BUDGET: Ghana's external debt falls

Accra, Nov. 15, GNA - Ghana's external debt has declined from 120.5 per cent of GDP in 2001 (US$6,325.6 million) to about 17.6 per cent (US$2,637 million) of GDP at the end of September 2007, Finance Minister Kwadwo Baah-Wiredu told Parliament on Thursday.

Presenting the 2008 budget to Parliament, Baah-Wiredu attributed the fall to the cancellation granted by external partners. According to him, the total public external and domestic debt was expected to be at the equivalent of 48.5 per cent of GDP at the end of December 2007. "We wish to emphasise that all the macroeconomic gains have been achieved in the face of rising crude oil prices and the energy crisis. However, he said, in spite of the relatively strong macroeconomic stability achieved over the years, the outturn of the 2006 budget indicated that the fiscal situation came under severe stress. Mr Baah-Wiredu said the overall fiscal outturn in 2006 resulted in an overall budget deficit equivalent to 7.8 per cent of GDP, against

a budget target of 4.5 per cent of GDP. Domestic financing of the budget was a net borrowing of 4.1

per cent of GDP, against a budget target of 0.2 per cent of GDP. The domestic primary balance for the year was equivalent to

4.9 per cent of GDP, against a budget estimate of a deficit

equivalent to 1.4 per cent of GDP. Mr Baah-Wiredu said total receipts, including domestic

revenue, donor grants, foreign loans and HIPC relief for 2006,

amounted to GH=A24,331.7 million, equivalent to 37.7 per cent of

GDP. This was about 0.3 per cent lower than the budget estimate for 2006. Domestic revenue made up of tax and non-tax revenue

amounted to GH=A22,556.9 million, against a budget estimate of

GH=A22,643.8 million. This indicates an increase of 10.4 per cent

over the outturn for 2005. He said total tax revenue for the 2006 fiscal year was

GH=A22,326.3 million (20.2 per cent of GDP), against a budget

estimate of GH=A22,421.4 million, equivalent to 21.6 per cent of

GDP. The Minister said the underperformance in tax revenue was

mainly due to lower outturn of company taxes, import VAT and

import duties. Non-Tax Revenue contributed an amount of GH=A292.3 million,

29.8 per cent higher than the Budget target of GH=A271.1 million. Total grant disbursements amounted to GH=A2634.9 million, 17.5

per cent below the Budget estimate of GH=A2769.7 million. Multilateral HIPC Assistance was 37.8 per cent below the

budget target, while Programme grants also fell short of target

by 4.0 per cent. The outturn for Project grants, was GH=A2228.5

million against a budget target of GH=A2300.0 million. Mr Baah-Wiredu said total loans received for 2006 was

GH=A2460.1 million, against a budget estimate of GH=A2670.0

million. Of this amount project loans amounted to GH=A2299.4

million, while the outturn for programme loans was GH=A2160.7

million. Mr Baah-Wiredu said the provisional actual outturn for total

payments in 2006 fiscal year, made up of statutory and discretionary

payments was GH=A24,331.7 million against a budget estimate of GH=A24,346.8 million. Total statutory payments, including interest payments, amortization, and transfers to households and dedicated funds

amounted to GH=A21,248.7 million, representing about 89.2 per

cent of the budget estimate for the year. The outturn reflects an increase of 12.2 per cent over the

outturn recorded in 2005. Also, external Debt Service amounted to GH=A2325.4 million,

against a budget estimate of GH=A2453.7 million. The principal component of the external debt due was GH=A2235.1 million, against a

targeted amount of GH=A2347.3 million, while payments on external interest amounted to GH=A290.3 million, compared to a budget target of GH=A2 106.4 million, the Minister said. Domestic interest payments including interest paid on TOR bonds during the 2006 fiscal year amounted to GH=A2303.1

million, against a target of GH=A2242.7 million. The outturn for payments into the District Assemblies Common Fund (DACF) indicate that a total amount of GH=A2104.7

million, against a target of GH=A2120.4 million was paid into the

DACF. The shortfall was as a result of the underperformance of

tax revenues. Total transfers into the Ghana Education Trust Fund (GETFund) amounted to GH=A2106.3 million. The transfers were lower than the budget estimate by GH=A232.4 million due to the shortfall in VAT revenue for the year. The outturn however, reflects an increase of 8.4 per cent over the outturn recorded in 2005. Mr Baah-Wiredu said discretionary payments for the year

totalled GH=A23,083.0 million, against a budget estimate of GH=A22,947.5 million. Personal emoluments amounted to GH=A21,137.1 million, 13.8

per cent more than the budget estimate. The Minister attributed the increase expenditure to

extraordinary pressures from the labour front, which led to higher nominal increases in the wage bill during the fiscal year. Administration and Service recorded an outturn of GH=A2427.7 million, out of which Service expenditure amounted to GH=A2125.8 million. The expenditure on Administration for the year exceeded its budget estimate by GH=A278.6 million. Domestically-financed investment, registered an outturn of GH=A2294.3 million, about 20.1 per cent lower than the budgeted amount of GH=A2368.2 million. Foreign-financed investment amounted to GH=A2527.9 million, GH=A2278.4 million lower than the budget estimate for the year. The lower performance is as a result of the lower disbursements of project loans and grants by our development partners. Mr Baah-Wiredu said HIPC-financed expenditure was GH=A2179.2 million, about 1.7 per cent lower than the budget

target of GH=A2182.2 million. The outturn indicates a 8.0 per cent increase over the outturn for the 2005 fiscal year. A total amount of GH=A239.2 million of non-road outstanding commitments were cleared during the course of the year. Of this amount, outstanding arrears of GH=A25.4 million and GH=A24.3 million were transferred into the DACF and GETFund, respectively, as clearance of the arrears for 2006, while an amount of GH A29.6 million was cleared in respect of road

arrears.