Business News of Wednesday, 21 November 2012
Source: ECONOMY TIMES
By Elorm Desewu
Preliminary figures from the Bank of Ghana on the execution of the budget for the first nine months of 2012 indicate that government has recorded a budget deficit of GHC5.1 billion representing 7.3 percent of Gross Domestic Product (GDP), against a target of GH¢4.3 billion representing 6.2% of GDP.
According to the country’s Central Bank governor Dr Henry Kofi Wampah, the excess was mainly accounted for by the implementation of the Single Spine Salary Structure (SSSS) and arrears clearance which amounted to 1.1 percent of GDP. For the corresponding perio d in 2011, the overall budget deficit was equivalent to 1.9 percent of GDP.
But in the 2012 budget government expects to record an overall budget deficit equivalent to 4.8 per cent of GDP. For the first nine months of 2012, revenue and grants totaled GH¢11.1 billion, this was 21.3 per cent higher than the outturn for the corresponding period in 2011. Tax revenue for the period amounted to GH¢8.6 billion, representing a year-on-year growth of 26.1 per cent. Non-tax revenue was GH¢1.3 billion, and grants disbursements amounted to GH¢955.4 million.
Total expenditures including payments for the clearance of arrears and outstanding commitments was GH¢16.2 billion due to higher recurrent spending which totaled GH¢10.8 billion, indicating a 52.8 percent increase over the outturn for the same period in 2011.
He explained that the high growth in recurrent spending was on account of higher levels of personal emoluments which went up by 65.8 per cent on a year-on-year basis mainly as a result of the implementation of the single spine salary structure (SSSS).
Interest payments amounted to GH¢1.6 billion, representing a 35 percent growth over the same period in 2011. This was mainly the result of high domestic borrowing and associated high cost of debt servicing.
Capital expenditure for the period totaled GH¢2.8 billion, compared with GH¢2.2 billion a year earlier, and a target of GH¢4.1 billion. This was on account of slow disbursement of project loans and grants.
Net Domestic Financing of the budget amounted to GH¢4.8 billion, compared to GH¢1.3 billion for the same period last year.