Ghana says fiscal measures in 2014 Budget credible, hits back at Fitch

Ghana has responded to Fitch’s assertion that the country cannot meet its deficit target set out in the 2014 Budget.

The credit ratings agency last week said measures outlined in the 2014 budget by the government were not enough to trim Ghana’s deficit to the targeted 8.5% of GDP in 2014, following an upward revision of the 2013 deficit to 10.2% against a target of 9% at the time of the previous budget.

According to Fitch, Ghana is likely to incur budget overruns next year. Ghana said it plans to spend $15.5 billion in 2014.

But in a Finance Ministry statement November 28, 2013, Ghana is of the view that “the measures announced in the Budget are credible to ensure  that  Ghana’s  fiscal  deficit  is  reduced  to  a  sustainable  level  over  the  medium term”.

The Ministry added “Ghana does not wish to adopt abrupt measures that will affect the medium-term growth prospects of the economy.”

It therefore disagreed with Fitch  Rating’s  position  that  the consolidation measures announced in the  budget  will  not  effectively  address  the  Ghana  fiscal  challenges  experienced  in  the past two years.

Fitch on November 25, 2013 maintained that “…the pace of fiscal consolidation over the next two years will be slower than the government projects”. The ratings agency forecasted a deficit slightly above 9% for 2014.

The government indicated that the fiscal  policies as outlined in the 2014 Budget continues to aim at fiscal consolidation through  improved revenue mobilisation, rationalization of public expenditures, and review of financing methods.

Although a fiscal deficit higher than what was estimated for 2013 is projected for the year, the Finance Ministry stated it is worth noting that significant progress has been made in addressing the issues that led  to the  fiscal slippage in 2012.

By Ekow Quandzie