By Elorm Desewu
The Bank of Ghana, (BoG) has disclosed that it would no longer finance government’s large budget overrun from next year 2023.
According to the governor of the BoG, Dr Ernest Addison, “the country has fundamental issues that we have to address such as fiscal problems, very large deficits which is not getting the adequate financing and therefore central bank was providing the financing on a temporary basis. Hopefully by the end of this year, that would not be there to complicate the inflation management issue”.
He said the financing of government’s deficit was just a temporary accommodation till the end of this year adding till the IMF’s program is successfully completed and implemented there will be no need for Bank of Ghana’s accommodation going into 2023. “In fact we do not expect the central bank to finance the budget into 2023 that should be a thing of the past” he stressed.
Provisional data on fiscal operations for January to September 2022 resulted in an overall budget deficit of GH¢41.7 billion (7.0 percent of GDP), against a programmed deficit target of GH¢36.7 billion (6.2 percent of GDP). The corresponding primary balance was a deficit of 1.6 percent of GDP, against a deficit target of 1.0 percent of GDP.
The higher-than-projected deficit was on account of revenue shortfalls alongside expenditure overruns. Total Revenue and Grants amounted to GH¢65.4 billion (11.0 percent of GDP), compared with a target of GH¢67.3 billion (11.4 percent of GDP), representing a shortfall of 2.8 percent compared to target and year-on-year growth of 33.2 percent.
Total Expenditure (including arrears clearance and discrepancy) for the period amounted to GH¢109.4 billion (18.5 percent of GDP), above the target of GH¢103.99 billion (17.6 percent of GDP) by 5.2 percent. The resulting overall fiscal deficit of GH¢41.7 billion was financed mainly from domestic sources.
But for 2023 fiscal year, the government is projecting a fiscal deficit of GH¢61,475 million, equivalent to 7.7 percent of Gross Domestic Product (GDP) and a corresponding Primary balance deficit of GH¢8,925 million, equivalent to 1.1 percent of GDP.
Total Revenue and Grants is projected at GH¢143,956 million or 18.0% of GDP and is underpinned by permanent revenue measures – largely Tax revenue measures – amounting to 1.35 percent of GDP.
Total Expenditure including clearance of arrears is projected at GH¢205,431 million or 25.6% of GDP.
This estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures (commitment basis) compared to the projected outturn in 2022 and a demonstration of Government’s resolve to consolidate its public finances.
