by Jerome Kuseh
Ghana’s budget deficit for the first half of the year was GH¢2,563 million against a target of GH¢3,274 million, a performance achieved on the back of higher than expected revenue.
The fiscal data for January to June 2015 released by the Ministry of Finance and Economic Planning shows that revenue was GH¢14,975 million (11.2% of GDP) against a target of GH¢14,205 million (10.6%) of GDP. Expenditure was GH¢17,538 million (13.1% of GDP) against a target of GH¢17,479 million (13% of GDP).
Domestic revenue was GH¢910 million higher than expected, continuing the trend of improved revenue mobilisation which has recently been enhanced by the creation of a task force to pursue defaulting tax payers. Grants were however GH¢138.8 million less than projected, which the Business & Finance Times suggests may be due to some donors remaining skeptical about government’s management of the economy going forward.
The higher than expected expenditure was mostly due to what was classified as “other expenditure” which was GH¢664 million over budget. There was also overspending on goods and services and capital spending. Compensation of employees, grants to other government units and other interest payments were lower than budgeted figures.
The fiscal figures will be welcome by investors, especially as many have pulled out of emerging economies because of falling commodity prices. Meeting fiscal targets is crucial for keeping policy credibility ahead of an election year. Concerns will however be raised about the possibility of revenue meeting targets going forward as oil price hit record lows. Government will be expected to strictly follow budgeted expenditure.
Ghana is under a three-year extended credit facility programme with the IMF to achieve fiscal consolidation and is targeting a budget deficit of 7.3% of GDP this year.