry, mining companies in particular,would be most impacted by the reforms.

A tax amnesty is being introduced in 2012 toEncourage those taxpayers outside the tax netinto the mainstream, bring structure to theinformalsector, and to increase tax revenues. We notethat the grace period allowed this time aroundis nine months which is an additional threemonths compared to the 2006 amnesty graceperiod of six months.

The resident individual tax payer thresholdshave been widened for PAYE and this is ex-pected to result in increased disposable incomefor employees and possibly enhanced standardof living for wage earners.

“Infrastructural Development forAccelerated Growth and Job Creation”

PwC Ghana 2012 Ghana Budget Highlights: Commentary 1

The 2012 BudgetStatement andEconomic Policywas delivered toParliament onWednesday 16November 2011by Dr. KwabenaDuffuor, Minis-ter of Financeand EconomicPlanning

Outlined in thispublication aresome of the prin-cipal matters inthe Budget State-ment:

In this issue

Commentary

Overall sum-mary

The Econ-omy

Direct Taxa-tion and VAT

Customs andExcise

Sectoral Out-look

Glossary

We will point outthat in prioryears, changeshave often beenmade to propos-als in the BudgetStatement beforethe relevant billshave beenpublished andenacted

Commentary

Continuing with Government’s revenue mobilisa-tion strategies in this year’s budget is the pro-posed transfer pricing legislation. Thisshould guide multinationals on their cross bordertransactions with related parties and will affectthe corporate income taxes as well as the VATpayable by multinationals in Ghana.

The 2012 Budget also provides for the exemptionof Capital Gains Tax on stocks traded on the GSEfor another five years. The strategy with this ini-tiative is to encourage transactions on the stockexchange and in the long term make the securi-ties market more vibrant and fluid.

Corporate Ghana is again delighted to note theadoption of some of their recommendations inthe 2012 budget, including;

Repeal of the National Fiscal StabilisationLevy;

Prompt refund of VAT credits with guide-lines and timelines;

The consolidation of all tax laws into asingle legislation;

Introduction of a mechanism for offsettingtax 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 oiland gas industry from VAT or alterna-tively including them within the scope ofthe VAT relief purchase orders, currentlyavailable to contractors only.

Perhaps responding to public opinion, the BudgetStatement has provided for a windfall profit taxfor the mining sector and also increased the cor-porate income tax rate for mining companies to35%. These new taxes ostensibly would cover allmining companies including those withStabilisation Agreements, a scenario which wouldnot augur well for investor confidence.

The 2012 Budget has set the stage for Ghana’sgrowth. Given the reported achievements of 2011,the targets set for 2012 should be realisable asthey are rather conservative. Alongside this, Gov-ernment should ensure strict fiscal discipline soas to sustain the gains achieved to date in light ofthe fact that 2012 is an election year.

In conclusion the Budget sets out the road maptowards addressing the current infrastructuredeficit. If successfully implemented it shouldmake Ghana an attractive destination for foreigndirect investments and also encourage domesticinvestments participation. This should assist inrealising the desired accelerated economicgrowth , improved infrastructure and jobcreation.

PwC Ghana 2012 Ghana Budget Highlights: Commentary 2

NationalBudget

The Economy

The theme for the 2012 Budget ‘’InfrastructuralDevelopment for Accelerated Growth and JobCreation’’ is reflective of the Government of Ghana’scontinuing pursuit of its ‘’Better Ghana’’ agenda. Thefocus of the 2012 Budget is on the provision of keyinfrastructure in various sectors of the economy tostimulate growth and support the private sector tocreate more jobs to improve the incomes of Ghana-ians.

It is also worth noting that Ghana has met all four con-vergence criteria (single digit inflation of 8.6%, exter-nal reserves of 3 months import cover, fiscal deficitexcluding grants to GDP ratio of 1.9% and CentralBank financing 0%) for the West African MonetaryZone (WAMZ) as at June 2011 for the first time sincethe programme commenced in 2001.

2011 performance

The performance of the economy during 2011 is deter-mined by the key indicators shown below:Source: 2012 GoG Budget Statement

A Debt Sustainability Analysis (DSA) showed that thesolvency and liquidity conditions which demonstrateability to service debt are favourable over the mediumto long-term.

We believe however, that it would beprudent to manage the rate of growth ofGhana’s external debt as there is a realopportunity to wean the country off donorfunds with the expected inflows from oil reve-nue.

Economic objectives and policies for2012 and the medium term

The 2012 Budget is aligned to Government’sstrategy as laid out in the Ghana SharedGrowth and Development Agenda (GSGDA).In fiscal year 2012 –2014 Government’s mac-roeconomic policy will focus on three comple-mentary objectives, namely:

Preserving the gains of macroeconomicstabilisation and fiscal consolidationachieved since 2009;

Creating fiscal space for high-priority in-vestments to spur long-term growth anddevelopment; and

Maintaining inflation in single digits.

To achieve the above objectives, Governmentplans to maintain fiscal deficits at levels thatcan be prudently financed without crowdingout private sector credit. There are also ef-forts to fill the country’s large infrastructuregaps by accelerating and keeping consistentwith the Ghana Shared Growth and Develop-ment Agenda (GSGDA).

The GSGDA 2012 – 2014 focuses on struc-tural transformation of Ghana’s economythrough industrialisation, modernised agri-culture and natural resource development.

The key infrastructural projects to be imple-mented in 2012 are consistent with GSGDAand are principally in the areas of:

Electricity, Oil and Gas;

Water and Sanitation;

Railways, Roads, and Ports; and

Health, Education, and Agriculture.

Fiscal year 2012 macroeconomic tar-gets

Government seeks to maintain the fiscal con-solidation achieved so far, notwithstandingthat 2012 is an election year.

PwC Ghana 2012 Ghana Budget Highlights: Overall Summary 3

Description Target 2011 Projectedoutturn toend of 2011

12 month CPIinflation(average)

8.7% 9%

End of periodinflation

9% 8.6%

Gross interna-tional reserves

Reserves notless than threemonths of im-port cover ofgoods and ser-vices

Reserves notless than threemonths of im-port cover ofgoods and ser-vices

Overall budgetdeficit

5.1% of GDP 4.8% of GDP

Real GDPgrowth rate(including oil)

14.4% 13.6%

Real GDPgrowth rate(excluding oil)

7.5% 8%

“Infrastructural Development forJob Creation”

The 2012 fiscal targets are broadly consistent withthe targets for 2011.

The fiscal deficit targets for the year has an over-arching aim of deficit reduction in both the oil andnon-oil sectors of the economy. The fiscal deficitreduction will be achieved through:

Further reforms in tax administration;

Managing the wage bill and implications of theimplementation of the Single Spine Pay Policy;and

Controlling other recurrent expenditure.

Debt management outlook

In line with the rising public debt levels, there areplans to rationalise the domestic debt auction cal-endar and build higher benchmark bonds. Seven-Year and Ten-Year fixed rate bonds will be intro-duced in 2012 to extend the yield curve, aimed atreducing liquidity in the short-dated instruments.

Government intends to hedge interest ratesthrough SWAP arrangements to allow for en-hanced predictability of debt service obligations.

Petroleum Revenues – Outlook for 2012

The total revenue expected from crude oil sales in2012 fiscal year is projected at GHS,1,239.82 mil-lion. This amount comprises royalty payments,income from Government carried and participatinginterest and corporate income tax as detailed be-low:

Government intends to submit to Parliament forapproval, a proposal for the Annual Budget Financ-ing Amount (ABFA) from oil revenues for fiscalyear 2012 to be set at 70% of the benchmark reve-nue.

In line with section 21 (5) of the PetroleumRevenue Management Act (PRMA), theABFA amount will be spent in the followingfour priority areas:

Expenditure and amortisation of loans foroil and gas infrastructure;

Road and other infrastructure;

Agricultural modernisation; and

Capacity building (including oil and gas).

Taxation

While recognising the strong revenue per-formance in 2011, Government plans to sus-tain its revenue mobilisation efforts in orderto provide the required funding to close thecountry’s infrastructural gap in 2012. To thisend, Government has proposed a number ofkey initiatives aimed at enhancing revenuemanagement, expanding the tax base andimproving efficiency of tax administration.

Direct Taxation

Some key proposals and steps taken in light ofthe above objectives include the following:

Increase in corporate tax rate of miningcompanies from 25% to 35%;

A 10% windfall tax levy on mining compa-nies;

A uniform regime for capital allowances of20% for five years for the mining sector, asis the case for the oil and gas industry;

Widening of the personal income taxthresholds and brackets;

Abolishment of the National Fiscal Stabili-sation Levy;

Reduction in the corporate tax rate for thehotels and hospitality industry from 22%to 20%; and

Broadening of the tax net through the es-tablishment of the Employment IncomeTax Revenue Enhancing Project.

Value Added Tax

In an effort to improve efficiency in tax ad-ministration, the Government has raised theVAT registration threshold from an annualturnover of GHS90,000 to GHS120,000.Businesses with turnover less thanGHS120,000 over the twelve month periodwill pay a presumptive tax of 6% of turnover.


