Mid-year budget review today: Seth Terkper to ask for more, despite collecting less

Government will among other things, seek parliamentary approval to spend more despite missing first quarter GH¢ 5.7 billion revenue collections target set out in the 2014 budget.

Minister of Finance Seth Terpker will Wednesday morning, present to parliament a midyear review of the 2014 budget.

The theme for the Government’s 2014 Budget and Statement of Economic Policy is ‘Rising to the Challenge: Realigning the budget to meet key national priorities’. The adoption of this theme is to enhance the resilience of the economy against risks; promote accelerated growth and development; and create jobs.

But government would need funds to actualise this objective. But Ghana’s economy is in hard times.

 Revenue from traditional exports took a hit after declining world market prices of gold and cocoa. The Ghana Revenue Authority has explained it had difficulties in meeting targets set for the various tax types because of the recurrent energy crises.

Government has removed subsidies on petroleum products and also introduced taxes such as the VAT on financial services, which is yet to be implemented.

Moody’s Investors Service has also downgraded Ghana’s sovereign rating by one notch to B2 from B1.

According to Moody, the key drivers of Ghana’s downgrading are a rising debt level and worsening debt affordability amid persistently high fiscal deficits.

The agency also maintains, Ghana’s vulnerability to shocks has increased because it is using its finances to service its large debt.

The stock of public debt (including Government guaranteed debt) stood at $23,498.76 million (53.5 percent of GDP) at the end of September 2013.

The budget review could  see government revise its macro economic targets set in this year.

The specific macroeconomic targets for 2014 are a non-oil real GDP growth of 7.4 percent;  overall real GDP (including oil) growth of 8.0 percent, end year inflation target of 9.5 percent within ±2 percent and an overall budget deficit equivalent to 8.5 percent of GDP.

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