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Inside Ghana’s $1.46bn 2023 Budget Proposal: Cut In MDAs Spending, VAT Increased To 15%, And More

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Nana Akufo-Addo, president of Ghana, on Thursday presented a draft of the 2023 budget to the parliament.

 

The draft, presented by the minister of finance, contains the budget statement and economic policy of the government for the year ending December 31, 2023.

 

The executive, seeking the parliament’s approval, anchored the 2023 budget on a seven-point agenda.

 

According to Akufo-Addo, the agenda is aimed at restoring macroeconomic stability and accelerating the economic transformation as articulated in the ‘post-COVID-19 program for economic growth (PC-PEG)’ of the country.

 

He said this will be achieved by “successfully negotiating a strong IMF programme, coordinating an equitable debt operation programme, and attracting significant green investments”.

 

Below are a few highlights of the proposed budget.

 

PROPOSED GH¢205.431 MILLION ($1.46 BN) 2023 BUDGET

 

The 2023 budget’s total expenditure (including clearance of arrears) amounted to GH¢205,431 million — 25.6 percent of its gross domestic product (GDP).

 

Giving the breakdown, Akudo-Addo said, “compensation of employees is projected at GH¢44,990 million (5.6 percent of GDP), use of goods and services is also projected at GH¢8,048 million (1.0 percent of GDP), interest payment is projected at GH¢52,550 million (6.6 percent of GDP), grants to other government units is estimated at GH¢30,079 million (3.8 percent of GDP).”

 

He said capital expenditure (CapEx) is projected at GH¢27,694 million (3.5 percent of GDP).

 

According to Akufo-Addo, other expenditure, mainly comprising energy sector levies (ESL) transfers and energy sector payment shortfalls, is estimated at GH¢26,739 million.

 

“The overall budget balance to be financed is a fiscal deficit of GH¢61,475 million, equivalent to 7.7 percent of GDP. The corresponding primary balance is a deficit of GH¢8,925 million, equivalent to 1.1 percent of GDP,” he added.

 

VALUE-ADDED TAX INCREASED BY 2.5 PERCENT IN 2023

 

To meet the goal of aggressively mobilising domestic revenue, the president said there will be an increase in the value-added (VAT) rate by 2.5 percent to directly support roads and the country’s digitalisation agenda.

 

Currently, the standard VAT rate is 12.5 percent, except for supplies of a wholesaler or retailer of goods, which are taxed at a total flat rate of 3 percent.

 

With the development, the VAT rate would spike to 15 percent if approved by the parliament.

 

He also said the implementation of the unified property rate platform (UPRP) would be fast-tracked to improve domestic revenue.

 

Akufo-Addo added that there would be a review of the e-levy act and more specifically, reduce the headline rate from 1.5 percent to 1 percent of the transaction value as well as removal of the daily threshold.

 

50 PERCENT CUT IN CONSUMPTION

 

To boost local productive capacity, Akufo-Addo intends to cut importation by public sector institutions by 50 percent.

 

He said the Ghana Audit Service and the Internal Audit Agency “will work together to enforce this” and ensure compliance.

 

Akufo-Addo reiterated his support for the aggressive production of strategic substitutes, adding that large-scale agriculture and agribusiness interventions through the Development Bank Ghana and ADB Bank will be implemented.

 

Also, newly formed domestic industries will be allowed produce goods locally and encourage competition and exports, he said.

 

To promote exports, the country intends to expand production capacity and actively encourage the consumption of locally produced rice, poultry, vegetable oil and fruit juices, and ceramic tiles among others.

 

In fulfilling this, the Bank of Ghana recently said it will no longer provide foreign currency (FX) support for importers of “non-critical goods”.

 

STREAMLINED GOVERNMENT EXPENDITURES

 

Ghana also seeks to reduce specific expenditures by the ministries, departments and agencies (MDAs) as well as other political appointments effective from January 2023.

 

“All MDAs, metropolitan, municipal and district assemblies (MMDAs) and state-owned enterprises (SOEs) are directed to reduce fuel allocations to political appointees and heads of MDAS, MMDAS and SOEs by 50 percent,” Akufo-Addo said.

 

“This directive applies to all methods of fuel allocation including coupons, electronic cards, chit systems, and fuel depots. Accordingly, 50 percent of the previous year’s (2022) budget allocation for fuel shall be earmarked for official business pertaining to MDAS, MMDAs and SOES.”

 

Also, measures on rationalised expenditure include a ban on the use of V8s/V6s or its equivalent except for cross-country travel. All government vehicles would be registered with GV green number plates.

 

He added that unnecessary travel would not be allowed.

 

“Limited budgetary allocation for the purchase of vehicles. For the avoidance of doubt, purchase of new vehicles shall be restricted to locally assembled vehicles,” he added.

 

“Only essential official foreign travel across government including SOES shall be allowed. No official foreign travel shall be allowed for board members. Accordingly, all government institutions should submit a travel plan for the year 2023 by mid-December of all expected travels to the chief of staff.”

 

EXTERNAL TRAINING AND WORKSHOP ON HOLD

 

In addition, Akufo-Addo said as much as possible, meetings and workshops should be done within the official environment or government facilities.