Overall Summary

Description Amount (GHSmillion)

Royalties 236.87

Carried and ParticipatingInterest

618.84

Corporate Taxes 384.11

Total receipts 1,239.82

Overall Summary

Customs & Excise

Some key policies are to be implemented to increaserevenue generation from customs and excise duties.Against the back drop of increased revenue after thereduction of ad-valorem duties on alcoholic and non-alcoholic beverages to 2.5% in 2011, Government plansto further reduce the rate as the industry increases theuse of local raw materials in production and furtherinvestments in capital, technology and employment oflabour.

As a matter of priority, Government proposes to grantexcise duty reduction on a sliding scale to companiesusing local materials as substitutes in the productionof excisable goods.

Government also plans to reduce the environmentaltax on plastic packaging materials in 2012, with ex-emptions for the pharmaceutical and agricultural sec-tors.

Other initiatives

The Tax Administration Bill, Internal RevenueBill, Customs, Excise and Preventive Bill and theVAT Amendment Bills are expected to be passedin 2012;

Government has offered a nine-month tax am-nesty commencing January 2012 to individualsand companies that have evaded taxes. During thisperiod, the GRA also intends to conduct a registra-tion and re-registration of tax payers as part of itsefforts to increase the tax base;

Government has extended the existing twenty yeartax holiday of the Ghana Stock Exchange (“GSE”)by five years to enable the GSE meet the industrycapitalisation expectations. Similarly, Governmenthas extended the Capital Gains Tax exemption forgains on sale of listed securities by a further fiveyears in order to promote investments and deepenactivities on the GSE;

The GRA would adopt an accounting system toallow taxpayers offset tax refunds against other taxobligations;

In order to track and account for containers andconsignments arriving at the ports, a Ghana Inte-grated Cargo Clearance System (GICCS) is ex-pected to be introduced by the GRA; and

To improve revenue collection, Government,through the GRA plans to broaden the coverage ofthe database of prices of goods imported into thecountry. This is to serve as a basis for comparisonwith the Final Classification and Valuation Report(FCVR) issued by the Destination Inspection Com-panies (DIC).

Sectoral Outlook

Ministry of Food and Agriculture (MoFA)

For the year 2012, Government is focusedon accelerating the modernisation of agri-culture to transform the economy throughthe continuous introduction of technology.MoFA will continue with its mandate toimplement programmes and projects inthe Medium Term Agricultural Sector In-vestment Plan (METASIP).

A Fisheries College would be establishedat Anomabu in the Central Region in col-laboration with the University of CapeCoast. In addition, a fish processing plantwill be established at Elmina and the Ma-rine Fisheries Research Division will alsobe rehabilitated.

Ministry of Energy

The Ministry will continue to pursue pro-grammes and projects aimed at ensuringsecure, safe and reliable supply of energyto meet Ghana’s development needs.

The Rural Electrification Project will con-tinue with it’s aim of attaining universalaccess to electricity. Work is also expectedto start on the construction of the TemaNatural Gas Secondary Network Systemwhich will distribute gas to IndependentPower Producers (IPPs) and industrialfacilities in the Tema zone.

The Ministry has procured a GHS80million facility from local banks to be usedto purchase cables and conductors fromlocal manufacturers. This forms part ofGovernment efforts to enhance local par-ticipation and local value addition.

Ministry of Trade and Industry

The Ministry aims to develop a vibranttechnology driven and competitive indus-trial sector that significantly contributes toeconomic growth and employment crea-tion.

One way the Government seeks to achievethis is via the Micro, Small and MediumEnterprises Development (MSME) project.The Ministry, through this project, willprovide matching grants to businesses viathe Business Development Services (BDS)Fund.


Overall Summary

Ministry of Roads and Highways

The Ministry will maintain its present focuson routine and periodic maintenance activi-ties. Accordingly, the Road Fund will ensurethat projects are in the order of priority ofroutine maintenance, periodic maintenance,road safety and other works.

Government is committed to the implemen-tation of the Eastern Roads Corridor projectand will secure donor funding of US$1.5 bil-lion to fully execute the project.

One of the proposed projects involves theconstruction of five new steel bridges to im-prove access from Volta Region to the North-ern Region. Also, the construction of BurmaCamp Road, Giffard and Maate Tsuru roadsin the eastern corridor of Accra will com-mence.

Ministry of Water Resources, Works andHousing

The Ministry mainly intends to continueplanned projects targeted at ensuring 68% ofthe Ghanaian population has access to safewater.

With respect to housing, Government willcontinue to ensure that the objectives of theNational Housing Policy are achieved to sup-port the private sector to increase housingdelivery in the country and to improve mort-gage affordability.

In addition, Government will continue tosustain the channel opening, widening anddeepening of most drains at flood prone ar-eas within the Accra-Tema Metropolis, otherregional capitals and selected district capitalsto improve upon the environment and toprotect life and property.

Ministry of Transport

Government will continue to encourage pri-vate sector participation in the investmentand management of aviation infrastructureand services.

The Ministry plans to seek Cabinet andParliamentary approval to enable Ghana CivilAviation Authority (GCAA) and Ghana Air-ports Company Limited (GACL) to haveenough funds for infrastructure develop-ment.

Government plans to continue the KotokaInternational Airport (KIA) Phase Three andRegional Airports Rehabilitation Projects.

With Government’s effort to improve andmodernise the railway system, it plans tocomplete the Railway Master Plan in 2012.Government plans to complete rail networkswhich have started while rehabilitating ex-isting lines.

The reconstruction of the Western Line un-der the China Development Bank (CDB)facility will also commence in 2012.

To improve and enhance intra and intercitypassenger bus services, the Ministry willcontinue to assist the Metro Mass Transit(MMT) and Inter-City STC (ISTC) to acquirenew buses and also support the private sec-tor to renew their fleet.

In the long term, Government should planto establish assembly plants for these busesin strategic regional centres. This will en-sure a consistent supply of buses with localtechnical support and parts to keep the sys-tem running.

Ministry of Environment, Science andTechnology

Government aims to procure an additional6,000 laptops for distribution and trainingof youth in assembling and repairs of ICTequipment. In addition, Government plansto support the use of local materials in theconstruction industry.

This is an area where collaboration withlocal companies would be beneficial. It willalso allow Government to directresources into specific ICT sub-sectors thatit considers critical to the ‘’Better Ghana’’agenda.

Ministry of Communications

The Ministry will continue initiatives startedin 2011 especially relating to the implemen-tation of a number of e-applications thathave been adopted to facilitate efficient andeffective service delivery to the public.

Government also plans to promote the ex-tension of voice, data and video services torural and underserved areas. Special incen-tives will be offered existing Telecom com-panies to enable them realise positive re-turns on capital invested.


Overall Summary

Ministry of Tourism

Government plans to complete tourist facili-ties currently under construction to enhancepatronage and boost revenue among benefici-ary communities.

Also the Ministry plans to organise NationalChocolate Day and World Tourism Dayamong others to generate foreign exchangeand revenue for local communities, DistrictAssemblies, boost businesses and local SMEs.

Ministry of Lands and Natural Resources

Government will continue with its objective ofensuring land and sustainable natural re-sources management for accelerated wealthcreation.

Key activities for 2012 to be carried out in-clude; decentralisation of land administrationto the district level and building of staff ca-pacities at all levels to facilitate integration inthe delivery of land administration services.

In addition, Government will support smallscale 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 asalt winning enclave for prospective investors.To this end, fiscal incentives will be providedto attract investors.

Other Policy Initiatives

Other key policy initiatives include:

The US$3.0 billion facility from China Devel-opment Bank ( CDB) will be utilised to reducethe infrastructure deficit of the country;

Viability Gap Schemes will be used to providefinancial support for Public Private Partner-ship (“PPP”) projects that are economicallyessential but not commercially viable;

The Ghana School Feeding Programme will beextended to cover an additional 500,000 pu-pils from the current 1,040,000; and

Government will support the Ghana StockExchange to create an alternative marketwhere simplified rules of entry will allowSMEs to list.


NationalBudget

Globally, growth inquite a number oflarge economiesstalled in 2011

Economies in theWAMZ generallyperformed verywell, driven bystrong growth inagricultural andindustrial sectors.

Ghana out per-formed her peerWAMZ countries,meeting all fourprimary conver-gence criteria. Li-beria is the onlyother country thatsatisfied all fourcriteria.

The three keyplanks of Ghana’smedium term devel-opment strategyinclude: stabilitypreservationEncouraging highpriority invest-ments single digitinflation

Ghana is now alower middle in-come country

Overview

In 2011, the following key targets were set foreconomic performance:

Real GDP growth (excluding oil) of 7.5% ;

Real GDP growth (including oil) of 14.4% ;

Average inflation of 8.7% ;

End-period inflation of 9.0%;

Fiscal balance of a deficit equivalent to 5.1%of GDP; and

Gross international reserves equivalent of notless than 3 months of import cover of goodsand services.

Based on provisional data at the end of the firstthree quarters of the year, expected out turns for2011 are:

Real GDP growth (including oil) of 13.6% ;

Average inflation of 8.4% ;

Fiscal balance of a deficit equivalent to 2.0%of GDP; and

Gross international reserves equivalent to 3.6months of import cover of goods and ser-vices.

