The government of Ghana is planning to raise a total of GH¢10.4 billion from taxes in the first quarter of 2021. Out of this amount, the government plans to spend GHS 6.4 billion to pay the wages and salaries of its employees.
This represents 61.8% of the government’s projected tax revenues in the first quarter of 2021. It also accounts for 2.4 percent of the country’s GDP in the first 3 months of 2021.
This, the finance minister, Ken Ofori-Atta indicated in the 2021 budget statement presented on the floor of the house on October 28, 2020.
According to Mr. Ofori-Atta, the government expects to raise a total revenue of GH¢52.1 billion from taxes in 2021. Of this amount, it plans to spend 25.8 billion on the payment of wages and salaries of its employees.
This means that 49.4% of total revenues will be consumed by the payment of wages and salaries.
The projected total tax revenues for the 2021 fiscal year accounted for 11.8% of the country’s GDP.
A total of GH¢7.71 billion is expected to be spent on Compensation of Employees, representing 28 percent of the proposed 2021 first-quarter budget appropriation of GH¢ 27.4 billion.
Of the total amount earmarked as compensation for employees, GH¢1.3 billion will go into social contributions, GH¢412 million will be used to pay pension allowances, GH¢406 million for gratuities, and an additional GH¢450 million for social securities.
According to the finance minister, a total of GH¢27.6 billion is expected to be used to pay accumulated interests on government borrowings in the 2021 fiscal year. Out of this amount, GH¢7.0 billion is expected to be used to pay interest in the first quarter of 2021. GH¢4.6 billion will be used to pay domestic interests whilst GH¢2.4 billion will be paid to external lenders.
The finance minister further states that the government is planning to spend GH¢389 million as ESLA transfers, GH¢425 million on Covid-19 Related Expenditures, GH¢78 million as seed fund for capitalization of the development bank, and GH¢175 million as cost of economic revitalization payment.
The finance minister also indicated that the projected 2021 first quarter Total Revenue and Grants amounted to GH¢13.3 billion while total expenditure including the clearance of arrears is projected at GH¢24.0 billion. This results in the projected fiscal deficit of GH¢10.7 billion for the period.
Also, Mr. Ofori-Atta stated that the projected 2021 fiscal deficit has been scaled down from 9.6 percent of GDP as reported in the Mid-Year Review to 8.3 percent of GDP, reflecting the improved revenues from the anticipated pick-up of economic activities and a more rationalized public expenditure program.
“With this path, we expect a return to the fiscal responsibility threshold of 5.0 percent of GDP fiscal deficit and a positive primary balance earlier than the 2024 fiscal year previously announced”.
