This forms part of efforts to restructuring the GIIF with the capability to mobilise foreign and private capital for critical infrastructure development, using a private sector model.

This was disclosed by the Minister of Finance, Mr Ken Ofori-Atta, at the 2018 post budget breakfast forum organised by PwC on Wednesday.

“We are looking at the GIIF law so that we move the fund to about US$1 billion or even US$2 billion to be a key player in our infrastructure drive,” he stated.

The GIIF was established in 2014, in pursuant to the GIIF Act, Act 877 of 2014.

Its mandate is to provide financial resources to manage, coordinate and invest in a diversified portfolio of infrastructure projects in the country for national development.

Background

It is estimated that the country needs some US$1.5 billion annual investment in infrastructure for the next decade to satisfy its infrastructural needs.

Under budgetary constraints, the government needed to leverage its resources as best as possible to satisfy its investment needs.

The GIIF was, therefore, instituted to focus on strategic infrastructure that would lead to job creation and the growth of the economy.

Sources of GIIF funds

The primary source of funds for the GIIF is the 2.5 per cent increase in the Value Added Tax (VAT) rate, the Annual Budget Funding Amount (ABFA), a portion of the petroleum revenue meant for amortisation and infrastructure development and other such funds as Parliament may decide.

Other sources include escrowed and on-lent funds from prior investments; private or public domestic and foreign funds from multilateral institutions and development banks.

The GIIF is also expected to look to the capital markets, including the Ghana Stock Exchange, pensions and mutual funds, social security and insurance funds for additional sources.

The fund was to, in due course, pursue its own ratings on the domestic and international financial and capital markets in order to attract the trust and confidence of the market.

Lending rates

Contributing to a panel discussion at the forum, Economist and Lecturer at the University of Ghana, Dr Eric Osei Asibey, urged the government to put in place measures that would ensure a rapid decline of lending rates in the country.

“If we want to drive the private sector, then that is one area we have to look at. For the private sector to be able to take advantage of the one-district, one-factory policy and all the strategic initiatives that have been rolled out by the government, they have to get access to affordable and long-term credit,” he noted.

He said that would also enable the private sector to drive the kind of inclusive and sustainable growth that was required in the country.

“Sustainable growth will definitely come from the private sector. If you are talking about broad based and growth that matters for poverty reduction and creation of jobs, then it will have to be spearheaded by the private sector,” he said.

Macro-economic stability

Dr Osei Asibey, however, commended the government for improving the country’s macro-economic environment.

“From the macro-economic perspective, I think the government has done well by stabilising the economy. Seeing inflation coming down, exchange rates stabilising and closing of the deficit gap is very good for the economy,” he stated.

He also commended the government for its fiscal consolidation efforts as he believed that was what the country needed to ensure debt sustainability.

He, however, urged the government to put in more efforts in mobilising enough domestic revenue to ensure that it does not always cut expenditure to ensure fiscal consolidation.

“If you want to ensure fiscal consolidation, you look at either increasing your revenue generation or cutting expenditure or the combination of the two but we have so far achieved fiscal consolidation largely because we cut expenditure and that is good but to what extent can we continue to do that,” he explained.

Implementation is key

A Tax Expert and Partner at PwC, Ms Ayesha Bedwei, for her part, pointed out that most of the good initiatives in the 2017 budget were washed out at its implementation stage and could, therefore, not have the required impact.

“The issue has always been with implementation, which has always been problematic. For example, when we look at the VAT flat rate which was also introduced, from the time it was stated in the manifesto, it was clear that it was targeted towards small and medium enterprises (SMEs) but by the time it went through the various legislative processes and was passed, the meaning had changed and, therefore, larger companies were also affected and this resulted in increased cost,” she noted.

“There were a lot of such laudable initiatives in the 2017 budget but some of them washed out at the implementation level and we will like to see some changes in 2018,” she added.

About forum

The forum, which is on the theme: ‘Putting Ghana back to work,’ brought together policy makers, clients and stakeholders of PwC to understand issues highlighted in the budget.

The forum also provided the platform for the business community to give direct feedback to the government.