…as a result of fuel subsidies, high salaries
After setting a 6.7% budget deficit target for 2012, Ghana overshoots the target almost 100% as the country spent more than the revenue it had.
The budget deficit was as a result of increased salaries, lower income taxes, utility and fuel subsidies, the central bank reported February 13, 2013.
Ghana’s total revenue and grants in 2012 amounted to GH¢16.1 billion (22.3% of GDP) against a budget estimate of GH¢16.9 billion, the Bank of Ghana (BoG) indicated.
The country’s expenditures including arrears clearance and commitments totalled GH¢24.8 billion (34.5% of GDP), 14.7% higher than the budget target.
“These developments in the fiscal operations resulted in a deficit of GH¢8.7 billion which is 12.1% of GDP against a target of GH¢4.7 billion (6.7% of GDP), Dr Kofi Wampah, acting BoG governor, told reporters when presenting summaries of the 54th Monetary Policy Committee (MPC) meeting.
Dr Wampah mentioned shortfall in corporate income taxes – GH¢708.2 million (1% of GDP), excess payments on single spine salary – GH¢1.9 billion (2.7% of GDP), higher interest cost – GH¢245 million (0.3% of GDP) and higher fuel and utility subsidies – GH¢339 million (0.5% of GDP) as activities that contributed to the higher budget fiscal deficit.
According to the BoG, the deficit was financed mainly from domestic sources.
Net domestic financing accounted for GH¢7.1 billion of which the central bank says its financing was 31% while foreign financing was GH¢1.6 billion.
By Ekow Quandzie