 

“Government-sponsored external training and staff development activities at the office of the president, ministries and SOEs must be put on hold for the 2023 financial year; reduction of expenditure on appointments including salary freezes together with suspension of certain allowances like housing, utilities and clothing, etc,” he said.

 

“A freeze on new tax waivers for foreign companies and review of tax exemptions for the free zone, mining, oil and gas companies.

 

“No new government agencies shall be established in 2023.”

 

He also said there would be no hampers for 2022, adding that there should be no printing of diaries, notepads, calendars and other promotional merchandise by MDAS, MMDAS and SOES for 2024.

 

He, therefore, added that all non-critical projects must be suspended for 2023.

 

Credit: TheCable

BIG STORY

US Court Sends British-Nigerian To Seven Years In Jail Over $5m Cyber Fraud

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Oludayo Adeagbo, a British-Nigerian, has been sentenced to seven years in prison for his role in a multimillion-dollar business email compromise (BEC) scheme.

According to the US Department of Justice, Adeagbo, who also goes by John Edwards and John Dayo, conspired with others to steal over $3 million from various entities in Texas, including local government bodies, construction companies, and a Houston-area college.

Adeagbo and his co-conspirators also defrauded a North Carolina university of more than $1.9 million.

The case began in August 2022 when Adeagbo and two other Nigerian citizens, Donald Echeazu, 42, and Olabanji Egbinola, 44, were extradited from the United Kingdom (UK), where they had been residing, to face charges of conspiracy, wire fraud, and money laundering.

The US Department of Justice stated that the offences were committed in North Carolina, Texas, and Virginia.

On April 8, Adeagbo pleaded guilty in two cases against him in North Carolina and Texas for participating in a business email compromise scheme, which is also referred to as a “cyber-enabled financial fraud” scheme.

A business email compromise scheme can be initiated by scammers creating fake accounts that mimic companies a business regularly deals with.

Court records revealed that Adeagbo and his co-conspirators gathered information about significant construction projects across the United States, including a multi-million-dollar project at a university in North Carolina.

“To execute the scheme, Adeagbo, Echeazu, and others registered a domain name similar to that of the legitimate construction company in charge of the university’s project and created an email address that closely resembled that of an employee of the construction company,” the Department of Justice said.

“Using the fake email address, the fraudsters deceived and directed the university to wire a payment of more than $1.9 million to a bank account controlled by an individual working under the direction of Adeagbo and his co-conspirators.”

Adeagbo and his co-conspirators employed the same tactics in Texas, targeting local government entities and universities by impersonating construction companies. They stole over $3 million from the scheme, bringing their total haul to $5 million.

Adeagbo has been ordered to pay $942,655.03 in restitution and will serve seven years in prison.

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BIG STORY

Nigerian-American Oye Owolewa Re-Elected To US Congress

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Oye Owolewa, a Nigerian-American Democrat, has been re-elected as the shadow representative for the District of Columbia (DC).

Owolewa, a PhD graduate from Northeastern University in Boston, made history in November 2020 when he became the first Nigerian-American elected to Congress.

He secured 164,026 votes, or 82.84 percent of the total votes cast in DC.

His role, while not officially recognized by the US government as a full member of Congress, is to advocate for the district’s interests, particularly its bid for statehood.

On Thursday, Owolewa expressed his gratitude to DC voters via a post on X, thanking them for their continued support.

“Thank you DC again for giving me chance to serve. I also want to thank the organizations that have supported, partnered with and endorsed me,” he wrote.

While shadow representatives like Owolewa do not have voting power in the US House of Representatives, they play a key role in pushing for recognition and state-level advocacy for DC residents, who are otherwise disenfranchised at the federal level.

Owolewa has consistently championed the cause of DC statehood, which has become a central focus of his work.

The re-election took place on November 5, the same day as the US presidential election.

In that election, former President Donald Trump defeated Vice-President Kamala Harris, securing over 270 electoral votes to win a second term.

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BIG STORY

Joe Biden Urges Americans To Accept Trump’s Victory, Promises Peaceful Transition

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United States President Joe Biden has urged Americans to accept the victory of Republican Party candidate Donald Trump in the presidential election.

On November 6, Trump won the presidential election after surpassing the magic number of 270 electoral college votes.

Trump defeated Kamala Harris of the Democratic Party, who received 219 electoral college votes.

Harris has congratulated Trump on his electoral victory.

During a speech on Thursday at the White House Rose Garden, Biden said, “We accept the choice the country made.”

“I know for some people, it’s time for victory to state the obvious. For others, it’s a time of loss,” the US president said.

“Campaigns are contests of competing visions. The country chooses one or the other.

“I’ve said many times, you can’t love your country only when you win. You can’t love your neighbour only when you agree.

“I will do my duty as president. I’ll fulfil my oath and honour the Constitution. On January 20, we will have a peaceful transfer of power here in America.

“Remember, defeat does not mean we are defeated. We lost this battle. The America of your dream is calling for you to get back up.

“The America experiment endures. We are going to be okay, but we need to stay engaged. We need to keep going. Above all, we need to keep the faith.”

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