By Elorm Desewu
The government’s revenue underperformance has complicated fiscal policy implementation in the country, according to the Bank of Ghana’s Monetary Report.
The report said persistent uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to financing of the budget, resulting in monetization of the budget deficit by the central bank.
So far, financing of the budget has predominantly been from the banking sector with the central bank absorbing a larger share.
The budget implementation, for the first nine months of 2022, recorded an elevated overall cash deficit of 6.4 percent of GDP, against the revised programmed target of 5.0 percent of GDP.
Total receipts of GH¢51.49 billion representing 8.7 percent of GDP fell short of projected target of GH¢60.08 billion which was 10.2 percent of GDP, and represented 85.7 percent of the budgeted estimate. Total payments of GH¢89.04 billion representing 15.0 percent of GDP was almost on target, representing 99.5 percent of GH¢89.46 billion or 15.1 percent of GDP.
The deficit of GH¢37.56 billion, together with net foreign loan repayments of GH¢3.54 billion, created a resource gap of GH¢41.1 billion, which was financed from domestic sources and use of resources from the stabilization fund.
The stock of public debt at the end of July 2022 stood at GH¢402.4 billion, showing an increase of GH¢50.6 billion over the end December 2021 stock of GH¢351.8 billion. In terms of GDP, the total public debt as at end-July 2022 was 68.0 percent, compared with 76.6 percent recorded in December 2021.
The domestic component was GH¢190.2 billion (32.1 percent of GDP), representing a year-to-date increase of 4.7 percent and accounting for 47.3 percent of the total public debt, lower than the 51.7 percent recorded in December 2021.
The increase was driven mainly by increases of GH¢7.5 billion and GH¢752.5 million in the medium and long-term instruments respectively, which was offset by a decrease of GH¢0.4 million in the short-term instruments.
In terms of the holding structure, the non-bank and banking sectors recorded year-to-date increases of GH¢11.7 billion and GH¢2.4 billion respectively. However, the non-resident investors holdings decreased by GH¢5.6 billion over the period.
On year-to-date basis, total external debt, in US dollar terms, decreased by US$303.4 million to US$28.0 billion. However, due to exchange rate effect, total external debt increased by GH¢42.1 billion to GH¢212.1 billion (35.8 percent of GDP) at the end of July 2022. External debt also constituted 52.7 percent of total public debt at the end of July 2022, compared to 48.3 percent in December 2021.