These expected out turns indicate thatGhana would achieve its key economic per-formance targets for 2011

The World Economy

Growth prospects in, emerging and develop-ing countries remained resilient in 2011 withmany sub-Saharan African economies grow-ing at rates close to their pre-crisis averages .Advanced economies in Europe and the USare projected to grow minimally on the as-sumption that policies will remain sufficientlystrong to keep the financial turmoil undercontrol.

The West African Monetary Zone(WAMZ)

Preliminary results from the half-year surveil-lance report prepared by the West African Mone-tary Institute (WAMI) indicates that the overalleconomic performance in the WAMZ re-mained strong with real GDP expected to ex-pand by 8% in 2011, compared to 7.7 % in 2010.The strong growth in 2011 is being driven by in-creased activities in the agricultural and indus-trial sectors in member countries.

Ghana achieved single-digit inflation of8.6%, external reserves of 3 months importcover, fiscal deficit excluding grants to GDPratio of 1.9% and Central Bank financing of0%.

However, there was no improvement in theperformance on the secondary convergencecriteria. Convergence performance of otherWAMZ countries are: Liberia (4), The Gam-bia (3); Guinea (3); Nigeria (3); and SierraLeone (2).

Economic development framework

Government continues to pursue the objec-tives of the “Ghana Shared Growth and Devel-opment Agenda” (GSGDA). In the mediumterm, Government’s macroeconomic policyagenda is expected to focus on three comple-mentary objectives:

Preserving the gains of macroeconomicstabilisation and fiscal consolidationachieved since 2009;

Making fiscal space for high-priority in-vestments to spur long-term growth anddevelopment; and

Maintaining single digit inflation.

Middle income country status

The rebasing and revision of the national ac-counts measurement in 2010 has raisedGhana’s national income by more than 60%,moving the country to lower middle-incomestatus.

Middle income status has its benefits as wellas its drawbacks; the net position depends onhow Government manages the country’s totalresource base and opportunities. However,middle income status may exclude Ghanafrom accessing some types of aid, especiallygrants and loans priced at concessionaryrates.

Conversely, middle income status will makethe country more visible to international in-vestors, thereby attracting FDIs with its as-sociated benefits of employment creation andan increment in the country’s domestic capi-tal in the short-to-medium term.

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

PwC Ghana 2012 Ghana Budget Highlights: The Economy 8

Real GDP growth

Provisional estimates put real GDP growth(including oil) at 13.6% at the end of September2011, suggesting that the economy is on track toachieve the 2012 target of 14.4%. In 2010, realGDP growth was 7.7%; in 2012, it is projected tobe 9.4%.

It is generally expected that the Oil and Gas(O&G) industry will continue to spawn confi-dence in the country’s future and therefore helpto sustain high real GDP growth rates in thenear and medium terms. However, perceptionsof prudential management of the sector’s reve-nue will be important for sustaining such confi-dence.

Source: GSS/PwC Analysis

Summary of sectoral performances

The Agricultural Sector

The sector expanded by 2.8% against a target of5.3% for the year; the actual outturn in 2010 was5.3% . Growth in the Fishing sub-sector was sig-nificantly lower than expected with the Forestryand Logging sub-sector experiencing a contrac-tion of 14%.

Government should create policies thattarget accelerated growth in the sub-sectors thatare experiencing lower than expected growth asit has done for the cocoa sub-sector.

The Industry Sector

The Industry Sector recorded the highest outputgrowth this year due mainly to the debut produc-tion of oil from the Jubilee Fields. The output ofthe Mining and Quarrying subsector, which in-cludes O&G, grew by 225.4% over of 2010.

In spite of the astronomical growth rate, theMining and Quarrying subsector (powered bythe newfound oil) still fell behind the Construc-tion subsector within the Industry Sector interms of contribution to GDP.

Of concern is the low growth achieved by themanufacturing sub-sector – the provisional out-turn of 1.7% is a dismal performance comparedto the target of 7%. It would seem that in spiteof the increased credit to the private sector, thecountry’s manufacturers still face difficulties,one of which is cheap imports from countriesthat are fast assuming the profile of major devel-opment partners to Ghana e.g. China.

The Services Sector

The Services Sector grew by 4.2% and contrib-uted 48.1% to GDP, still making it the largestcontributor to GDP. The Hospitality sub sectorshrank significantly (negative 11%) compared tobudgeted growth of 13.5%; financial intermedia-tion also performed poorly (1%) relative to itstarget (17%). Business and other service activi-ties experienced a contraction of –1% against atarget of 10% growth.

Fiscal performance

Provisional data on implementation of theBudget for the first three quarters of 2011 indi-cate that revenues were above the budget by8.4%. Expenditure was lower than the budgetestimate by 1.2%. Total revenue and grants forthe first three quarters of the year amounted toGHS8,798.2 million (equivalent to 15.5% ofGDP), compared to a target of GHS8,119.9 mil-lion (equivalent to 14.3% of GDP). For the yearas a whole, total revenue and grants are projectedat GHS12,825.0 million.

Domestic revenues for the first three quarterscomprising tax and non-tax revenue, totalledGHS8,177.0 million, equivalent to 14.4% of GDP.The outturn was 15.9% higher than the budgetestimate of GHS7,055.0 million.

Provisional esti-mates at Septem-ber put real GDPgrowth at 13.6%and on track toachieve the 2012target of 14.4%

Growth in the In-dustry Sector wasphenomenal,powered by thecommencement ofproduction fromthe Jubilee Fields

While the ServicesSector remainsthe largest con-tributor to GDP at43.1%, key sub-sectors such asFinancial Inter-mediation shrankby as much as 11%

Provisional dataindicate revenueout performedbudget by 8.4%;expenditure fellbehind budget by1.2%, resulting ina better thanplanned deficit

Domestic reve-nues as at endSeptember 2011was GHS8.18bn;equal to 14.4% ofGDP and betterthan budget forthe period by15.9%


The Economy

Total tax revenueas at the ninthmonth was 11% ofGDP. This repre-sented a 16.2%over performancecompared to theBudget for thesame periodbudget

Total expenditureat end September2011 wasGHS10.41billionwhich was 18.3%of GDP. This rep-resented 1.2%behind budget

As at September2011, the fiscaldeficit was 2%,much smallerthan the targeted4.4% for the sameperiod

Outstanding bankcredit to the pri-vate sector as atSeptember 2011stood at GHS7.7bn, represent-ing almost 93%total bank creditto both public andprivate institu-tions

Total tax revenue was GHS6,596.0 million,equivalent to 11.0% of GDP. This was higher thanthe target of GHS5,676.7 million by 16.2%, and49.6% higher than the outturn recorded duringthe first three quarters of 2010. For the year as awhole, total tax revenue is projected atGHS9,614.0 million, against a budget estimate ofGHS8,527.1 million.

Provisional disbursements of grants (project andprogramme) from development partnersamounted to GHS621.2 million, against a targetof GHS1,064.9 million. Total grant disburse-ments at year-end are projected at GHS989.4million, 26.8% lower than the budget estimate for2011.

World economic developments e.g. low growthrates of some large and powerful economiesand the crisis of the Euro Zone accounts for therelatively low level of development partners’disbursements.

At September 2011, total expenditure amountedto GHS10,412.3 million, equivalent to 18.3% ofGDP. The outturn was 1.2% lower than the targetof GHS10,543.8 million. Total expenditure forthe year is projected at GHS15,565.5 million,8.1% higher than the 2011 budget estimate ofGHS14,397.4 million.

Recurrent expenditure for the period totalledGHS7,121.7 million, exceeding the target ofGHS6,808.0 million. For the year as a whole,revised projections put recurrent expenditure atGHS10,155.5 million, compared to a budget esti-mate of GHS9,222.5 million.

Total capital expenditure for the three quarters toSeptember also amounted to GHS2,168.3 million,equivalent to 3.8% of GDP. This compares with abudget estimate of GHS2,887.5 million, equiva-lent to 5.1% of GDP. Total capital expenditure forthe year is projected to be GHS3,681.9 million,14.6% lower than the 2011 budget estimate ofGHS4,311.5 million.

The level of capital expenditure continues to below compared to the recurrent expenditure; thisexpenditure mix or balance does not supportGovernment’s medium-term infrastructuretransformation plans, especially when infra-structure development is a pivotal element in itsshort to medium term plans for economicgrowth and development.

The overrun in recurrent expenditure is princi-pally the result of the higher than anticipatedcost of personnel emoluments arising from theimplementation of the Single Spine Salary Struc-ture (SSSS). The ability to more accurately esti-mate the public sector wage bill will be very im-portant for managing inflation in 2012, whichcould be a year that presents significantchallenges for prudent fiscal management. Inparticular, Government’s success at managingpressure from various stakeholder groups in2012 will help not to destabilise the foundationbuilt so far.

Fiscal deficit

Fiscal deficit at the end of September 2011 was2.0% of GDP, lower than the target for the nine-month period of 4.4% and the full-year target of5.1%. Based on the projected revenues and ex-penditures up to the end of 2011 fiscal year, thefiscal deficit for the year is expected to beGHS2,740.5 million, equivalent to 4.8% of GDP,and well within the budget deficit target of 5.1%of GDP.

