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Fiscal deficit narrows for first quarter

By Kofi Ahovi
Overall fiscal operations from January to July 2011 resulted in a narrow budget deficit of GH¢1.12 billion, compared with a target deficit of GH¢849.8 million, according to figures released by the Bank of Ghana’s Monetary Policy Committee last week.

The deficit was financed by net domestic borrowing of GH¢1.04 billion and net foreign inflows of GH¢84.3 million. The net domestic financing represented 92.7% of budgeted target for the period.

Provisional Bank of Ghana data on the execution of the budget shows that the total revenue target for the January - July period was achieved. However, it noted that the pace of growth in expenditures was higher than programmed.

Total revenue and grants realized in the first seven months of 2011 amounted to GH¢5.8 billion compared to a target of GH¢5.7 billion. International trade taxes comprising import duty, import VAT, petroleum taxes and import NHIL totaled GH¢1.9 billion, exceeding the target by 7.7%. However, income and property taxes amounted to GH¢1.9 billion, falling short of the expected target by 12.4%. Indirect domestic taxes, made up of domestic VAT, excise duty, Communication Service Tax (CST) and NHIL, amounted to GH¢679.2 million, 5.9% below its target. Non-Tax Revenue amounted to GH¢458.8 million, representing 69.6% of budgeted target. Grants amounted to GH¢260.4 million, representing 75.8% of the budgeted target. Other receipts amounted to GH¢556.5 million.

Total expenditure, excluding foreign financed capital expenditure, amounted to GH¢6.9 billion for the first seven months of 2011. Wages and salaries and related expenditures amounted to GH¢2.6 billion, absorbing 46.5% of domestic revenues.

The stock of domestic debt at the end of July 2011 was GH¢10.9 billion, up from GH¢8.3 billion in December 2010. The external debt stock increased from US$6.3 billion at the end of December 2010 to US$7.1 billion at end July 2011.

The total public debt at the end of July 2011 was therefore GH¢21.6 billion, equivalent to 40.5% of GDP, up from 38.1% at the end of December 2010.

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