July 31, 2017
Source: Norvan Acquah – Hayford/thebftonline.com/Ghana
The government of Nana Addo Dankwa Akufo-Addo has reviewed downwards the country’s fiscal deficit target for 2017 from 6.5 percent to 6.3 percent of GDP.
According to the Finance Minister Ken Ofori-Atta, the reduction is as a result of government inability to meet its revenue target for the year under review.
In his presentation of the mid-year review of the government budget for 2017 to Parliament, Finance Minister said the revision is to prevent compromises of government’s fiscal consolidation objectives, targets and expenditures.
“The downward revision in revenues and expenditures as well as reclassification of inflows from the sale of shares have resulted in the revision of the fiscal deficit target from 6.5 percent of GDP to 6.3 percent. These revisions are consistent with our fiscal and debt sustainability objectives.
Being mindful of the high debt burden which has arisen largely because of high fiscal deficits in the past, the revision of the fiscal deficit further demonstrates our commitment to fiscal discipline,” he added.
The Finance Minister further stated that: “going forward, we will strengthen the implementation of revenue measures to ensure that we meet our revised revenue targets. To ensure that the fiscal objectives and targets are not compromised, we will make the necessary downward adjustment to discretionary expenditures in the event that we are not able to meet our revenue targets.”
The Minister touching on last year’s performance revealed that GDP growth in 2016 has been the worst for the past 15 years although government maintained the projected real GDP growth of 6.3 percent for 2017 with the nominal GDP revised downwards from GH¢203.41 billion to GH¢202.01 billion, to reflect mainly the revision of the deflator downwards.
He pointed out that the low performance of the economy in 2016 resulted in the alteration of certain estimates by the government.
Mr. Ofori-Atta observed that provisional data from the Ghana Statistical Service (GSS) released in 2017 showed that the “real GDP growth for 2016 was 3.5 percent against the provisional estimate of 3.6 percent reported in the 2017 budget and lower than the 3.8 percent recorded for 2015, the lowest in over 15 years.”
The services sector had a growth of 5.7 percent followed by agriculture, 3 percent, and Industry 1.4 percent adding, that “the economy we inherited was severely impaired.”
Mr. Ofori-Atta noted that: “the fiscal deficit was worse than previously estimated at 9.3 per cent of GDP compared to a provisional figure of 8.7 percent of GDP on cash basis at the time of presenting the 2017 budget.”