The government has revised downwards, its total expenditure (including arrears clearance) by 0.48 per cent to GH¢61.7 billion for the 2018 financial year.
The downward revision is expected to help the government to close the year with the end-year fiscal deficit target of 4.5 per cent, other than that, it would have ended the year with a fisical deficiet of 4.9 per cent.
Per the 2018 budget, the government was supposed to spend GH¢62 billion, representing 25.7 per cent of the country’s gross domestic product (GDP) and an annual growth of 14.5 per cent for the entire year.
But, the Finance Minister, Mr Ken Ofori-Atta, during the presentation of the Mid-Year Fiscal Policy Review of the 2018 Budget Statement on July 19 in Accra, said that had been reviewed downwards from GH¢62 billion to GH¢61.7 billion.
The key revisions to expenditure are in wages and salaries, goods and services, interest payments (specifically domestic interest) and dome
The minister explained that those revisions in the country’s fiscal operations were prudent and expected to safeguard the fiscal deficit target of 4.5 per cent of GDP.
He observed that financing of the deficit would also comprise a net foreign financing of GH¢4.7 billion and total domestic financing of GH¢6 billion.
Of the net foreign financing amount, borrowing from foreign sources (including the 2018 Eurobond) will amount to GH¢9.97 billion, while amortisation will remain as programmed at GH¢5 billion.
Mr Ofori-Atta indicated that a total expenditure (including arrears clearance) from January to May 2018 amounted to GH¢23,756 million (9.8 per cent of GDP) and constituted 38.3 per cent of the annual budget target.
Although the outturn was 3.2 per cent lower than the programmed target of GH¢24.6 billion, moderate slippages were observed in the wage bill (GH¢279.6 million) and goods and services (GH¢134.1 million).
According to him, expenses on compensation of employees amounted to GH¢8 billion, exceeding the programmed target by GH¢133.9 million or 1.7 per cent of this amount, while expenses on wages and salaries amounted to GH¢7,131.6 million, representing 4.1 per cent higher than the programmed target of GH¢6,852.0 million and accounting for the overage in compensation of employees.
The minister stated that the reason for the slippage was attributed to budget overruns recorded by the Ministries of Education and Health.
“Corrective measures such as the complete rollout of the HRMIS are being employed to ensure that the excesses are curtailed in the second half of the year,” he said.
Similarly, he stated that expenses on the use of goods and services which amounted to GH¢1.6 billion were about 9.0 per cent higher than the programmed target.
“The slippage is mainly attributed to front-loaded expenditure, including those for the purchase of fertiliser for the Planting for Food and Jobs programme. These overruns are not expected to recur in the second half of the year,” he said.
Interest payment remained within the programmed target for the period but is expected to pick up given the impact of the bond issued by the government on behalf of the GCB Bank on the Purchase and Assumption of UT Bank and Capital Bank.
Grants to other government units
Grants to other government units, Mr Ofori-Atta said, comprising transfers to statutory and earmarked funds such as the National Health Insurance Fund (NHIF), the Ghana Education Trust Fund (GETFund), the District Assemblies Common Fund (DACF), among others, remained lower than the programmed target mainly on account of lower tax revenues and reported IGF retained by MDAs.
The minister mentioned that total capex, comprising domestically financed capex and foreign financed capex, was 39.6 per cent lower than target.
Although domestically financed capex was below target, it showed a stronger performance compared to the same period in 2017 and 2016.
Domestically financed capex amounted to GH¢438.4 million (or 13.1 per cent of the annual target) compared to a programmed target of GH¢1 billion.
“It should be noted, however, that commencement certificates amounting to about GH¢1 billion have been issued for capital projects.
“A significant portion of programmed arrears for 2018 has been cleared compared to the programmed target. Total clearance of arrears amounted to GH¢807.4 million against a target of GH¢394.9 million. The total clearance constitutes 94.1 per cent of the annual target,” he noted. —GB