Gov’t exceeds fiscal deficit target in Q1
Based on the current fiscal performance, in terms of revenue mobilization, governments is most likely to introduce new revenue measures and a possible expenditure cut in the upcoming mid-year budget review later this month.
Already for the first quarter, fiscal deficit exceeded target by 0.4 percent of GDP.
Data from Bank of Ghana (BoG) shows that, overall, government budgetary operations resulted in a budget deficit of GHc 6,359.62 million, 1.8 percent of GDP, at the end of the first quarter of 2019, compared with a target of GHc 4,891.88, 1.4 percent of GDP.
The primary balance also recorded a deficit of 0.8 percent of GDP against a primary deficit target of 0.3 percent.
The data further reveals that government’s revenue mobilization for the first quarter of 2019 has fallen short of the projected target for the period by 17.6 percent.
Government, during the first quarter has only been able to mobilize a total revenue and grant amounting to GHc 10,250.36 million, representing 3.0 percent of GDP, compared with a target of GHc 12,432.22 million, 3.6 percent of GDP. This is contained in the latest Monetary Policy Report for May 2019.
In the same period last year, revenues and grants amounted to GHc 9,362.02 million, 3.1 percent of GDP.
The report explains that the revenue underperformance was largely attributed to lower-than-expected Cost-Insurance-Freight (CIF), rising zero-rated CIF and lower-than-anticipated personal income taxes.
Total expenditure, including arrears clearance, for January to March 2019 amounted to GHc 15,607.27 million, 4.5 percent of GDP, compared with GHc 12,440.35 million, 4.2 percent of GDP, for the corresponding period in 2018.
This outturn represents a year-on-year (y-o-y) growth of 15.0 percent, constituting 82.9 percent of the projected expenditure target for the period.
During the first quarter of 2019, domestic revenue summed up to GHc 10,188.48 million, 3.0 percent of GDP compared with GHc 9,007.69 million, 3.0 percent of GDP, in the same period of 2018. This depicts a year-on-year growth of 13.1 percent although the outturn was below the program target by 15.6 percent.
Tax revenues amounted to GHc 8,383.24 million, 2.4 percent of GDP, compared with GHc 7,048.80 million, 2.4 percent of GDP, over the same comparative period. This represents a year-on-year growth of 18.9 percent and constituted 90.3 percent of the projected target.
Non-tax revenue amounted to GHc 1,362.49 million, which is significantly below the projected target of GHc 2,026.17 million. This represented a shortfall of 32.5 percent. This compares with GHc 1,314.57 million realized for the corresponding period in 2018.
Out of the total expenditures of GHc 15,607.27, interest payments amounted to GHc 3,767.93 million for the period compared with GHc 2,706.78 million, for the same period in 2018.
The report indicates that this outturn was 1.5 percent below the projected target of GH¢3,826.90 million, 1.1 percent of GDP, signifying that both domestic and external interest payments were within the set targets by 1.3 percent and 2.7 percent respectively.
Compensation of Employees, including wages and salaries, pensions and gratuities and other wage related expenditures, for the period amounted to GHc 5,429.92 million, 1.6 percent of GDP, below the programmed target by some 4.0 percent but represented an annual growth of 13.3 percent.
Goods and Services for the period under review amounted to GHc 1,797.67 million compared with the target of GHc 1,907.18 million.
Grants to government units such as National Health Fund (NHIL), Education Trust Fund (GETFund), Road Fund, among others, as well as other earmarked funds during the period under review amounted to GHc 2,519.30 million against the target of GHc 2,911.75 million.
Capital expenditures was GHc 1,668.03 million compared to the first quarter target of GHc 2,337.82 million, representing a y-o-y increase of 87.3 percent.