Tax Revenue Decline Widened 2013 Budget Deficit

Ghana’s budget deficit last year was wider than the government’s original forecast because of a decline in tax revenue and higher spending on wages, a Finance Ministry document shows.

The gap is 10.8 percent of gross domestic product, wider than the 10.2 percent estimate presented in the November budget, a Ministry of Finance document, obtained by Bloomberg News, showed.

The Minister of Finance, Seth Terkper, didn’t immediately answer a call or return a text message to his mobile phone for comment.

Ghana, West Africa’s largest economy after Nigeria, is struggling to contain a government worker wage bill that consumes 70 percent of tax revenue as the price of gold, the country’s biggest export, dropped last year for the first time in more than a decade.

Ghana’s fiscal gap will probably remain above 10 percent for a third year in 2014, putting pressure on the nation’s rating, Moody’s Investors Service said in a note on February 14.

Fitch Ratings cut Ghana’s credit rating by one level to B, five below investment grade in October.

In another development, the Bank of Ghana (BoG), on Friday, said that the yield on its 91-day bill rose to 21.0825 percent at its February 21 auction from 20.7851 percent at the last auction.

The Bank said GH¢501.66 million ($199 million) worth of bids for the 91-day paper were accepted at the auction out of a total GH¢524.18 million of bids tendered.

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