Monetary Sector

Broad money supply, including foreign currencydeposits (M2+) grew by 41.9% year-on-year toGHS15,851.3 million compared with growths of28.0% and 33.8% for the ninth month and fullyear periods September and December 2010,respectively. Growth in bank outstanding creditto public and private institutions at September2011 rose by 14.1% on a year-on-year basis, com-pared with a decline of 5.7% recorded at Septem-ber 2010.

Outstanding bank credit stood at GHS8,377.0million at the end of September 2011, of whichGHS7,752.4 million represented outstandingcredit to institutions in the private sector.

The Ghana Cedi traded weaker on both the Inter-Bank and Forex Bureau markets during the nine-month period from January to September 2011,compared to the corresponding period in 2010.

Interest rates continued their downward trendduring 2011, in line with declining inflation andinflationary expectations.

The Bank of Ghana (BoG) policy rate which stoodat 18% in December 2009 was lowered progres-sively to 13.5% in July 2010 and further reducedby 50 basis points each in May and July 2011 tobring the rate to 12.5% where it remained as atthe end of September 2011.


The Economy

The Economy

Banks have generally been slow in loweringtheir base rates in response to reduction in theBank of Ghana (BOG) policy rate. It is refresh-ing to note that BOG will continue to applymoral persuasion to get commercial banks toharmonise their base rates and also respondquickly to reductions in the policy rate.

Inflation rate

Average inflation for the 9 month period betweenJanuary to September 2011 (8.40%) was betterthan period target (8.7%) and well within end ofyear target of 9%. Average inflation for 2012 istargeted to be 8.7% with; end-period inflationprojected to be 8.5%.

Government has been successful in maintaininginflation in the single digit range over anextended period of time. The performance ofsingle inflation could however be at risk , as his-torically, Government has been liberal in spend-ing in a General Election year. The temptation todo so should be tempered with the long-termpolicy objective of a low inflation economy thatencourages business investment planning andgrowth.

Interest rates

Interest rates generally have continued to trenddownwards. Developments within the moneymarket have led to the correction of the market’sinverted interest rate yield curve. The BOG’spolicy rate has been reduced twice already in2011 to signal the Central Bank’s policy in moneymarkets. Interbank weighted average rates havealso declined to 10.59% (September 2011) from11.65% (December 2010). Some banks also re-duced their base rates in the course of the year,signalling a fall in borrowing costs.

In a relatively low inflation environment as thecountry is experiencing now, low commerciallending interest rates would help to providebusiness with the impetus for rapid growth, thuspowering the economy in the direction desired.The concerns of banks with regard to interestrates should however be taken into accountwhen solutions are being considered.

External sector

The Balance of Trade (BOT) recorded a deficit ofUS$1,685.8 million (4.5% of GDP) for the firstnine months of 2011, against a deficit ofUS$2,016.4 million (8.7% of GDP) during thecorresponding period of 2010.

Gross international reserves

At US$4.98 billion (end October 2011), grossinternational reserves is higher than the Decem-ber 2010 balance of US$4.68 billion, and offersmore than 3 months cover for 2012 projectedimports. This was driven principally by favour-able price movements in gold, cocoa beans andcocoa products. It is envisaged that there will bea further build-up in the gross international re-serves to an average of US$7.5 billion over themedium term (estimated to cover 4 months ofimports) on the back of oil production.

This is good news, as the Ghana Cedi can be-come more stable allowing households andbusinesses to more reliably make projections.

Financial stability

Ghana’s financial system is fairly well-diversified.The banking system has seen steady growth overthe years and remains fairly well capitalised, sol-vent and profitable. The banking system’s assets-to-GDP ratio has seen consistent growth, fromunder 30.0% of GDP in 2008 to 43.5% as of Au-gust 2011. In terms of the ownership structure,the split is 55.4% to 44.6% between foreign andlocal control respectively.

Concentration within the banking system, meas-ured by the share of the top 5 banks in total as-sets, has declined consistently over the yearsreaching 45.3% in August 2011, from over 70.0%in 2005.

Over the medium term, BOG aims to continue toimplement measures towards addressing chal-lenges in the banking system with the view toensuring a safe, sound and stable banking systemto support broad based economic growth. Atpresent, the Central Bank has issued two guide-lines on Risk Management and Intervention inTroubled Institutions. The former is aimed atimproving risk management in banks, while thelatter sets out criteria for intervening in weakbanks.

Public debt

The total public debt increased from US$11,247.7million 37.8% of GDP as at September 2010 toUS$14,766.72 million 38.98% of GDP by the endof September 2011, representing an increase of1.1% of GDP over the period. As at end Septem-ber 2011, external debt was US$7,103.41 million,representing 19.1% of GDP and 49% of the totalpublic debt stock, while domestic debt amountedto US$7,521.59 million, representing 19.9% ofGDP and 51% of the total public debt stock.


Inflation rates—year-on-year andaverage—bothremained singledigit. Septemberaverage inflationwas 8.4% andbetter than periodtarget

The Economy

Debt Sustainability Assessment

The Debt Sustainability Analysis (DSA), updatedin November 2011, showed that public debt stoodat 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 strategyis to keep the total public debt ratio below a ceil-ing of 50% of GDP. Government also proposes tointroduce long-dated fixed rate bonds(seven-year and ten-year) in 2012.


NationalBudget

resident Ghana entity or whether it will includeappreciation in local subsidiaries as a result ofchanges in ownership structure of their non-resident parent entities.

Financial Services Sector

The tax holiday granted to the Ghana Stock Ex-change as an entity which expired in 2010 is to beextended by another 5 years.

In addition, the Capital Gains Tax exemption ongains made on the GSE has been extended by 5years. The exemptions are expected to promoteinvestment activities on the GSE.

The extension of the exemption period for CapitalGains Tax in respect of gains made on the GSEwill encourage investors to increase their partici-pation in securities traded on the GSE. It is alsoexpected to make the securities market more vi-brant.

There is however the need for clarity as towhether capital gains made in the 2011 year ofassessment would be covered by this exemptionsince the initial exemptions expired in November2010.

VAT exemption

Government proposes that Mutual Funds and UnitTrust Funds that invest in shares listed on the GSEwill be exempted from VAT on financial services.

The VAT Act currently exempts from VAT, finan-cial services with the exception of professionalservices such as investment advice. This an-nouncement will therefore also specifically ex-empt these funds from VAT on their professionalservices.

Tax Refunds

Government has recognised through its 2012Budget the problems that taxpayers have alwaysencountered on VAT refunds and duty drawbacks.

It has been proposed that the GRA will adopt anaccounting system that will allow taxpayers to off-set tax refunds against other tax obligations.

Prior to this development it was difficult for tax-payers to plan with any certainty regarding theirtax refunds, which in turn impacted adversely ontheir cash flow planning. Some corporate taxpayers ended up with significant tax refunds dueto them whilst at the same time making tax pay-ments on their Corporate Tax obligations. Taxpayers should welcome this proposal as a poten-tial solution to their challenges. More guidelineson the mechanism, however needs to be providedto aid taxpayers.

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

Review of Personal Income tax bands

Government has proposed revised income taxbands on employment income.

The proposed revision in tax bands follows aprevious tax band increment announced in the2011 Budget Statement but which was notpassed into law until a year later.

The proposed income thresholds and bracketsare as follows:

Widening of personal income tax bands is astep in the right direction as it will result inincreased disposable income for employees,which should in turn enable them to enhancetheir living standards.

Hotel and Hospitality Industry

The corporate tax rate for the hotel and hospi-tality industry has been reduced from 22% to20%.

Government has completed the review of in-centives granted under LI 1817 (Ghana Invest-ment Promotion Centre, Promotion of TourismInstrument), which will be incorporated inInternal Revenue Act of 2000 (Act 592). TheGhana Revenue Authority (‘’GRA’’) is expectedto publish the full list of incentives available tothe hotels and hospitality industry in duecourse.

For the tax incentives to achieve the desiredeffect of attracting investments into the indus-try, the GRA should publish the list of tax in-centives without any delays.

Capital Gains Tax on appreciation in thevalue of a company

The appreciation in values of companies as aresult of transformation in ownership structureand control of aspects of their business wouldbe subject to Capital Gains Tax .

What is not clear is whether the Capital Gainstax would be applicable only when there is achange in the ownership structure of the

Chargeable incomeGHS Tax Rate

First 1,440 Free

Next 720 5%

Next 1,008 10%

Next 25,632 17.50%

Exceeding 28,800 25%

Direct Taxation and VAT

Taxation of professionals and the informalsector

Government in fulfilment of its statement in the2011 Budget to focus attention on revenue contri-bution from the self-employed, has set up the“Self-Employment Income Tax RevenueEnhancing Project”. The project is aimed atbroadening the tax net.

Government’s should speed up measures to en-hance the identification of self-employed per-sons in the informal sector to be able to track alltaxable persons and make them contribute theirquota in taxes to Government revenue.

