Government has ended the first quarter of this year spending more than what it has collected as revenue.
According to its fiscal data for the first three months of this year, the state spent about 700 million Ghana cedis more than the 7.3 billion Ghana cedis revenue mobilized.
The driver of the overruns for the first quarter, was the amount of money government spent financing capital projects.
Interestingly , payment of wages and salaries for public sector workers, was not a challenge this time round, as government managed to stay below the target . It spent 2.6 billion Ghana cedis against, projected targeted 3 billion Ghana cedis.
Even though government was hoping to spend about 8.6 billion cedis, it ended the first quarter, spending just 8.1 billion, 500 million Ghana cedis less, than the projected total expenditure target. But for economists, the development is worrying, because if the spending overruns should continue, then the year can end with another huge deficit which can have some serious implications for the economy.
In the revised 2015 estimates, the state is hoping to spend 40 billion Ghana cedis by the end of 2015, 12 billion Ghana cedis, more than projected revenue.
Another interesting development in the fiscal data, was, revenue. Government ended the first three months of this year collecting 1 billion Ghana cedis more than 6.3 billion it was hoping to mobilize.
The major drivers were taxes paid by companies, domestic goods and services, excise duty and petroleum tax, as well as VAT and communication service tax. Taxes paid by companies for instance, was 77 million Ghana cedis more than the 753 million the state was looking for, While Communication Service Tax for instance, bagged 279 million Ghana cedis more than the 69 million cedis the state was hoping to realize.
The development might be good news, if they should trend continue, in terms of the revenue numbers, because it could help government better manage its expenditure or reduce the deficit.
It also interesting that despite the challenging business environment, which has come about, because of the energy crisis and the depreciation of the cedi, which was expected to affect the earnings of businesses, and there by affect taxes, collections has been good for government.
Meanwhile, government has maintained that despite the overruns recorded for the first half of this year, it has made a lot of progress in trying to reduce the budget deficit.
A source close to government has maintained that, the second quarter number will show that the state has come very far in reducing its rising expenditure. The source adds since government has never recorded a budget surplus, people should rather see the fiscal data as gains being made to reduce the budget deficit.
Economist, Sampson Akligoh says although government must be commended for the progress made with respect to the budget deficit being contained, the real test will be the last quarter of this year.
Click to read the CENTRAL GOVERNMENT OPERATIONS for 2015
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