2015 Budget... Agenda on course • Ministry seeks GH¢41.4b to support economy
The Minister of Finance, Mr Seth Terkper, has asked Parliament to approve GH¢41.4 billion for spending in 2015, with an assurance that medium-term prospects for the economy are bright, with the transformational agenda of the governmnent still on course.
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The amount represents a 15.6 per cent increase over the projected outturn for 2014.
Of that amount, GH¢1.6 billion or 3.8 per cent of total expenditure for next year will be used to clear arrears and commitments.
Presenting the 2015 Budget Statement and Economic Policy of the government to Parliament in Accra yesterday, Mr Terkper said the country’s successful structural transformation rested on three strategic interventions.
Those, he said, were strengthening and deepening the essential elements and institutions of good governance, promoting export-led growth through products that built up on Ghana’s comparative strength in agricultural raw materials and anchoring industrial development through prudent use of natural resources based on locally processed value addition.
Mr Terkper stressed that the medium-term fiscal policy of the government, of which the 2015 budget was the maiden, would focus on managing volatilities in the short term, while continuing to pursue “the fundamental policies and measures we have been implementing for some time now”.
Home-grown measures
Those measures, termed ‘home-grown measures’, include negotiating public sector wages within budgetary constraints to ensure the sustainability of the Single Spine Pay Policy (SSPP), continuation of the freeze on public sector employment (excluding education and health) and non-replacement of departing public sector employees in overstaffed areas.
Other measures were the removal of subsidies on petroleum taxes, price adjustment for utility tariffs, as well as the restructuring of the public debt stock.
Mr Terkper said although the country’s public debt stock as a percentage of GDP had been rising over the years from 36.3 per cent in 2009, 55.53 per cent in 2013 and 60.8 per cent this year, the funds had been channeled into productive sectors.
The projects the loans financed include the Ghana National Gas Processing Plant to help solve the energy crisis, the refurbishment and expansion of the Ridge Hospital,; the construction of the University of Ghana Teaching Hospital and the expansion of the Kpong Water Pumping Station.
He also listed the Kwame Nkrumah Interchange, the Sofoline Interchange in Kumasi, the Tetteh-Quarshie–Madina road project, the Achimota-Ofankor road project, the construction of affordable housing units by OAS Construction and the upcoming Kasoa Interchange as some of the infrastructure projects financed by the loans.
He outlined the medium-term goal of progressively reducing the fiscal deficit to 3.5 per cent of GDP by 2017, driven mainly by improvement in tax policy, revenue administration reforms, improved management of public funds, expenditure rationalisation and the implementation of new debt management strategies.
He said the deliverables of the second Ghana Shared Growth and Development Agenda (GSGDA II) would be linked to the Ministry of Finance’s new performance and expenditure tracking database and the Ghana Integrated Financial Management Information System (GIFMIS).
Revenue and expenditure
According to the minister, since the estimated domestic revenue of GH¢33.9 billion would be far short of financing the expenditure, the government would rely on GH¢1.3 billion being inflows from the development partners and GH¢7.6 billion additional borrowing from the domestic market to close the gap, often known as the budget deficit.
In the budget, which was on the theme, “Transformational Agenda: Securing the Bright Medium Term Prospects of the Economy”, the expenditure pattern was not a marked departure from what pertained in previous budgets, as compensation of public sector employees (comprising wages and salaries, allowances, pensions, gratuities and social security contributions) was estimated at GH¢12.3 billion, representing 9.1 per cent of GDP.
Of that amount, GH¢10.3 billion (or 7.6 per cent of GDP) is estimated for the payment of wages, salaries and allowances, while GH¢750.9 million, GH¢216.0 million and GH¢1.1 billion are estimated for pensions, gratuities and social security, respectively.
Comparatively, expenditure on goods and services which the ministries, departments and agencies (MDAs) will rely on to prosecute their programmes and projects, is estimated at GH¢2.0 billion, representing 1.5 per cent of the value of goods and services produced in the economy.
Of the estimated total expenditure for 2015, 24.4 per cent, amounting to GH¢9.6 billion, will be used to pay interests on loans.
Transfers to statutory funds
For the statutory funds, GH¢50 million has been earmarked for the payment of subsidies on petroleum products, while the District Assemblies Common Fund (DACF) and the Ghana Education Trust Fund (GETFund) will receive GH¢1.6 billion and GHc843.9 million, respectively.
Mr Terkper said the Road Fund would receive GH¢257 million in 2015, while GH¢5.3 million would be transferred to the Petroleum-related Fund.
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Allocation for capital expenditure, such as financing infrastructure such as schools and hospitals, amounted to GH¢7 billion, representing a 27.1 per cent increase over the projected outturn for 2014 and 17.8 per cent of the estimated total spending for 2015.