Increase in VAT threshold

Government proposes to raise the threshold forVAT registration from an annual turnover ofGHS90,000 to GHS120,000. Businesses withturnover of less than GHS120,000 will beexpected to pay a presumptive tax of 6% of turn-over and will also fall into the category of smalltaxpayers.

The increase in the VAT threshold should helpreduce the administrative burden on small busi-nesses.

The GRA should as a matter of urgency, issueadministrative guidelines operationalise the6% turnover tax,;

It should also clarify whether the 6% tax onturnover would replace the corporate tax forsmall business; and

And lastly whether the recent taxpayer seg-mentation criteria of the Domestic Tax Reve-nue Division of GRA will be revised as a resultof increase in the VAT threshold toGHS120, 000.

Transfer Pricing

Government intends to reduce revenue lossthrough transfer pricing and has consequentlydrafted regulations to strengthen existing taxlegislation to deal with taxation of multinationalcompanies and minimise the incidence of trans-fer pricing.

Betting and gaming

Government intends to take an active interest inthe growing gaming and betting industry inGhana. Government therefore intends to developregulations to streamline activities in this indus-try and to ensure efficient mobilisation of taxrevenues from casino operations.

It is expected that most of these businesses wouldbe captured under the proposed re-registrationexercise next year.

Ring Fencing

Government has proposed to review the princi-ples of ring fencing applicable to the petroleumand mining sector. With effect from year 2012,losses on one site will no longer be offset againstprofits from another contract area or site(belonging to the same company) in determiningchargeable income for income tax purposes.

Prior to this proposal, mining and petroleumcompanies were allowed to offset costs and prof-its from different sites. This approach was easierto administer. The proposed approach is likelyto result in increased administrative proceduresespecially for mining entities with different con-tract sites under various stages of developmentEntities affected will be expected to ensure eachcontract area or site maintain separate account-ing records for tax purposes. This may also comewith increased compliance costs due to require-ments to prepare separate reports for account-ing purposes and associated tax calculations forfiling with the GRA.

Natural Resource Taxation

Government commented on the inadequacy oftax revenues and social benefits generated fromthe mining sector and to address these, made thefollowing proposals:

Increase the corporate income tax rate formining companies from 25% to 35%;

Re-introduction of a windfall profit tax at10%; and

Alignment of the method of granting capitalallowances with that operated in the oil andgas sector. This will result in the capitalisedcosts of qualified assets owned by miningcompanies being spread evenly over a 5-yearperiod through the capital allowance system.

The above proposals may indeed improve taxincome mobilised from the mining sector al-though it should be acknowledged that someimplementation issues are bound to be encoun-tered. Issues to be addressed include constraintsin stabilisation agreements of existing miningcompanies that protect these companies fromadverse consequences of newly introduced lawsand amendments.

Mining entities had previously been grantedcapital allowance deductions at 80% on initialaddition of assets and subsequent allowance of50% which critics cited as being generous andoften resulted in little or no chargeable income tobe subjected to corporate taxes.

The proposals may be viewed as a majordisincentive to mining companies.


A project has beenset up to increasethe tax contribu-tion from self-employed profes-sionals

Increase in VATthreshold and in-troduction of turn-over tax.

Transfer Pricingregulation draftedby Government toregulate growingcasino operationsto increase taxrevenue

Ring fencing inenergy and min-ing sector — forincome tax pur-poses, costs in-curred in one sitenot to be offsetagainst profitsfrom another siteof the same com-pany

Revision in corpo-rate tax rates andintroduction of thewindfall tax formining entities.

Changes in therate and methodof granting capitalallowances forqualifying assetsof mining compa-nies.

Direct Taxation and VAT

National Fiscal Stabilisation Levy(“NFSL”)

The NFSL that was introduced in 2009 and fur-ther extended to the 2011 year of assessment willbe revoked from 2012.

The NFSL was intended to be a temporary levymainly aimed at the fiscal stabilisation of theeconomy 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

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

Government conducted a similar exercise in2006 for six months. The nine months offeredthis time is expected to be sufficient for taxpay-ers to regularise their tax affairs.

It is also proposed that after the nine monthwindow, the GRA will go ahead and conducttheir audits and any irregularities would be sub-ject to interest and penalties applicable undertax laws amnesty period. Under these circum-stances, it would be difficult for the GRA to grantwaivers of interest and penalties to taxpayerswho fail to declare their taxes during theamnesty period.

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

Bills expected to be passed during 2012 includethe following:

Tax Administration Bill (to consolidate thecommon procedures of all the tax laws);

The Internal Revenue Bill;

The Customs Excise and Preventive Bill; and

VAT Amendment Bill.


National Fiscal Sta-bilisation Levyabolished.

Tax amnesty—

Government offersa 9-month windowfor taxpayers todeclare their taxliabilities.

Tax AdministrationBill and the CEPSBill are expected tobe presented to Par-liament for consid-eration

NationalBudget

Reduction of envi-ronmental excisetax on plastic pack-aging materialsand products from20% to 15% withexemption for agri-cultural and phar-maceutical sectors

Companies usinglocal raw materialsin the production ofexcisable goods areto be granted areduction in theexcise duty rate

Re-organisation ofcustoms bondedwarehouses inGhana

Widening the data-base of prices ofimports

Increased monitor-ing of Free ZonesOperators

Proposed expansionand modernisationof KIA and otherregional airports

Resource Mobilisation Initiatives

The focus of revenue management in fiscal year2012 is to expand the tax base and improve theefficiency of tax administration. In the area ofCustoms and Excise administration, increasedmonitoring is expected to be a key driver for reve-nue mobilisation.

As part of measures to strengthen the CustomsDivision (CD) of the GRA, a Tax AdministrationBill and a CEPS Bill are expected to be presentedto Parliament for consideration. Proposedchanges to Customs and Excise duties for the2012 fiscal year are as follows:

Environmental excise tax on plastic andpackaging materials

The environmental tax charged on plastic pack-aging materials and products is expected to bereduced from 20% to 15% with exemptions forthe pharmaceutical and agricultural sectors.

There is the need for guidelines on how theexemption for pharmaceutical and agriculturalsectors will operate, areas to consider include:

tracking the production of packaging materi-als for use in the pharmaceutical and agri-cultural sectors;

how producers of plastic packaging materi-als for the sectors exempted and other sectorsof the economy should calculate excise duties;and

how operators in the exempt sectors shouldseek exemption from the purchase of plasticpackaging materials.

Review of Excise Duty Rates

In addition to the general 2.5% reduction in ex-cise duty rates in 2011, Government will considergranting further reductions in excise duty rateson a sliding scale for persons using local raw ma-terials as substitutes in the production of excis-able goods.

The relevant Government agencies should en-sure that the production capacity for such rawmaterials is expanded to prevent shortfalls andsupplies. The proposed incentive would be ex-pected to result in increased demand for suchlocal raw materials. The proposal may not onlycontribute to reduced production cost for af-fected businesses in the industry, but also serveas an incentive which could potentially boostproduction and utilisation of local raw materi-als.

The sliding rate concept was previously used indetermining applicable mineral royalty rates. Areason for the change to a fixed rate was thedifficulty in determining the applicable rate for amining company for a particular year.To avoid such difficulty in the case of excise du-ties there is the need to fully evaluate how thesliding rate will be implemented for producersthat use local raw materials.

Air Transport and Aviation DevelopmentLevy

A committee to propose modalities for fundingthe expansion and modernisation of Kotoka In-ternational Airport (KIA) and other regional air-ports is to be set-up by Government. This isaimed at reducing the congestion and pressure onexisting infrastructure and facilities at the air-port.

To finance the expansion of the KIA, a levy asmentioned above is likely to be introduced in thenear future.

With Government’s recent adoption of a PPPpolicy, the committee should consider developingany additional airport or aviation infrastructureusing PPP models and associated fundingmechanisms.

Re-organisation of customs bonded ware-houses

Government proposes to re-organise and reduceto a reasonable number the more than 300 cus-toms bonded warehouses in Ghana. The remain-ing customs bonded warehouses will be re-zonedand sub-offices created to ensure effective reve-nue collection.

Customs Valuation of Imported Goods

GRA will broaden the coverage of the database ofprices of goods imported into the country. This isto serve as a basis for comparison with the FinalClarification and Valuation Report (FCVR) issuedby the Destination Inspection Company (DIC).

Government should work towards minimisingdelays in release of FVCR by DIC for valuationof goods that are cleared at the ports to reducecompliance time for customs matters.

Monitoring of Free Zone Operators

The GRA is expected to step-up monitoring ofFree Zones Operators to ensure that at least 70%of production in the Free Zones is exported andthe 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 monitoringexercise does not unduly affect the day-to-daybusiness of entities in the free zones enclave.

Introduction of GICCS

In order to track and account for containers andconsignments arriving at the ports, GICCS is ex-pected to be introduced by the GRA.

The GRA needs to indicate how the GICCS willlink with GeGov’s—a PPP to deploy an eGovern-ment solution in Ghana — and other electronicsystems for automating and integrating variousgovernment agencies. Government should con-tinually engage with stakeholders to ensure asmooth implementation of the system.

