A recent review of fiscal developments in the Ghanaian economy within the first six months of the year show some mixed outcomes but which ultimately resulted in a lower budget deficit than the government’s projections for the first half (H1) of the year. H1 H1
Data presented by the Finance Minister in the 2021 mid-year budget review show that government missed its revenue targets by 12.5 percent in the first six months of the year but its expenditures were also GH¢4.5 billion less than the programed target for the period.
“The provisional fiscal data for Jan-June 2021 show that we are on track with the target on the fiscal balance for the period. Total Revenue and Grants amounted to GH¢28,304 million (6.5% of GDP), against a programmed target of GH¢32,362 million (7.5% of GDP). For the same period, Total Expenditure, including the clearance of arrears, amounted to GH¢50,619 million (11.7% of GDP), against a programmed target of GH¢55,088 million (12.7% of GDP). This resulted in an overall fiscal deficit of GH¢22,315 million (5.1 of GDP), against a programmed target of GH¢22,726 million (5.2% of GDP)”.
Ken Ofori-Atta
Revenue performance and targets
Meanwhile, it was clear from the onset that the government may not meet its revenue targets for the first half of the year after the Bank of Ghana released its Economic and Financial data for the first quarter of 2021, which saw the government missing its revenue targets by 18.8%.
According to BoG’s data, government receipts, including grants, for the first quarter of 2021 was GH¢12,847.9 million, lower than the target of GH¢15,831.9 million. Nevertheless, the amount raised in the first three months of the year represents a year- on-year growth of 7.2 percent.
Interestingly, despite missing its revenue targets for the first half of the year, the government has revised its overall revenue targets for the 2021 fiscal year upwards by 0.03 percent, an increase over the original 2021 Budget target estimates of GH¢72,452 million to GH¢72,477 million. This raises doubts as to whether the government will be able to meet its revenue targets for the year or the government is just being “overly ambitious” as some experts have said.
Government sure of improving revenue collection
However, Mr. Ofori-Atta issued an assurance that government will through its Revenue Assurance and Compliance Enforcement (RACE) initiative ensure that all its programmed revenue targets will be collected to avoid revenue slippages.
Ken Ofori-Atta
“Our focus on taxes is to collect what is due to the Republic. To this end, we are building a robust framework to expand Domestic Revenue Mobilization to focus on compliance and enforcement nationwide. We have established the Revenue Assurance and Compliance Enforcement (RACE)”.
Furthermore, Mr. Ofori-Atta, still speaking on the initiative, stated that the remit of RACE is to identify and eliminate revenue leakages in areas such as petroleum bunkering, gold and minerals export, port operations, transit goods, warehousing, border controls and free zones operations.
Meanwhile, the government of Ghana disclosed to Parliament that it will not seek additional funding and a supplementary budget for the next half of the financial year. The move, the finance minister noted, is intended to contain the country’s rising debt stock as well as avoiding fiscal revenue slippages.
In June, the IMF noted that risks to Ghana’s capacity to repay its debts have increased, however, it concurred that they are still manageable and that Ghana’s capacity to repay the Fund remains adequate. The Fund however, warned Ghana against monetary financing of its debts, implying that government must raise its own revenues if it’s still committed to meeting its fiscal targets this year. H1 H1 H1 H1
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