Financial Crunch Hits Projects
More development, economic and social projects and programmes in the 2013 Budget may ‘die from hunger’ due to lack of funds.
Preliminary fiscal data for the first seven months of the year revealed that both government’s revenue and expenditure remain below their respective targets.
However, the shortfall in revenue was much higher than the reduction in expenditure, according to the Governor of the Bank of Ghana (BoG), Dr. Henry Kofi Wampah.
He was quick to state: ‘Total revenue and grants was GH¢10.4 billion, lower than the target of GH¢12.5 billion, mainly as a result of shortfalls in domestic revenue collections and low disbursement of grants’.
Of this outturn, domestic revenue totalled GH¢9.8 billion, below the target of GH¢11.6 billion. Total tax revenue amounted to GH¢7.7 billion, lower than the target of GH¢9.1 billion.
Grant disbursements were GH¢542 million, falling short of its target by 41.7 percent. Non-tax revenues amounting to GH¢2.1 billion for the period also missed the target by 12.4 per cent, Dr Wampah added.
Total expenditure, including clearance of arrears and outstanding commitments amounted to GH¢16.0 billion, lower than the budget target of GH¢17.5 billion.
However, compensation of employees exceeded its target of GH¢5.1 billion and amounted to GH¢5.5 billion. Similarly, interest payments totalling GH¢2.6 billion, breached its target of GH¢1.8 billion, the fiscal data noted.
The above developments resulted in a fiscal deficit (cash basis) equivalent to 6.3 percent of Gross Domestic Product (GDP) against a target of 5.6 percent.
Dr. Wampah who is also the Chairman of the Monetary Policy Committee (MPC) of the BoG, explained: ‘The deficit was financed mainly from domestic sources, resulting in a Net Domestic Financing (NDF) of GH¢4.4 billion, higher than the budget target of GH¢3.6 billion’.
Foreign financing of the budget amounted to GH¢1.3 billion, marginally lower than the GH¢1.5 billion target, while financing from Bank of Ghana amounted to GH¢1.0 billion, equivalent to 4.9 percent of projected revenue, he stressed.
These developments are taking place at the time when the country’s stock of public debt increased to GH¢43.9 billion (49.5% of GDP) at end of August 2013, from GH¢35.1 billion in December 2012.
Of this, the domestic component amounted to GH¢24 billion compared to GH¢18.5 billion in December 2012. External debt stood at US$10.2 billion, up from US$8.8 billion in December 2012. The increase in the external debt was mainly due to the sovereign bond issue.
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