Import duties on Teak products

To support rural electrification and augment lo-cal production, teak products used as electricpoles 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 torestore the duties at the standard rate when localproduction capacity is adequate.

Government should give an indication of whenthe local production capacity is expected to beadequate for consumption by SHEP. This willencourage indigenous producers while restrict-ing the dumping of imported products on theGhanaian market. This will also contribute to-wards improving the country’s balance of pay-ments position when it comes into force.

Migration from HS Code 2007 to HS Code2012

The ECOWAS Commission is working on themigration from the HS Code 2007 to HS Code2012 which the World Trade Organisation (WTO)recommends all countries to migrate onto to en-sure harmonised global trading system. The aimis to have individual country HS Codes replacedby the regional Central External Tariff (CET) tar-iff structure throughout the sub-region.

This is another step in furthering integrationwith the sub-region through a framework for thesame nomenclature of goods

Duty drawbacks and tax refunds

The Ministry of Finance and Economic Planning(MoFEP) will ensure that there are enough fundsavailable for refunds and duty drawbacks. Ulti-mately, the GRA in its administrative improve-ment will adopt an accounting system that willallow taxpayers to offset such refunds againstother tax obligations.

The opportunity to set-off refunds against othertax obligations will help improve the cash flowposition of taxpayers and also reduce time insettling refunds.

We expect that the Tax Administration Bill whichseeks to consolidate the common procedures ofall the tax laws will help to achieve this setting-off process.

PwC Ghana 2012 Ghana Budget Highlights: Customs and Excise 17

Introduction ofGhana IntegratedCargo ClearanceSystem for trackingand accountingpurposes.

Imposition of stan-dard duty rates onteak products im-ported into thecountry

Migration from HSCode 2007 to HSCode 2012

Taxpayers to offsetdrawbacks againstliabilities of othertax types.

NationalBudget

Government to con-tinue policies tosupport cocoa andcoffee sectors

Land administra-tion to be decentral-ised to the districtlevel

Aggressive market-ing and promotionof Ghana as a pre-ferred tourism des-tination

ECONOMIC SECTOR

Government’s key areas of focus in the EconomicSector for the medium term are: enhancing com-petitiveness of Ghana’s private sector, accelerat-ing agricultural modernisation and natural re-source mobilisation and the development of theEnergy, Oil and Gas industry.

Ministry of Food and Agriculture

Government intends to focus on accelerating themodernisation of agriculture to transform theeconomy through continuous introduction oftechnology. Programs for 2012 include:

Implementation of main policy interventionssuch as fertilizer subsidy, irrigation, bufferstock management, seed improvement andquality standardisation;

Expansion of the Agriculture Subsidy

Programme to include liquid fertilizers (bio-fertilizer) and improved seeds. 165,000 metrictonnes of chemical and liquid fertilizer will besubsidised;

Continue with the policy of providing oneAgricultural Mechanisation Service Centre(AMSEC) per district with the full comple-ment of machinery and equipment along thevalue chain;

Rehabilitation of 50 breached dams and dug-outs in the 3 Northern Regions, Greater Accraand Volta Regions. Additional works on Weijaand Okyereko will be completed;

Rehabilitation of Ashaiman Soil Laboratoryand Vea Irrigation Scheme;

Establishment of project implementationunits and a National Steering Committee toimprove the investment climate for agri-business and developing inclusive Public Pri-vate Partnerships (PPPs); and

Continue to implement policies to support theCocoa and coffee sector. The Cocoa Diseaseand Pest Control Programme (CODAPEC) willcontinue to be pursued to mitigate the risksassociated with the incidence of disease andpest attacks on cocoa.

Ministry of Lands and Natural Resources

Government is committed to ensuring sustain-able management and utilisation of the nation’slands, forests, wildlife and efficient managementof mineral resources for the socio-economicgrowth and development of the country.

Key activities to be undertaken during the yearinclude:

Decentralisation of land administration to thedistrict level to facilitate integration in deliv-ery of land administration services;

Establish plantation development pro-grammes to promote ecological balance andjob creation;

Undertake geographical investigations forsmall scale mining to reduce environmentaldegradation and initiate Alternative Liveli-hood Projects in mining communities; and

Provide the necessary infrastructure and fiscalincentives to attract investors in the salt in-dustry.

Ministry of Trade and Industry

Government will continue to pursue programsunder the Private Sector Development Strategy,the Industrial Sector Support Programme and theNational Export Strategy to improve competitive-ness of businesses and job creation. Initiatives tobe taken during the year include:

Implementation of programmes to assist themanufacturing sector to become competitiveand build efficient supply chains;

Upscale the Rural Enterprises Project;

Provide matching grants to businesses in Mi-cro, Small and Medium Enterprises (MSME)through Business Development Services(BDS); and

Construction of storm drain at Tema ExportProcessing Zone.

Ministry of Tourism

Government’s aim is to make Ghana the pre-ferred tourist destination in Africa and makingthe sector a major foreign exchange earner andemployment provider for the country. Pro-grammes and activities will focus on:

marketing and aggressive promotion of thecountry in key markets in Europe, Americaand emerging markets in Korea and China;and

Completion of tourist receptive facilities, con-tinuing with the United Nation’s IndustrialDevelopment Organisation-United NationsWorld Tourism Organisation (UNIDO-UNWTO) Collaborative Actions for Sustain-able Tourism (Coast Project) to reduce theenvironmental impact from coastal tourismand develop eco-tourism around Ada.

PwC Ghana 2012 Ghana Budget Highlights: Sectoral Outlook 18

Sectoral Outlook

To achieve these objectives, the Governmentshould also focus on the hospitality industry,which contracted in 2011 (-11%). In the longterm, it may be necessary to invest in trainingcolleges/institutions that focus on hospitalityservices – hotels, restaurants, touroperators etc which are crucial to the tourismindustry.

Ministry of Energy

Government’s emphasis will be to continue pur-suing programmes and projects aimed at ensur-ing secure, safe and reliable supply of energy tomeet Ghana’s development needs.

Power Sub Sector

The first 133MW out of the 400MW Bui Hydroproject and 132MW Takoradi 3 Thermal Projectwill be released into the national grid in 2012.Government will continue to implement meas-ures to improve system reliability and reductionof system losses, such as the TransmissionImprovement Projects and Distribution SystemImprovement Project.

Also, Government will rehabilitate, upgrade andconstruct various ECG primary sub-stations inAccra and Tema and link all the Electricity Com-pany of Ghana (ECG) sub-stations.

Government intends to boost rural electrificationthrough the connection of over 2,800 communi-ties across all the regions of Ghana.

Petroleum Sub Sector

Government intends to continue with the devel-opment of the Gas Commercialisation MasterPlan and the management of block acquisition inthe upstream petroleum sub-sector. Constructionof 150,000 cubic meter capacity tanks for gaso-line, diesel and kerosene storage for the Bulk OilStorage and Transportation Company (BOST)Petroleum Terminal will commence in 2012 inthe downstream sub-sector. The project will alsoinclude 20,000 cubic meter storage tanks forLiquified Petroleum Gas (LPG) and MethaneCoalbed (CBM) which will facilitate import andexport of products

To maximise the benefits of the oil and gas re-source, Government will ensure the conversion ofthe Local Content and Local Participation Policyinto legislation.

In addition, work is expected to start on the con-struction of the Tema Natural Gas SecondaryNetwork System which will distribute gas to In-dependent Power Producers (IPPs) and Indus-trial facilities in the Tema zone. A new 70 kilome-ter (12-inch) twin petroleum pipeline linking theAccra Plains Depot to the Akosombo Depot willalso be constructed as part of the Depot Expan-sion Programme.

The speedy delivery of additional power is cru-cial to fill the current power gap to meet theneeds of the fast expanding economy.

Government should also continue to focus onrenewable energy sources.

Ministry of Environment, Science andTechnology

Government will implement projects and pro-grammes that focus on biodiversity, reduction ofthe impact of climate variability and change, ap-plication of science and technology, enhancingenvironmental quality and ensuring proper spa-tial organisation for sustainable development asoutlined in their Medium Term DevelopmentPlan.

Specific initiatives include:

Establishment of Science Technology andInnovation Fund;

Initiation of the National Science and Tech-nology Theme Park Project;

Implementation of the Mathematics, Scienceand Technology Scholarship Scheme(MASTESS); and

Utilisation of local building materials.

INFRASTRUCTURE SECTOR

The role of the infrastructure sector has becomemore critical in propelling economic growth andsustained poverty-reduction. In recognition ofthat role, Government will focus on infrastructuredevelopment for accelerated growth and job crea-tion; accordingly, priority will be given to theexpansion of existing social and economic infra-structure to ensure that services provided arereliable, affordable and efficient so as to enablethe acceleration of growth and achieve job crea-tion.


First 133MW out ofthe 400MW fromBui Power Projectto be commissionedinto the nationalgrid

132MW fromTakoradi ThermalPlan to be commis-sioned

Science Technologyand InnovationFund to be estab-lished

Government to fo-cus on the infra-structure develop-ment for acceler-ated growth and jobcreation

Sectoral Outlook

The ministries under the infrastructure sector areWater Resources, Works and Housing(MWRWH), Transport (MOT), Roads and High-ways (MRH) and Communications (MOC).

