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Ghana has successfully reduced its deficit of 8.2 per cent of Gross Domestic Product (GDP) in 2012 to 4.0 per cent in 2014, a Deputy Minister of Finance, Mr Cassiel Ato Forson, has revealed.

That, he said, was due to the prudent fiscal management and the government’s commitment to fiscal consolidation and debt sustainability and indicated that the deficit was 5.4 per cent in 2013 and also expected to decline to 0.3 per cent this year.

“Due to a combination of global factors and domestic challenges, the economy has been under severe stress since 2012, leading to double digit fiscal and external current account deficits,” he said.

According to him, Ghana had witnessed significant economic growth over the past decade, with real GDP growth rising steadily from 3.7 per cent in 2000 to 11.5 per cent in 2011 before decelerating to 4.0 per cent in 2014 mainly on account of energy challenges.

He told the Daily Graphic that over the medium term, economic growth was expected to pick up to 9.2 per cent in 2017, with inflation reducing to 8.2 per cent while the fiscal and current account deficits would be reduced to 3.7 per cent and 4.9 per cent of GDP respectively in 2017.

“The primary fiscal balance is expected to start recording surpluses of 0.5 per cent of GDP in 2016 and 2.0 per cent of GDP in 2017. All these will contribute to a build-up of reserves to cover 4.2 months of goods and services by 2017,” he said
Stabilising measures

Mr Forson said the government had been implementing stabilising measures since 2013 and had set the economy on a high growth path.

According to him, although those measures had helped to improve the situation, “new and continuing adverse global and domestic developments such as the gold and oil price declines and energy challenges continue to pose challenges to economic management.”

Mr Forson said due to improved revenue administration and compliance, as well as the implementation of efficient tax policy measures, “Ghana’s non-oil tax revenue to GDP ratio has increased from 15.8 per cent in 2013 to 17.1 per cent in 2014 and it is estimated to reach 18.8 per cent by the end of 2015,” pointing out that, it had been achieved in a period of economic slowdown.

He said the wage bill as a ratio of GDP had also reduced from 8.9 per cent in 2012 to 8.7 per cent in 2013, 8.3 per cent in 2014 and was expected to decline further to 7.7 per cent in 2015.

“As a ratio of tax revenue, the wage bill has declined from 53.3 per cent in 2012 to 49.1 per cent in 2014 and it is expected to reach 44.5 per cent in 2015”.

“Similarly, the wage bill including wage arrears cleared as a ratio to tax revenue has declined from 68.2 per cent in 2012 to 65.1 per cent in 2013 to 52.1 per cent in 2014 and expected to decrease further to 46.1 per cent in 2015,” he stated.
Source: Daily Graphic

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