Ghana's fiscal deficit target for 2016 is likely to be missed by between 1.5 to 2%, the Minister for Finance and Economic Planning, Seth Terkper has confirmed.
Government had set a target to reduce the country’s fiscal deficit to 5% of Gross Domestic Product (GDP) in 2016, from 6.3% recorded in 2015.
However, Finance Minister has back tracked and has said the projected fiscal deficit for 2016 would range between 6.5 to 7% of GDP.
“We are likely to miss the programmed fiscal deficit target of 5% of GDP by about 1.5 to 2 percentage points,” Mr Terkper said.
The Finance Minister was speaking at a press briefing held in Accra to update journalists on the current state of the country’s economy.
According to Mr Terkper, preliminary fiscal data for January to October 2016 indicated that both “revenue and expenditure were below their respective targets for the period resulting in the fiscal deficit higher than anticipated.”
“The higher than programmed fiscal deficit is partly due to weak tax revenue performance as well as uncontrollable factors such as crude oil price and volume shocks including FPSO turret bearing challenges,” he further explained.
It would be recalled earlier this year that oil production from the Jubilee Fields was significantly reduced as a result of a faulty turret bearing on the Floating, Production, Storage and Offloading (FPSO) vessel operating on the field, FPSO Kwame Nkrumah.
This resulted in a fall in oil production from the field to an average of 80,000barrels a day from its normal 110,000 barrels a day.
Crude prices have not performed any better on the world market. The commodity has traded at an average of $42 a barrel in 2016.
Government had projected an average trading price of $45.35 in the 2016 Budget.
As such in July 2016, the country revised its budget to reflect the expected shortfall in domestic revenue as a result of these challenges.
Ghana began a fiscal consolidation programme in 2014 and a year later in April 2015 had the International Monetary Fund (IMF) approving a $918 million Extended Credit Facility (EFC) to assist Ghana in its effort.
The fiscal consolidation helped reduce the fiscal deficit drastically from 10.2% to GDP in 2014 to 6.3% to GDP in 2015.
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