Government claims it could not meet its revenue target of GH˘12.5 billion for the first seven months of the year at a time when it has introduced more taxes and increased its tax threshold.
Government’s total revenue and grants raised over the period was GH˘10.4 billion as against a revenue target of GH˘12.5 billion.
Dr. Kofi Wampah, Governor of Bank of Ghana (BoG), who made this known at the close of a Monetary Policy Committee meeting in Accra, attributed the decline to the shortfalls in domestic revenue collections and low disbursement of grants.
Dr Wampah said the delay in the removal of utility subsidies also affected government’s revenue.
He said, “Of this outturn, domestic revenue totaled to GH˘9.8 billion below the target of GH˘ 11.6 billion”. Dr Wampah said total tax revenue amounted to GH˘7.7 billion, lower than the target of GH˘ 9.1 billion, adding that grant disbursements were GH˘542 million as against the target of 41.7 percent.
He said Non-tax revenues amounting to GH˘ 2.1 billion for the period also missed the target by 12.4 percent.
Dr Wampah said the shortfall in revenue was much higher than the reduction in expenditure, stating that total expenditure including clearance of arrears and outstanding commitments amounted to GH˘16.0 billion as against the budget target of GH˘17.5 billion.
However, he said compensation of employees exceeded its target of GH˘5.1 billion and amounted to GH˘5.5 billion. Similarly, Dr Wampah said interest payments totaling GH˘2.6 billion fell short of its target of GH˘1.8 billion.
“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”, he said.
Wampah said the deficit was financed mainly from domestic sources, resulting in a Net Domestic Financing of GH˘ 4.4 billion, higher than the budget target of GH˘ 3.6 billion.
He said foreign financing of the budget amounted to GH˘1.3 billion, marginally lower than the GH˘1.5 billion target. Wampah said financing from Bank of Ghana amounted to GH˘1.0 billion, equivalent to 4.9 percent of projected revenue.
On the growth outlook, he said the Committee observed that economic activity had picked up evidenced by positive developments in the Centre for Environmental Impact Analysis (CEIA) and the credit stance of Deposit Money Banks (DMBs) as well as increased oil production.
However, Dr Wampah said the downside risks include budgetary cutbacks in domestic financed capital expenditures and spending on goods and services in favour of recurrent expenditures such as wages and salaries. He said softening consumer sentiments may also pose a downside risk to the growth outlook.
Source: Daily Guide
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