By Kofi AHOVI
Based on projected revenues and expenditures up to the end of the 2010 fiscal year, government has projected a fiscal deficit for the full year to be GH¢2.51billion, equivalent to 9.7% of Gross Domestic Product (GDP).
The projected higher than originally expected fiscal deficit is mainly as a result of the projected higher disbursement of project loans from the country’s development partners than was earlier estimated.
Provisional data on the implementation of the budget for the first three quarters of 2010 indicate that revenues were below the budget target by 1.8%. On the other hand, expenditures were higher than estimated by 8.0%.
Given the performance of revenues and expenditures for the same period, the overall budget balance showed a deficit of GH¢2.3 million. This is equivalent to 8.8% of GDP, compared with a budget target of a deficit equivalent to 7.6% of GDP.
The bigger than expected deficit is mainly as a result of increased disbursement of project loans than was anticipated, and the accelerated clearance of domestic arrears than programmed for the first three quarters of the year.
The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, made these known in parliament last week when he presented the 2011 Budget Statement and Economic Policy of the government.
The 2011 budget would focus on major growth-oriented programmes and projects intended to improve and sustain Ghana’s newly realized middle income status. To this end, there would be significant investments in the areas of energy, road and rail transport to facilitate private sector expansion for employment generation.
Government plans to continue with fiscal and monetary policies that aim to sustain macroeconomic stability for improved private sector growth, which it believes, would stimulate employment and improve the quality of life for Ghanaians.
To improve on Ghana’s Balance of Payments, government requested a three-year programme, now called the Extended Credit Facility (ECF) from the IMF in 2009, which approved a loan of 387 million Special Drawing Rights (SDRs), equivalent to US$602 million as balance of payments support to Ghana. This amount is supposed to be disbursed in seven tranches over a three-year period, ending in June 2012, after each semi-annual review of the programme.
The first and second reviews of the programme have been successfully completed, and a total amount of US$218 million has so far been disbursed to support the country’s balance of payments position. The third review of the programme is expected to be completed by the end of January, 2011.
According to the minister, the programme has contributed to the stabilization of the economy, as the disbursements have helped to increase the level of Ghana’s reserves, which, in turn, has helped stabilize the cedi and boosted confidence in the economy.
The domestic primary balance for the period under review registered a deficit equivalent to 2.1% of GDP, against a budget target of a deficit equivalent to 3.2% of GDP. The domestic primary balance for the whole of 2010 is expected to be a deficit equivalent to 1.4% of GDP.
Duffuor stated that, “with the progress made so far, I can confidently state that we are ready to make the transition from stability to accelerated growth.”
He explained that the theme for the 2011 budget “Stimulating Growth for Development and Job Creation” was chosen to focus attention on the need to propel the economy onto a higher growth and development trajectory.
Based on projected revenues and expenditures up to the end of the 2010 fiscal year, government has projected a fiscal deficit for the full year to be GH¢2.51billion, equivalent to 9.7% of Gross Domestic Product (GDP).
The projected higher than originally expected fiscal deficit is mainly as a result of the projected higher disbursement of project loans from the country’s development partners than was earlier estimated.
Provisional data on the implementation of the budget for the first three quarters of 2010 indicate that revenues were below the budget target by 1.8%. On the other hand, expenditures were higher than estimated by 8.0%.
Given the performance of revenues and expenditures for the same period, the overall budget balance showed a deficit of GH¢2.3 million. This is equivalent to 8.8% of GDP, compared with a budget target of a deficit equivalent to 7.6% of GDP.
The bigger than expected deficit is mainly as a result of increased disbursement of project loans than was anticipated, and the accelerated clearance of domestic arrears than programmed for the first three quarters of the year.
The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, made these known in parliament last week when he presented the 2011 Budget Statement and Economic Policy of the government.
The 2011 budget would focus on major growth-oriented programmes and projects intended to improve and sustain Ghana’s newly realized middle income status. To this end, there would be significant investments in the areas of energy, road and rail transport to facilitate private sector expansion for employment generation.
Government plans to continue with fiscal and monetary policies that aim to sustain macroeconomic stability for improved private sector growth, which it believes, would stimulate employment and improve the quality of life for Ghanaians.
To improve on Ghana’s Balance of Payments, government requested a three-year programme, now called the Extended Credit Facility (ECF) from the IMF in 2009, which approved a loan of 387 million Special Drawing Rights (SDRs), equivalent to US$602 million as balance of payments support to Ghana. This amount is supposed to be disbursed in seven tranches over a three-year period, ending in June 2012, after each semi-annual review of the programme.
The first and second reviews of the programme have been successfully completed, and a total amount of US$218 million has so far been disbursed to support the country’s balance of payments position. The third review of the programme is expected to be completed by the end of January, 2011.
According to the minister, the programme has contributed to the stabilization of the economy, as the disbursements have helped to increase the level of Ghana’s reserves, which, in turn, has helped stabilize the cedi and boosted confidence in the economy.
The domestic primary balance for the period under review registered a deficit equivalent to 2.1% of GDP, against a budget target of a deficit equivalent to 3.2% of GDP. The domestic primary balance for the whole of 2010 is expected to be a deficit equivalent to 1.4% of GDP.
Duffuor stated that, “with the progress made so far, I can confidently state that we are ready to make the transition from stability to accelerated growth.”
He explained that the theme for the 2011 budget “Stimulating Growth for Development and Job Creation” was chosen to focus attention on the need to propel the economy onto a higher growth and development trajectory.
Comments