Ministry of Water Resources, Works andHousing

Government targets 68% access to safe water byvigorously pursuing interventions intended toprovide safe water with emphasis on small townwater schemes and boreholes. These are expectedto be achieved by development and implementa-tion of appropriate regulations by the WaterResources Commission (WRC) for effective andsustained utilisation and development of waterresources. 24,000 boreholes are to be sunk overthe next five years for rural water as well ascontinuing with the on-going urban water pro-jects

Access to safe water is a necessity and Govern-ment should consider the participation of theprivate sector for efficiency.

Government is expected to sustain the channelopening, widening and deepening of most drainsat flood prone areas within the Accra –Tema Me-tropolis, other regional capitals and selected dis-trict capitals to improve upon the environmentand protect life and property.

Flooding in the Accra-Tema metropolis has be-come a perennial occurrence and Governmentefforts to widen and deepen most drains couldminimise floods. However, it is important thatthe human activities which also contribute toflooding addressed to bring a holistic solution tothe problem.

Government is to ensure that its objective for theNational Housing Policy is achieved. It plans tosupport the private sector to increase housingdelivery to improve mortgage affordability. Inthis regard, it will continue to facilitate privatesector to commence the construction and deliveryof safe, decent, and low income affordable hous-ing.

The implementation of the Affordable HousingProject as planned across the nation will createmassive employment and accelerate economicgrowth if the objective of the housing policy isachieved.

Ministry of Transport

Reconstruction of the Western Railway Line is tocommence under the China Development Bank(CDB) Facility. The Tema port expansion projectand the Multi-Modal Transport project that linksthe Tema Port by rail to the Volta Lake will alsobe undertaken under the same CDB facility.

Government should make rail transport a prior-ity for the transportation of food stuffs. This willhelp reduce carriage cost and result in lowerfood prices.

New Acts to be introduced to adequately addressregulatory issues in relation to the oil find. Theseinclude Marine Pollution Bill, Draft ShippingServices Providers Regulations, draft regulationson inland waterways and draft regulations to li-cense shipping agencies.

A new road traffic regulations to be enacted tooperationalise the Road Traffic Act 2004 (Act683).

Government to ratify various international con-ventions and to continue its policy of liberalisingthe legal and regulatory framework by reviewingand negotiating Bilateral Air Services Agreementswith its trading partners.

Government to review the Airport Passenger Ser-vice Charge to enable the Ghana Civil AviationAuthority and Ghana Airport Company Limitedhave enough funds for infrastructure develop-ment.

Airport charges in Ghana are already consid-ered high. Government must therefore considerthe review of the proposed charges carefully soas not to make Ghana an expensive destinationfor air travel, which could negatively affect tour-ist and business travel to the country.

Ministry of Roads and Highways

Government to expand the electronic tolling ofroads to other sections of the road network inanticipation of improved revenue generation intothe Road Fund for the maintenance of the roadnetwork.

Coordination and supervision of donor fundedprojects to be enhanced to in order to improvethe disbursement process. It is expected that thiswill enable the quick commencement of suchprojects and matching of funds as well as com-pensation payments to be made in a timely man-ner.

Road projects in the Western oil and gas enclaveto commence. Along side that, Government willcontinue to improve major road corridors to pro-mote trade and economic activities.

Government to show commitment to implement-ing the Eastern Corridor Roads project by secur-ing donor funding of US$1.5 billion for its fullexecution.


Government totackle perennialflooding in the Ac-cra-Temametropolis

Housing sector con-tinues to receiveGovernment’spriority

Rail transport to beexpanded andChina to providemost of funding

New Acts to addressmarine pollutionand Bills to bedrafted for shippingmanning agencieslicensing andinland water ways

A new road trafficregulations to beenacted.

Ratification of In-ternational conven-tions for the nego-tiation of BilateralAir Services Agree-ments with tradepartners

Sectoral Outlook

Ministry of Communications

Government to ensure transparent and account-able governance. In doing so, the Ministry willcontinue to implement a number of e-applications which have been adopted to facili-tate efficient and effective service delivery to thepublic. It is expected that national e-governmentnetwork infrastructure project will continue byutilising capacity from the NationalCommunications Backbone Company.

Government to facilitate a major uptake of e-government by formally establishing the publicInternet Governance Registry and also come upwith policy guidelines to guide the migrationfrom IPV4 to IPV6.

Government will embark on a nationwide public-ity and communication campaign to educate thegeneral public on the switchover to digital broad-casting to prevent panic buying. The public edu-cation will cover the entire lifespan of the digitalbroadcasting migration programme until ana-logue switch-off by December 2014.

The implementation of the e-government projectwhich is now taking off at the Ghana RevenueAuthority and the Registrar Generals Depart-ment will go a long way to create efficiency inthe service delivery of these institutions therebycreating investor confidence in the systems andprocesses.

SOCIAL SECTOR

Ministry of Education

As part of the proposed 2012—2014 EducationSector Operational Plan, Government plans toaddress the enormous infrastructural challengesas well as human resource needs of the sector.This would include the following initiatives:

intensify the implementation of pro-poorintervention programmes such as the capita-tion grant, free school uniforms, free exercisebooks and subsidies to basic and senior highschools. This is expected to increase enrol-ment figures in basic schools.;

Rehabilitated and newly constructed infra-structure projects in secondary and basicschools would be done in line with the Dis-ability Act; and

Equip the two new public universities in Hoand Sunyani with infrastructural develop-ment. It is anticipated that the first batch ofstudents would be enrolled in 2012/2013 aca-demic year.

Whilst addressing the infrastructural issues as-sociated with the public universities, governmentshould ensure the enabling environment is cre-ated to ensure adequate number of lecturers andprofessional staff to deliver quality teaching andlearning.

Government would continue to provide adequateresources to CSSPS to deliver improved services.

Since its introduction, the CSSPS has removedsome challenges encountered in the selection ofschools for basic students. However with therecent challenges encountered by the unit lead-ing to the delay in the placement of basic schoolstudents in second cycle schools, Governmentwould need to review the system to ensure theachievement of the intended objectives.

Ministry of Youth and Sports

The Ministry plans to complete the processes forthe passage of the new National Youth Law, theNational Sports Law and also review the existingSports Policy formulated in 1994.

Establishment of a mechanism to take advantageof the regulation that will provide tax rebate/waiver for companies and individuals that makedonations or import equipment for sports devel-opment and promotion. This is expected to en-courage private sector participation in the devel-opment of sports in Ghana.

As part of sports Infrastructure development,there are plans to commence the construction oftwo multipurpose Sports Halls for the Northernand Southern sectors.

Parliament is expected to pass the National YouthEmployment Programme (NYEP) Law before theend of 2012 to provide clear guidance on the im-plementation of the NYEP.

Parliament should speed up the passage of thislaw when presented by the Ministry to serve as aguide to Government and development partners.


Government to con-tinue pursuing pro-poor programmesto increase enrol-ment figures inschools

Government to con-tinue providinginfrastructural fa-cilities in schools tobe user friendly topeople with disabil-ity

Provision of Infra-structure for thetwo new Universi-ties to pave way forthe commencementof the 2012/13 aca-demic year

Adequate resourcesto enable the Com-puterised SchoolSelection and Place-ment System(CSSPS) to deliverimproved services

Plans are in place topass a new Na-tional Youth andSports law whilstreviewing existingSports Policies

Private sector par-ticipation in sportsdevelopment

Construction of twomulti-purposesports halls for theNorthern andSouthern sectors

Sectoral Outlook

Ministry of Employment and Social Wel-fare

Government is planning to have continuous dia-logue with all stakeholders to deepen under-standing of the Single Spine Pay Policy (SSSP).

Recent strikes by medical doctors, teachers andother public sector workers on transfer to SSPPrequires Government to continue dialogue withall stakeholders in finding a solution to this is-sue.

The Ministry will collaborate with the Ghana Sta-tistical Service (GSS) and International LabourOrganisation (ILO) to conduct a National LabourSurvey to provide information on the rate of un-employment for more effective employment pol-icy implementation.

Ministry of Health

Government will focus on the following coreareas in 2012:

Continue to implement programmes to bridgeequity gaps in access to health care and nutri-tion services;

Ensure sustainable financing arrangementsthat protect the poor;

Strengthen governance and improve effi-ciency and effectiveness in the health system;

Improve access to quality maternal, neonatal,child and adolescent services;

Intensify prevention and control of communi-cable and non communicable diseases; and

Strengthen institutional care including mentalhealth service delivery.

Ministry of Women and Children Affairs

The Ministry plans to scale up its sensitisation

and awareness creation programmes on Human

Trafficking (HT) to include five additional district

assemblies and outlying communities. The draft

Legislative Instrument for the operationalisation

of the HT Act will be finalised and the dissemi-

nated and existing database on HT updated.

To help promote gender equality, the Ministryplans to continue dialogue with Microfinance andSmall Loans Centre (MASLOC) and other finan-cial institutions to provide micro-credit on flexi-ble terms to women groups and organizations.

