Ghana’s economy grew at 3.1 percent in the first three months of the year, data published by the Ghana Statistical Service (GSS) said.

The country’s economy is recovering, albeit less indicative of strong growth from the ashes of the slump caused by the pandemic.

Manufacturing, which expanded 1.3% after contracting in the three months through December, was one of the main drivers of growth. The agricultural sector slowed to 4.3%, compared with an 8.2% expansion in the previous quarter. Oil and gas contracted 16.2%, while the hospitality sector shrank 10.7%.

Government Statistician Samuel Kobina Annim told reporters Wednesday in the capital, Accra. The economy grew 0.8% from the previous quarter.

“With the reference point for quarter 1 2020 and quarter 1 2021 on a year on year basis, quarterly GDP from an oil perspective was 3.1 percent for the period quarter 1 2020 and quarter 1 2021 in sharp contrast with what was recorded for quarter 1 2019 and quarter 1 2020 where the economy grew by 7.0 percent”.

“From a non-oil perspective we see that on a year on year basis in quarter 1 2021 the economy grew by 4.6 % and also this is a marked dip from the same period between quarter 1 2019 and quarter 1 2020. Where the economy grew by 7.9 percent so again from an oil and a non-oil perspective, the economy has slowed down with its growth rate on a quarter 1 basis for the period January to March 2019 compared with January to March 2020 relative to 2020 quarter 1 and quarter 1 20201”.

Recovery plan

Meanwhile, government has targeted 5 percent growth by end of the year. To achieve this, it has outlined some key strategies to aid in recovery from the pandemic’s devastation. These include the Ghana Coronavirus Alleviation and Revitalisation of Enterprises Support (Ghana CARES) programme, which is expected to raise GH¢100billion to assist businesses and key sectors boost their productive capacities.

Another one is the establishment of a new Development Bank of Ghana, which government recently secured a €170million facility from the European Investment Bank to set up.

And to boost domestic revenue, government introduced new taxes in the 2021 budget aimed at raising more cash to take care of COVID-19-related expenditure and provide support to other sectors.

Some of the taxes introduced include a new tax dubbed the ‘COVID-19 Health Levy’, which will see a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to COVID-19.

In addition to this, government said it is proposing a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA); and a further Energy Sector Recovery Levy of 20 pesewas per litre on petrol/diesel under the ESLA as a means of finding additional resources to cover the excess capacity charges which have resulted from the Power Purchase Agreements (PPAs).

The implementation of these two proposed levies for sanitation and pollution as well as to pay for excess capacity charges, according to the budget statement, will result in a 5.7 percent increase in petroleum prices at the pump. What this essentially means is that prices of goods and services are likely to go up, as the increment’s effect will be to affect transport fares – which will be directly passed on to consumers.

Besides these taxes, government has further slapped a financial sector clean-up levy of 5 percent on profit-before-tax of banks to help defray outstanding commitments stemming from the financial sector clean-up. The levy, the budget states, will be reviewed in 2024.

Source: Ghana/ files from B&FT