Ghana government finances budget deficit with domestic bonds

The government of Ghana financed its budget deficit in 2011 through the issuance of domestic bonds.

According to the Bank of Ghana Monetary Policy Committee (MPC),  government’s total revenue and grants in 2011 amounted to GH¢10.7 billion compared to GH¢7.5 billion in 2010.

“Import duties, import VAT, petroleum taxes and NHIL receipts accounted for GH¢3.5 billion. Income and property taxes were GH¢3.8 billion while domestic VAT, excise duty and NHIL amounted to GH¢1.3 billion. Programmed grants of GH¢340.6 million also accrued,” it said.

The government’s total expenditure in 2011, the MPC said was GH¢12.7 billion, compared to GH¢9.2 billion in 2010. Wages, salaries and related expenditures, it said, totalled GH¢5.2 billion.

“Fiscal operations in 2011, therefore, resulted in a narrow budget deficit of GH¢2.1 billion, and was financed mainly through the issuance of domestic bonds,” it said.

The central bank noted that the Net Domestic Financing (NDF) of GH¢2.1 billion was, however, within the programmed target of GH¢2.4 billion.

The bank announced that total revenue and grants in January 2012, amounted to GH¢649.3 million, while expenditures were GH¢1.4 billion.

“This resulted in a narrow fiscal deficit of GH¢756.4 million compared to a surplus of GH¢107.7 million recorded for January 2011.  The deficit was financed mainly from the domestic sector of GH¢679.9 million, and net foreign inflows of GH¢76.6 million.  The NDF for January of GH¢679.9 million represents 80.6 per cent of the first quarter target of GH¢844 million,” it said.

The stock of domestic debt, according to the bank increased by 43 per cent year-on-year to GH¢11.84 billion in 2011, from GH¢8.3 billion in 2010. The external debt stock also increased by 20.1 per cent over the end of December 2010 position to US$7.6 billion (GH¢11.77 billion).

“Cumulatively, the total public debt was GH¢23.6 billion, equivalent to 44.2 per cent of GDP at end 2011, compared to GH¢17.6 billion (38.1 per cent of GDP) in 2010,” it added.

By Emmanuel K. Dogbevi

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