By Kofi Ahovi
Ghana’s fiscal operations during the first half of 2011, resulted in a narrow budget deficit of GH¢701.9 million compared with programmed deficit of GH¢645 million. However, this compares favourably to a deficit, on a cash basis, of GH¢821.8 million (3.2% of GDP) recorded during the same period in 2010.
According to recent data released by the Monetary Policy Committee of the Bank of Ghana (BoG), this deficit was financed by a net domestic borrowing of GH¢599.8 million and a net foreign loan inflow of GH¢102 million. “The net domestic financing of GH¢599.8 million was well within the end-June programmed target of GH¢953.5 million,” the report stated.
For the first half of the year, total revenue and grants amounted to GH¢5.1 billion compared to GH¢3.3 billion during the same period last year. International trade taxes, comprising import duties, import Value Added Tax (VAT), petroleum taxes and National Health Insurance Levy (NHIL) receipts for the first six months of this year amounted to GH¢1.6 billion, exceeding the target by 8.4%.
Income and Property taxes amounting to GH¢1.6 billion marginally fell short of target by 1.2%. Indirect domestic taxes; VAT, excise duty and NHIL amounted to GH¢649.0 million, exceeding the target by 9%. Lodgements of non-tax revenue amounted to GH¢ 425.9 million representing 66.8% of budgeted receipts.
Also, programme grants amounted to GH¢ 244.3 million, exceeding the target by 22.7%. Total expenditure (excluding foreign financed capital expenditure) for the first half of 2011 amounted to GH¢5.5 billion. Wages and salaries and related expenditures amounted to GH¢2.1 billion absorbing close to 48.5% of domestic revenues.
The GH¢3.3 billion recorded for the first half of 2010 comprises GH¢2.7 billion in tax revenue, and GH¢500.8 million in non-tax receipts. Due to lower collections of import duties and import VAT, CEPS collections were below target, recording GH¢1.0 billion. Income and Property taxes collected by IRS amounted to GH¢1.1 billion.
In addition, domestic VAT and Excise Duty collected by VAT service was GH¢445.9 million. Non- tax revenue receipts made up of non- tax revenue and Grants contributed GH¢141.5 million and GH¢394.8 million respectively to the total collections for the period in 2010.
At end May 2011, domestic debt stood at GH¢10 billion, up from GH¢8.3 billion in December 2010. The external debt stock rose from US$6.3 billion in December 2010 to US$6.7 billion in May 2011. The total public debt was therefore GH¢20.1 billion at end May 2011, equivalent to 35.4% of Gross Domestic Product (GDP) down from 39.1% of GDP at the end of 2010.
Meanwhile, Ghana’s Ministry of Finance and Economic Planning will announce a supplementary budget in August with a view to increasing spending beyond the original 2011 budget projections in areas that will boost growth, according to Deputy Finance Minister, Fiifi Kwetey.
Analysts say that the supplementary budget will be made possible largely by revenues that have accrued to government from oil exports. The sale of the Ghana National Petroleum Corporation’s very first cargo of oil, early this year, generated US$112 million which has been deposited in an interest – bearing escrow account. This amounts to about GH¢167 million. If GNPC lifts four times as expected, and production levels rise beyond what obtained during the first quarter of the year, as also targeted, then government’s revenues will significantly exceed the oil revenue target of GH¢584 million originally projected for 2011.
The original budget for 2011, which will be topped up by the supplementary budget to be announced next month, envisaged total expenditure of GH¢12,670.8 million, which was 14.8% higher than what was actually spent in 2010. This was supposed to comprise GH¢8,924.9 million in recurrent expenditure accounting for 70.4% of total fiscal spending and GH¢3,745.9 million in capital expenditure.
Total revenue was projected at GH¢10.601.1 million, of which non-oil revenues was expected to generate GH¢10,017.8 million.
Meanwhile the tenure of domestic debt is to be extended with the issuance of the 5-year bond this month by the Bank of Ghana. BoG plans to raise a total of GH¢300 million through the five-year bond instrument on behalf of the Government of Ghana through an auction process on July 28, 2011.
The BoG says the purpose for the bond is mainly to provide a five-year GOG benchmark investment and benchmark yield to guide the market; and finance the construction of four major on-going road projects in the country.
However, economic analysts note that another reason is that government is seeking to extend its public debt repayment profile and in so doing reduce the public sector borrowing requiring (PSBR).
