Government releases GH¢370m for statutory payments
The government has released GH¢370 million to clear accumulated statutory payments. A breakdown of the beneficiaries are: District Assemblies Common Fund, GH¢207,483,526.75; Ghana Education Trust Fund (GETFund), GH¢98,096,708.29; and the National Health Insurance Levy, GH¢63, 963,001.40.
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A government source told the Daily Graphic last night that the release of the amount was expected to boost the operations of the beneficiary institutions.
With the release of the funds, the Finance Minister, Mr Seth Terkper, expressed the hope that the inflows from the cocoa syndication loan and the Tweneboa, Enyenra and Ntomme (TEN) and Sankofa-Gye Nyame projects in the Western Region, the mid-year prospects for the economy would be good.
These and stable commodity prices as well as improved non-traditional exports and oil production would create the favourable conditions for gradual economic recovery.
Speaking in an interview with the Daily Graphic, Mr Terkper said cocoa production was expected to be “relatively stable for the 2013/14 season.”
He said the government aimed at boosting production to one million tonnes on a sustained basis (the level achieved in the exceptional 2010/11 season).
Mr Tekper explained that the coming on stream of the TEN and Sankofa-Gye Nyame projects in the second half of 2016 should boost the medium-term prospects of increasing output and shoring up the foreign exchange reserves. This will cure the effect of the decline in the oil import bill with the onset of gas production and should create conditions for gradual recovery of output and foreign exchange reserves”, Mr Terpker said.
Causes of overruns
The finance minister said the government ended 2013 with a provisional fiscal deficit of 10.8 per cent of GDP against a target of nine per cent, mainly on account of shortfall in tax revenue resulting from lower domestic output and import levels.
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The economic challenges were compounded by the decline in commodity prices on the world market, notably gold and cocoa.
According to him, although cocoa prices recovered in the second half of the year, it was not sufficient to prevent an overall deterioration of the terms of trade.
Again the country suffered some shortfall in grants from its development partners relative to the budget target, while containing a large overrun cost in compensation and personal emoluments, comprising wages, gratuities and allowances including arrears.
The government also recorded an overrun in subsidies due mainly to the payment of arrears; and interest costs from the financing of the deficit and past issues of bonds to complete capital projects that were placed on the budget.
This alongside a large net service and income outflows and the slowdown in official and private transfer inflows resulted in a deterioration of the current account balance to 12.8 per cent and financed mainly by direct investments and short-term capital flows as well as drawdown of reserves.
Fiscal corrective measures
According to the Finance Minister, fiscal policy measures would be aimed at consolidation to achieve sustainable fiscal deficit and public debt.
He said the reduction in fiscal deficit would be driven mainly by expenditure rationalisation and revenue enhancing measures.
The strategy for achieving macroeconomic stability includes adhering to fiscal discipline that hinges on prudent public expenditure management and enhanced domestic revenue mobilisation – mainly through the ongoing Ghana Revenue Authorityreforms that include the revision of direct and indirect tax laws.