3. PROJECT FINANCE - NATIONAL DEVELOPMENT PLAN Estimating potential funds for Ghana Infrastructure Plan (Ghana's 40 Years Development Plan, also called Ghana@100) Ghana's Economy by 2057 The long-term planning framework is expected to facilitate Ghana's transition from low-income to high- income status. The NDPC has modelled a scenario for the country to achieve per capita income of over 60,000 current USD by 2057 if the economy is grown by an average of 9% annually. The Gross Domestic Product (GDP) is projected to be 2.9 trillion current USD. In constant 2017 USD, this works out to USD 19,000 for per capita GDP or USD 1.2 trillion in 2057 for total GDP and. The process of developing the right policies, strategies and plans is already in motion to formulate and implement a framework with a collective sense of purpose and urgency across successive governments. Table 1.1: Indicative socio-economic forecasts for the LTNDP Nominal GDP USD Population Estimated Average Income 2018 45, 564,368,220 20.595,511 0.545.01 2021 72,985,307 591 31,350,200 2.237 31 2025.019,000. 617.948. 1734.256,905 1.350.00 2020 194,022.367,132 137-145,6033959.90 2033 210,294.325.134 34 40.329,2187336.36 2097 497,82 413.00 1990.723 10.0273 2041 783,345.941,258.02 47,031,554 16,156.14 2045 1,189,178 848,42863 49 852,784 23,133.56 204911728.448.467,519.97 92 442,784 11,962.99 2053 2:512.267,596.236 01 54 995,769 44,434 28 20573,651,533,230,870.54 56,998,78452,202.57 Source: NDPC, 2017 Recall our last class - Efficiency gains as a source of funds for GIP. It is your guide. Work on annual basis, and in the end provide a figure of estimated amount potentially realizable to fund infrastructure in constant 2021 USD. You are in Ghana. Make, state clearly and justify any reasonable assumptions that you need. Please form yourselves into 10 groups or so. Each group will work on one of the following: a) Reducing Illegal outflows Boyce and Ndikuman's (2012 estimate that without illegal financial flows, Africa's capital stock would have expanded by more than 60 per cent, and GDP per capita would have been up to 15% more; The ratio of domestic investment to GDP would have increased 19% to 30%. Projecting savings that Ghana stands to make if she reduces illegal financial flows. Herkenrath (2014) estimates that illegal flows amount to 5.7% of Africa's GDP. Assume that the 5.7% of GDP applies to GHANA Starting with progressive reductions in illegal flows, that is blocking leakages and corruption, (as we did for inefficiencies) of 0.3% of GDP in 2022 and increasing reductions by additional 0.15 percentage points each year. That is 0.45% of GDP for 2023, 0.6% for 2024, until a maximum of 5% is attained; Or b) Increasing General Govt Tax Revenues Ghana's weak tax collections have been in the news lately. Ghana's taxes on income and property) averaged 8% of GDP. It is higher than Upper Middle Income (5.4%) and Lower Middle Income countries (5.0%) but much lower than High Income countries average of 12.9% Value-added tax (VAT) is also referred to as taxes on domestic goods and services. Ghana's average of 6.4% compares favourably with Upper Middle Income (5.2%) and Lower Middle Income countries (5.0), but still lower than High Income countries (6.8%). Ghana's tax on international trade (3.2%) is lower than Upper Middle Income (4.6%) and Lower Middle Income countries (4.9%). At an average of just over 4%, Ghana's non-tax revenue is lower than all groups. Grants are the least source of revenues for Ghana and for the groups of countries. OECD ratios serve as a benchmark for Ghana's aspirations. Thus, Ghana should endeavor to improve her ratios to OECD averages. These will serve as sources of funds for investments. Some timeframe is required for this to happen. It is proposed that total Ghana Government revenue as % of GDP should rise gradually to 28% by 2030 and further to 35% by 2050. 5.4 5.0 Government revenues as proportion of GDP (%) High Income Upper Middle Lower middle GHANA OECD Income income Government revenue 41.5 28.5 26.4 23.0 Total taxes 35.4 20.7 17.7 18.8 Income Tax 12.9 8.0 VAT revenue* 6.8 5.2 5.0 6.4 Trade Tax 0.6 4.6 3.2 Non-tax revenue 6.1 7.8 8.7 4.1 Grants 0.1 0.6 0.8 0.8 Source: Mascagni et al. (2014)'. Last column, author's calculations. 