Ghana’s fiscal operations during the first half of 2011, resulted in a narrow budget deficit of GH¢701.9 million compared with programmed deficit of GH¢645 million. However, this compares favourably to a deficit, on a cash basis, of GH¢821.8 million (3.2% of GDP) recorded during the same period in 2010.
According to recent data released by the Monetary Policy Committee of the Bank of Ghana (BoG), this deficit was financed by a net domestic borrowing of GH¢599.8 million and a net foreign loan inflow of GH¢102 million. “The net domestic financing of GH¢599.8 million was well within the end-June programmed target of GH¢953.5 million,” the report stated.
For the first half of the year, total revenue and grants amounted to GH¢5.1 billion compared to GH¢3.3 billion during the same period last year. International trade taxes, comprising import duties, import Value Added Tax (VAT), petroleum taxes and National Health Insurance Levy (NHIL) receipts for the first six months of this year amounted to GH¢1.6 billion, exceeding the target by 8.4%.
Income and Property taxes amounting to GH¢1.6 billion marginally fell short of target by 1.2%. Indirect domestic taxes; VAT, excise duty and NHIL amounted to GH¢649.0 million, exceeding the target by 9%. Lodgements of non-tax revenue amounted to GH¢ 425.9 million representing 66.8% of budgeted receipts.
Also, programme grants amounted to GH¢ 244.3 million, exceeding the target by 22.7%. Total expenditure (excluding foreign financed capital expenditure) for the first half of 2011 amounted to GH¢5.5 billion. Wages and salaries and related expenditures amounted to GH¢2.1 billion absorbing close to 48.5% of domestic revenues.
The GH¢3.3 billion recorded for the first half of 2010 comprises GH¢2.7 billion in tax revenue, and GH¢500.8 million in non-tax receipts. Due to lower collections of import duties and import VAT, CEPS collections were below target, recording GH¢1.0 billion. Income and Property taxes collected by IRS amounted to GH¢1.1 billion.
In addition, domestic VAT and Excise Duty collected by VAT service was GH¢445.9 million. Non- tax revenue receipts made up of non- tax revenue and Grants contributed GH¢141.5 million and GH¢394.8 million respectively to the total collections for the period in 2010.
At end May 2011, domestic debt stood at GH¢10 billion, up from GH¢8.3 billion in December 2010. The external debt stock rose from US$6.3 billion in December 2010 to US$6.7 billion in May 2011. The total public debt was therefore GH¢20.1 billion at end May 2011, equivalent to 35.4% of Gross Domestic Product (GDP) down from 39.1% of GDP at the end of 2010.
Meanwhile, Ghana’s Ministry of Finance and Economic Planning will announce a supplementary budget in August with a view to increasing spending beyond the original 2011 budget projections in areas that will boost growth, according to Deputy Finance Minister, Fiifi Kwetey.
Analysts say that the supplementary budget will be made possible largely by revenues that have accrued to government from oil exports. The sale of the Ghana National Petroleum Corporation’s very first cargo of oil, early this year, generated US$112 million which has been deposited in an interest – bearing escrow account. This amounts to about GH¢167 million. If GNPC lifts four times as expected, and production levels rise beyond what obtained during the first quarter of the year, as also targeted, then government’s revenues will significantly exceed the oil revenue target of GH¢584 million originally projected for 2011.
The original budget for 2011, which will be topped up by the supplementary budget to be announced next month, envisaged total expenditure of GH¢12,670.8 million, which was 14.8% higher than what was actually spent in 2010. This was supposed to comprise GH¢8,924.9 million in recurrent expenditure accounting for 70.4% of total fiscal spending and GH¢3,745.9 million in capital expenditure.
Total revenue was projected at GH¢10.601.1 million, of which non-oil revenues was expected to generate GH¢10,017.8 million.
Meanwhile the tenure of domestic debt is to be extended with the issuance of the 5-year bond this month by the Bank of Ghana. BoG plans to raise a total of GH¢300 million through the five-year bond instrument on behalf of the Government of Ghana through an auction process on July 28, 2011.
The BoG says the purpose for the bond is mainly to provide a five-year GOG benchmark investment and benchmark yield to guide the market; and finance the construction of four major on-going road projects in the country.
However, economic analysts note that another reason is that government is seeking to extend its public debt repayment profile and in so doing reduce the public sector borrowing requiring (PSBR).
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