Cabinet approves additional revenue options to achieve end-year target

Finance Minister Seth Terkper on Thursday announced that Cabinet had approved the use of additional revenue options, expenditure and debt measures to achieve the end-year targets. Government is expected to meet growth target of eight per cent, given improvements in the power situation and output in the oil and gas sector. On inflation, Government is expected to achieve the 2013 Budget rates of 8.9 (average) and 9.0 (end-year) per cent. Speaking at the Meet-the-Press series organised by the Ministry of Information and Media Relations in Accra, Mr Terkper said the measures proposed under revenue options that are subject to the approval of parliament include re-imposition of fiscal stabilization levy, imposition of levy on imports, increase in some excise duties, review of fees and charges (especially, the “user” elements) and special audits and administrative measures. He said the measures had been proposed on the face of the fiscal outcome for the first four months of the year with particular reference to the cost of debt service and burden of wage and other personal emoluments on the budget. The press briefing was to provide journalists information on the performance of the economy from January to April 2012 and outlook for the rest of the year, fiscal performance and outlook and the status and information on some policy issues and measures including the proposed 2013 Eurobond Issue. Mr Terkper said Government would take concrete steps to refinance portions of the public debt to reduce the debt services costs to contain possible expenditures to meet the 2013 fiscal targets. This, according to him, would be done mainly by substituting short term debt with high interest rates and substituting medium to long term low rate debt. Mr Terkper said more regular adjustment of utility prices to complement the proposed adjustment in petroleum prices to cost recovery levels would be pursued. Others include the implementation of Market Premium Policy approved by Cabinet under the Single Spine wage policy, control of allowances within provisions in the Budget and Medium Term Expenditure Framework provisions for all Ministries, Departments and Agencies. Mr Terkper observed that one effect of the fiscal pressures identified was that funds were being crowded out for social intervention programmes that fell under Goods and Services category of the budget. Consequently he said Government would ensure that part of the additional revenue to be generated from the budget would be used to restore the balance. “Secondly, we have stated that the Single Spine Pay Policy was meant to improve productivity of the public sector, therefore, any measures that will be taken including negotiation with in the Public Service Standing Joint Negotiation Committee will continue to uphold this objective of government.” On 2013 Euro Bond Issue, Mr Terkper announced that a transaction size of up to 21 billion dollars had been recommended and endorsed by Cabinet for approval by Parliament. He said indicative use of proceeds as approved by Cabinet included capital expenditures (including payments for counterpart funds) approved in 2013 Budget (with priority given to self-financing projects) and refinancing of public debt to reduce the cost of borrowing. Mr Terkper said the Bond is expected to be issued in July this year. He said the economy ended 2012 fairly strong with read Gross Domestic Product (GDP) growth of 7.9 per cent, compared to the provisional rate of 7.1 per cent that was used in the 2013 Budget. “The prospects for growth in 2013 remain strong and we expect to meet the target of eight per cent at the end of the year, given improvements in the power situation and output in the oil and gas sector,” he said. Mr Terkper said inflation increased from 8.8 per cent in December 2012 to 10.4 in March and 10.6 in April 2013. He attributed the increases to the pass-though effect of petroleum price adjustments and seasonality in food prices and added that the pressures are expected to decline steadily to enable Government achieve the 2013 Budget targets rates.