By Elorm Desewu
The Bank of Ghana, (BoG), has revealed that the government could achieve the revised budget deficit of 6.6 percent of GDP and a primary surplus of 0.1 percent of Gross Domestic Product, (GDP) through aggressive revenue mobilization.
According BoG, the fiscal data shows that both revenues and expenditure outturns for the first nine months of 2022 fell short of their respective targets. The deviations in revenue stem partly from lower-than expected receipts.
The expenditures performance on the other hand could be attributed to the build-up of arrears, considering the low statutory transfers.
“Aggressive revenue mobilization and strengthened commitment controls in the ensuing months of 2022 will contribute immensely to achieving the revised end year budget deficit of 6.6 percent of GDP and primary surplus of 0.1 percent of GDP” it said.
Government budgetary operations resulted in an overall budget deficit of GH¢44,021.8 million (7.4% of GDP) at the end of the first nine months of 2022. This was higher than the target of GH¢36,684.4 million (6.2% of GDP) by 20.0 percent. The overall fiscal deficit of GH¢44,021.8 million was financed largely from domestic sources with some external support.
Domestic financing (net) was GH¢36,801.4 million (6.2% of GDP), substantially higher than the target of GH¢26,324.7 million (4.4% of GDP). Foreign financing on the other hand, was a net inflow of GH¢6,531.0 million (1.1% of GDP), far lower than the target of GH¢12,459.4 million (2.1 % of GDP).
The pace of revenue mobilisation remained below target, reflecting in both tax and non-tax revenue. For the first nine months of 2022, total Revenue & Grants was GH¢65,398.8 million (11.1% of GDP), lower than the target of GH¢67,307.4 million (11.4% of GDP).
The revenue outturn represented 97.2 percent of the target and recorded a year-on-year growth of 38.5 percent. During the review period, domestic revenue totalled GH¢64,601.4 million (10.9% of GDP), below the target of GH¢66,503.4 million (6.9% of GDP).
The revenue outcomes reflected mixed performances for both tax and non-tax proceeds. Tax revenue, comprising taxes on income & property, taxes on domestic goods and services and international trade taxes, was GH¢49,055.3 million (8.3% of GDP), lower than the target of GH¢50,414.8 million (8.5% of GDP).
This represented a negative deviation of 2.7 percent. Taxes on income and property, made up of personal income tax (PAYE), self-employed taxes, company taxes (including taxes on oil), royalties from oil and minerals, other revenue, and airport taxes totalled GH¢24,787.2 million (4.2% of GDP).
This outturn was 3.2 percent below the target of GH¢25,601.9 million (4.3% of GDP). Taxes on Domestic Goods and Services comprising Domestic VAT, Excise Duty, GET Fund Levy,National Health Insurance Levy (NHIL), Communication Service Tax (CST), ElectronicTransaction Levy (E-Levy) and COVID-19 Health Levy all summed up to GH¢20,889.0 million (3.5% of GDP) and exceeded the target of GH¢20,787.1 million by 0.5 percent.
On a year-on-year basis, the outturn recorded a growth of 30.2 percent. Taxes on International trade mainly from import duties was GH¢6,221.6 million (1.1% of GDP),· below the target of GH¢6,133.8 (1.0% of GDP) by 1.4 percent, and represented 26.8 percent yearon-year growth.
Tax refunds was GH¢2,842.5 million, higher than the target of GH¢2,107.9 million for the period and registered a year-on-year growth of 39.1 percent Non-Tax revenue for the review period totalled GH¢11,048.9 million, representing 90.8 percent of the target, and a year-on-year growth of 81.7 percent.
The underperformance of this revenue handle was mainly due to lower collection efforts by some large and medium collectors as well as unrealised dividend payments. Other revenue measures made up of ESLA proceeds, raked in a total of GH¢4,217.3 million and was 19.3 percent above the target of GH¢3,535.3 million.
Government received project grants in the sum of GH¢797.4 million lower than the envisaged target of GH¢804.0 million by 0.8 percent. This outturn was also lower than the GH¢847.4 million recorded in the corresponding period of 2021, thus reflecting a yearon-year decline of 6.0 percent.
Government spending and arrears clearance was broadly within target, however, some key expenditure lines recorded overruns. Total expenditures & arrears clearance, for the first nine months of 2022, summed up to GH¢99,570.1 million (16.8% of GDP), below the target of GH¢102,566.8 million (17.3% of GDP).
This outturn represented a year-on-year growth of 30.1 percent. The outturn was also 97.1 percent of the target. Of the expenditures, Compensation of Employees (including wages and salaries, pensions & gratuities, and other wage related expenditure) was GH¢27,146.3 million, lower than the target of GH¢27,947.0 million.
This outturn represented 97.1 percent of the target. In terms of fiscal flexibility, compensation of employees constituted 42.0 percent of domestic revenue mobilized, better than the 50.4 percent recorded in the corresponding period of 2021.
Use of Goods and Services totalled GH¢4,233.9 million, lower than the expected target of GH¢5,117.2 million. The outturn was 17.3 percent below the target, but recorded a year-on-year growth of 25.9 percent.
Total interest payments of GH¢32,101.1 million was higher than the projected target of GH¢30,890.5 million by 3.9 percent, and accounted for 32.2 percent of total expenditure. It also constituted 49.7 percent of domestic revenue, compared with 54.7 percent recorded in the corresponding period of 2021.
Domestic interest payments accounted for 78.0 percent of the total interest payments during the period under review. Grants to other Government units consisting of National Health Fund, Education Trust Fund (GETFund), Road Fund, Energy Fund, District Assemblies Common Fund (DACF), Retention of IGFs, transfer to GNPC and other earmarked funds all summed up to GH¢17,562.0 million, above the envisioned target of GH¢16,820.1 million by 4.4 percent.
It also recorded a year-on-year growth of 57.7 percent. Other Expenditure made up of ESLA Transfers, Covid-19 related expenditure, and Other critical spending, for the first nine months of 2022 was GH¢7,093.9 million.
ESLA transfers of GH¢3,816.3 million was above the projected target of GH¢3,319.8 million by 15.0 percent. Acquisition of Non-Financial Assets for the period under review was GH¢10,891.7 million (1.8% of GDP), lower than the programmed target of GH¢12,028.3 million (2.0% of GDP) by 9.5 percent. This outturn represented a year-on-year increase of 20.0 percent.
