THE government plans to bring the fiscal deficit down to 4.5 per cent of gross domestic product (GDP) in 2018, below the 3.8 per cent required by the International Monetary Fund (IMF).
The 2018 deficit target is due to be announced in next year’s budget, which the Finance Minister, Mr Ken Ofori-Atta, will be presenting to Parliament tomorrow.
Next year’s deficit target will be some 1.8 percentage points lower than the 2017 target, which was set at 6.3 per cent.
Sources in government told the GRAPHIC BUSINESS that the 2017 deficit target had virtually been met after a 14.9 per cent drop in wrevenues in the first six months of the year led to a downward revision to revenues and expenditures.
Although rigid, one of the sources told the GRAPHIC BUSINESS in an earlier interview that it would not impact adversely on growth but rather stimulate growth in private sector by enhancing their competitiveness.
It said the budget would aim to streamline fiscal slippages in a manner that improves the business environment to help unleash the full potential of the private sector.
“The truth is that the focus for growth in the budget is not going to necessarily come from the fiscal side. To us, what is critical from the fiscal side is the stability – the exchange rate and making sure that you do not cut out the private sector – and that is what you will see in the budget,” one of the sources said, dismissing concerns that a rigid fiscal deficit of less 4.5 per cent of gross domestic product (GDP) could strangulate growth.
“The agenda is not about relying on government. It is more about getting the economy stabilised, bringing relief to businesses and then using the private sector to get the job done,” the source added.