by Jerome Kuseh
|Finance Minister, Seth Terkper is optimistic, but he has reason to worry.
Ghana’s struggle to regain investor confidence continues as the government is set to miss the fiscal targets set during the mid-year budget review prior to the call for assistance from the IMF.
In a budget presented to parliament today, Finance Minister, Seth Terkper revealed that the country’s budget deficit for 2014 was projected to be 9.5% against a target of 8.8% in the mid-year review. The deficit will be the nation’s first single-digit deficit since 2012.
The nation sought help from the IMF after increasing fiscal pressures from a poor performing currency, declining commodity prices, higher interest payments and a large public wage bill.
Although, the IMF programme has not yet got underway, the nation’s currency appreciated (19% in September 2014) against major trading partners after a successful issue of a US$1bn Eurobond and receipts of US$1.7bn for purchase of cocoa beans.
Provisional growth figures for 2014 indicate real GDP growth rate of 6.9% against a target of 7.1% and 7.6% for 2013. The Agricultural sector led with a growth of 5.3%, industry followed with 4.6% down from 7.3% in 2013. Services recorded the lowest growth rate since 2007 with 4.6% as compared to 9.6% in 2013.
Public debt rose to GH¢69,705.9 million, which is 60.8% of GDP, up from 55.5% in 2013. Receipts from petroleum were GH¢1,358.18 million (US$780.07 million).
The major tax policy proposal in the budget was the Special Petroleum Tax of 17.5% that is to be introduced. The fiscal stabilization levy of 5% and special import levy of 1-2% is to extended to 2017. The government plans to establish an Export and Import (EXIM) bank to increase exports.
In tackling the severe energy crisis that has crippled the economy, the Minister announced on-going power generation projects.
As deliberations continue with the IMF, an opposition MP has suggested that the budget may be revised as soon as IMF comes on board. What is sure for now, is that the uncertainty over the prospects of the economy continues.
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