The government narrowly missed its fiscal deficit target for the third quarter of the year by recording a deficit of 9.0 percent against a target of 8.9 percent.
Although total revenues for the period exceeded its target, it was not enough to help the government meet the deficit target due to the government’s inability to stay within its expenditure target.
This was disclosed by the Minister of Finance, Mr. Ken Ofori-Atta when he presented the 2021 expenditure in advance of appropriation to Parliament.
Total revenues and grants for the period totaled GH¢36.7billion exceeding the target of GH¢35.7 billion by GH¢972.7million or 2.7 percent.
On the other hand, total expenditures, including arrears clearance amounted to GH¢71.3 billion against a target of GH¢70.0 billion showing a deviation of GH¢1.3 billion or 1.8% from the target.
These developments resulted in a fiscal deficit of GH¢34.6 billion or 9.0 percent of GDP against a target of GH¢34.3 billion or 8.9 percent of GDP.
The corresponding primary balance also recorded a deficit of GH¢15.7 billion or 4.1 percent of GDP against the target of GH¢15.4 billion or 4.0 percent of GDP.
Despite the government missing the target for quarter three, Mr. Ofori-Atta told the House 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.
The downwards review, the finance minister stated, was necessary to reflect 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”.
Mr. Ofori-Atta expressed optimism of a strong rebound of economic activities in the coming year with a growth forecast of 5.7 percent in 2021. This, according to him, will be mostly driven by the government’s implementation of the Transformation and Revitalization phase of the Ghana CARES (Obaatanpa) Program.
The finance minister also touched on some of the gains made by the current government regarding macro-economic stability.
According to him, the Ghanaian economy had grown at an average rate of 7.0% between 2017 and 2019 as compared with 2.8% between 2014 and 2016.
Inflation had also reduced from 15.4 percent at End-December 2016 to 7.9 percent by the End-December 2019. He noted that this is “the lowest since the 4th Republic in 1992”.
Additionally, Mr. Ofori-Atta stated that the current government has maintained an average fiscal balance below 5% of GDP threshold between 2017 and 2019 as compared to an average of 6.3% in 2014 and 2016.
Gross international reserves have also improved reaching US$8.6 billion or about 4 months of import cover by February 2020 as compared to 3.5 months of import cover in 2016, according to the finance minister.