Ghana’s real gross domestic product (GDP) growth rate has been revised downward from 7.6 per cent to 7.1 per cent, Ken Ofori-Atta, Finance Minister, announced on Tuesday in Parliament.
Delivering the 2019 Mid-Year Budget Review, he said the downward revision was on the back of a relatively larger GDP base for 2018, as well as the lower projected crude oil and gas volumes.
Other key factors that contributed to the downward revision were poor revenue mobilisation and an increment in government’s spending; the depreciation of the local currency against the dollar, the energy sector debt which stands at nearly $1 billion. This was missing from the initial budget for 2019.
Fiscal Framework
Mr Ofori-Atta said the fiscal framework had been recalibrated to accommodate an overall budget deficit equivalent to 4.5 per cent of GDP, which was 0.3 percentage point higher than the fiscal deficit target of 4.2 per cent of GDP approved previously in November 2018 by Parliament.
“This notwithstanding, the fiscal outlook for the remaining half of the year remains sound, even in the midst of strong domestic headwinds. The revised 2019 fiscal framework has carefully considered some measures in the second half of the year to safeguard the revised deficit target of 4.5 per cent of GDP,” he said.
Financing Of Deficit
According to the minister, financing of the fiscal deficit for the second half of the year would be a balanced blend of foreign and domestic financing resources. “Expectations are that a World Bank Development Policy Operation (DPO) facility estimated at US$500 million will be approved by this august House for disbursement in the second half of the year,” he added.
Total Revenue And Grants
The revised Total Revenue and Grants is GH¢58.9 billion, 0.01 percentage point lower than the original 2019 budget estimate of GH¢58,904.9 million. Of this amount, non-oil Tax Revenue projected at GH¢43.1 billion.
Expenditures
The Finance Minister added that total expenditure (including arrears clearance) for the year was now estimated to be GH¢74.6 billion, about 1.6 per cent higher than the 2019 budget estimate of GH¢73.4 billion.
Energy Sector Debt
“The crystallisation of energy sector contingent liabilities in respect of take-or-pay contract obligations with independent power producers (IPPs) estimated at GH¢5.1 billion for 2019 is being amortised, thus increasing the requirements for external amortisation above the amount originally provisioned for in the 2019 budget,” he said.
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