4.9 3. PROJECT FINANCE - NATIONAL DEVELOPMENT PLAN Estimating potential funds for Ghana Infrastructure Plan (Ghana's 40 Years Development Plan, also called Ghana@100) Ghana's Economy by 2057 The long-term planning framework is expected to facilitate Ghana's transition from low-income to high- income status. The NDPC has modelled a scenario for the country to achieve per capita income of over 60,000 current USD by 2057 if the economy is grown by an average of 9% annually. The Gross Domestic Product (GDP) is projected to be 2.9 trillion current USD. In constant 2017 USD, this works out to USD 19,000 for per capita GDP or USD 1.2 trillion in 2057 for total GDP and. The process of developing the right policies, strategies and plans is already in motion to formulate and implement a framework with a collective sense of purpose and urgency across successive governments. Table 1.1: Indicative socio-economic forecasts for the LTNDP Nominal GDP USD Population Estimated Average Income 2018 45, 564,368,220 20.595,511 0.545.01 2021 72,985,307 591 31,350,200 2.237 31 2025.019,000. 617.948. 1734.256,905 1.350.00 2020 194,022.367,132 137-145,6033959.90 2033 210,294.325.134 34 40.329,2187336.36 2097 497,82 413.00 1990.723 10.0273 2041 783,345.941,258.02 47,031,554 16,156.14 2045 1,189,178 848,42863 49 852,784 23,133.56 204911728.448.467,519.97 92 442,784 11,962.99 2053 2:512.267,596.236 01 54 995,769 44,434 28 20573,651,533,230,870.54 56,998,78452,202.57 Source: NDPC, 2017 Recall our last class - Efficiency gains as a source of funds for GIP. It is your guide. Work on annual basis, and in the end provide a figure of estimated amount potentially realizable to fund infrastructure in constant 2021 USD. You are in Ghana. Make, state clearly and justify any reasonable assumptions that you need. Please form yourselves into 10 groups or so. Each group will work on one of the following: a) Reducing Illegal outflows Boyce and Ndikuman's (2012 estimate that without illegal financial flows, Africa's capital stock would have expanded by more than 60 per cent, and GDP per capita would have been up to 15% more; The ratio of domestic investment to GDP would have increased 19% to 30%. Projecting savings that Ghana stands to make if she reduces illegal financial flows. Herkenrath (2014) estimates that illegal flows amount to 5.7% of Africa's GDP. Assume that the 5.7% of GDP applies to GHANA Starting with progressive reductions in illegal flows, that is blocking leakages and corruption, (as we did for inefficiencies) of 0.3% of GDP in 2022 and increasing reductions by additional 0.15 percentage points each year. That is 0.45% of GDP for 2023, 0.6% for 2024, until a maximum of 5% is attained; Or b) Increasing General Govt Tax Revenues Ghana's weak tax collections have been in the news lately. Ghana's taxes on income and property) averaged 8% of GDP. It is higher than Upper Middle Income (5.4%) and Lower Middle Income countries (5.0%) but much lower than High Income countries average of 12.9% Value-added tax (VAT) is also referred to as taxes on domestic goods and services. Ghana's average of 6.4% compares favourably with Upper Middle Income (5.2%) and Lower Middle Income countries (5.0), but still lower than High Income countries (6.8%). Ghana's tax on international trade (3.2%) is lower than Upper Middle Income (4.6%) and Lower Middle Income countries (4.9%). At an average of just over 4%, Ghana's non-tax revenue is lower than all groups. Grants are the least source of revenues for Ghana and for the groups of countries. OECD ratios serve as a benchmark for Ghana's aspirations. Thus, Ghana should endeavor to improve her ratios to OECD averages. These will serve as sources of funds for investments. Some timeframe is required for this to happen. It is proposed that total Ghana Government revenue as % of GDP should rise gradually to 28% by 2030 and further to 35% by 2050. 5.4 5.0 Government revenues as proportion of GDP (%) High Income Upper Middle Lower middle GHANA OECD Income income Government revenue 41.5 28.5 26.4 23.0 Total taxes 35.4 20.7 17.7 18.8 Income Tax 12.9 8.0 VAT revenue* 6.8 5.2 5.0 6.4 Trade Tax 0.6 4.6 3.2 Non-tax revenue 6.1 7.8 8.7 4.1 Grants 0.1 0.6 0.8 0.8 Source: Mascagni et al. (2014)'. Last column, author's calculations. 4.9