For the first time in seven years, the government has spent less than it budgeted, thanks to a drastic cut in expenditure in response to slow revenue inflows.
This has resulted in a provisional fiscal deficit that is healthier than the year-end target.
Provisional data from the Bank of Ghana (BoG) show that the deficit ended 2017 at six per cent of gross domestic product (GDP) – 300 per centage points lower than the year’s target of 6.3 per cent of GDP.
The lower-than-budgeted deficit for 2017 is second only to the feat achieved in 2011. In that year, total revenue and grants exceeded target, then resulting in a deficit of 3.9 per cent of GDP, lower than the budget target of 5.1 per cent of GDP.
But unlike the 2011 feat, GRAPHIC BUSINESS analysis showed that last year’s lower-than-budgeted deficit was due to a 6.1 per cent (GH₵3.4 billion) cut in total expenditure.
The squeeze in spending was to help accommodate a corresponding 6.03 per cent drop in revenues and grants.
Compared to a budget target of GH₵55.9 billion (27.7 per cent of GDP) and GH₵43.1 billion (21.3 per cent of GDP), the paper found that provisional outturns for expenditure and revenues and grants was GH₵52.5 billion and GH₵40.5 billion respectively.
Beyond being a landmark achievement for the government, the lower deficit is a testament of the preparedness of the Finance Minister, Mr Ken Ofori-Atta to stick to his pledge of reining in expenditures to help avoid frivolous spending while consolidating the economy.
In presenting the mid-year review in August last year, the minister said “unlike the practice in the recent past where government expenditures have actually increased in the face of declining revenues, we are now in a regime where spending is based on recognised revenues and expected receipts.”
Copyright © 2019 Ghanalive.TV. All Rights Reserved.