The Ministry's Re-engineering Action Plan is ex-pected to be implemented in 2012 to enableMOWAC to be effective and efficient at promot-ing gender equality and rights of women and chil-dren in Ghana.

ADMINISTRATION SECTOR

Ministry of Local Government and RuralDevelopment

The Ministry seeks to continue implementation ofthe Local Service and Skills Development Pro-gramme (LESDEP) in collaboration with theprivate sector to create employment for theyouth. About 6,000 youth will also be trainedthrough formal apprenticeship programmes inTechnical and Vocational Institutions through theDepartment for Community Development.

Government is keen in its pursuit to sustain theGhana School Feeding Programme. A nationalpolicy for the programme will be developed in2012 and steps taken to increase the number ofpupils covered under the programme from1,040,000 in 2011 to 1,500,000 pupils in 2012.

Start up capital of GHS1 million has been ear-marked for each of 42 new districts created in2011 to enable them meet the initial infrastruc-tural needs.

Office of the Head of Civil Service

The Service will undertake initiatives for efficientmanagement of its human resources. These in-clude:

Development of comprehensive Civil ServiceHuman Resource Plan;

Development of comprehensive training plan;

Creation of Human Resource database for allCivil Servants;

Operationalisation of the Annual PerformanceReporting System; and

Review of the Civil Service Code of Conductand Rules and Regulations.


Continuous dia-logue with all stake-holders to deepenunderstanding ofthe SSPP

A national laboursurvey is planned toprovide informa-tion on the rate ofunemployment

Blood transfusioncentres would beconstructed inKorlebu and KomfoAnokye TeachingHospital

Various infrastruc-tural projectsplanned to improvehealth service deliv-ery in the country

The draft legislativeinstrument for theoperationalisationof the Human Traf-ficking Act is ex-pected to be final-ised

Provision of creditfacilities to promotegender equality

MOWAC’s Re-engineering ActionPlan is expected tobe implemented in2012

Sectoral Outlook

With the Human Resource database, more infor-mation will be available on the variety and lev-els of competencies and experience of civil ser-vice personnel, and add to the richness of exper-tise for policy formulation, analysis and decisionmaking across sectors. The availability of such adatabase will facilitate and enhance the efficientallocation of human resources.

National Pensions Regulatory Authority(NPRA)

The NPRA will register existing pensionsschemes and licensed trustees for implementa-tion of the new pension policy. The existing con-tribution in the Temporary Fund Account willalso be transferred to the registered schemes andtrustees. A regulatory body will also be estab-lished to supervise and help develop the pensionindustry.

Office of Parliament of Ghana

In the effort to improve the legislative and over-sight functions of Parliament, there will be en-hanced quality of information service to MPs andparliamentary committees will have access totechnical expertise. Infrastructure for the legisla-ture will be improved with the establishment ofresearch centers in some regional capitals.

To further bring Parliament closer to the people,a dedicated television channel for the live broad-cast of parliamentary sittings and proceedings isplanned. Parliamentary committee meetings willalso be open to the public.

The MPs constituency fund will be enshrined inthe relevant laws of the country and appropriateguidelines and policies developed for proper dis-bursement while the office space for the MPs willbe completed in 2012.

Millennium Development Authority( MIDA)

The Compact I awarded to Ghana ends in Febru-ary 2012. This Compact focussed on agriculturaltransformation for effective and sustainable ruraldevelopment. Ghana has been selected by Millen-nium Challenge Corporation (MCC) as eligible forCompact II and Government has accordinglysubmitted a Constraints Analysis for Compact II,to the MCC for consideration. The Compact II ifawarded, will focus on the constraint of“inadequate and unreliable power supply”.

Electoral Commission (EC)

With the impending general elections in 2012, theEC will undertake biometric voters registration toreplace the existing voters register to ensure free,fair and transparent election. Electronic verifica-tion equipment will also be procured for easyidentification of voters.

This will be the first time Ghana will be under-taking such an exercise and as such the relevantresources should be made available to the EC intime. The biometric registration and electronicverification will boost confidence in the country’selectoral process.

Ministry of Foreign Affairs and RegionalIntegration

In pursuit of its strategy to promote the use ofICT under the National e-GovernanceProgramme, biometric passport processingcentres will be set up in selected missions abroad.This will ensure that online application systemfor biometric passport and visas are operational.

Economic strategy programme

The Ghana Statistical Service will conduct theGhana Living Standards Surveys and LabourForce Surveys. The report and findings of the2010 Population and Housing Census will bepublished by the Service in 2012.

The results of the two surveys could provide rele-vant data for key economic and social decisions.The Service should be adequately resourced toperform its functions and publish the results ontimely basis.

Government will continue to strengthen the fi-nancial markets through increased capitalisationof the banking and insurance sectors. Efforts willalso be geared towards attracting long term in-vestments through provision of incentives forcapital market institutions and enhancement ofexisting regulatory policies. The GSE will createan SME development market to enable SMEsraise relatively cheaper capital.

Whilst listing of the SMEs on the exchange iscommendable, the SMEs should be sensitised onthe relevance of risk management standards andcorporate governance to boost investor confi-dence


Government com-mits to sustain theSchool Feeding Pro-gramme

Live transmissionof Parliamentaryproceedings to com-mence in 2012

Ghana is eligible toapply for MCCCompact II

Biometric registra-tion and electronicverification for2012 general elec-tions

Biometric passportprocessing centersto be established inmissions abroad

Ghana Living Stan-dards and LabourForce Surveys to becarried out

GSE to create plat-form to enableSMEs raise capital

Sectoral Outlook

Public Financial Management Programme

The Ministry seeks to complete the developmentof a Disaster Recovery Management System. TheGovernment intends to introduce the Ghana Inte-grated Cargo Clearance System (GICCS) to trackand account for containers and consignments. Anonline database will be installed to capture andreport information on external resources. Toimprove the capacity of staff, various trainingschools under the Ministry and its agencies willbe merged under one umbrella, Ghana FiscalInstitute (GFI).

Ministry of InformationIn the effort of improving the professional outputand competence of the media, GHS 1 million hasbeen set aside for establishment of a Media De-velopment Fund to be managed by a Board ofTrustees.

Appropriate legislation, policies and guidelinesfor accessing the funds should be developed toenhance its administration.

PUBLIC SAFETY SECTOR

Ministry of Justice and Attorney General

To improve access to justice for all, Governmentplans to create more awareness through themedia on publication of new enactments, organ-ise public education activities as well as intensifystakeholder education, drive an agenda for thetranslation of laws into local languages and set upa Task Force of Attorneys to deal with the backlogof remand cases.

The Government also plans to set up the WitnessCharter as part of plans to implement the Justicefor all programs.

While the departments and agencies under theMinistry of Justice focus on enhancing their visi-bility in the public space in 2012, it is importantthat the Ministry creates and utilises the re-quired systems and processes that will allow itto be seen as independent of Government in or-der to build public trust.

Judicial Service

The process of automating Magistrates Courts tofacilitate performance of the family, juvenile anddrug related courts, aimed at enhancing deliveryof legal services and ensuring quicker access tojustice is ongoing.

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

The efforts to enhance speedy and affordableaccess to justice through the weekend magistratecourts and the Alternate Dispute Resolutionprogramme is a laudable initiative.

Ministry of Defence

Plans are underway to establish 2 naval detach-ments at Ada and Elmina to strengthen sea pa-trols in line with Government’s plans to tightenmaritime security in the new oil and gas industry.A number of maritime infrastructural improve-ments were carried out in Sekondi in the pastyear in this regard.

500 and 20 bed capacity blocks are expected tobe constructed at the 37 military hospital and theMedical Reception Centres respectively to im-prove health care delivery.

Ministry of the Interior

There has been infrastructural development andcapacity building over the 2011 fiscal year. TheGhana National Fire Service (GNFS) received itsbiggest logistical support since its establishmentwhile the housing difficulties of Prisons Servicehas received some attention. For 2012, theGovernment has allocated GHS 406 million forvarious projects within the Ministry.

To safeguard the gains achieved so far and tospur further economic growth, the Ministry ofthe Interior should continuously improve on itsservice delivery to ensure rapid response to in-ternal security threats.


GHS 1 million setaside for MediaDevelopment Fund

Ministry of Justiceand Attorney Gen-eral to create moreawareness on itsinitiatives

Quicker access tojudicial servicesthrough ICT

Improvement inmaritime securityand protection ofthe new oil and gasindustry

Enhancement ofhealth care deliveryfor security services

Appendix

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

Items

2012Budget

(A)

2011 Budget(Revised)

(B)

2011 Pro-jected Out-

turn(C)

Variance(D=A-B)

Variance(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 -15.96C. InternationalTrade 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. NationalHealth Insurance 682.14 495.41 530.20 186.73 -34.79

E. Other RevenueMeasures 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 REVENUEAND 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 -0.93C. 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 and2012

Items

2012Budget

(A)

2011Budget

(Revised)(B)

2011 Pro-jected Out-

turn(C)

Variance(D=A-B)

Variance(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 (INCLUDINGARREAR CLEARANCE AND TAX RE-FUNDS) 18,983.18 14,397.40 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

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