The government will spend more resources than it can generate in 2013 as it rolls out infrastructure development amid the granting of tax incentives to promote private sector activities.
While total oil and non-oil revenue and grants for the 2013 are estimated at GH¢22.53 billion, equivalent to 25.4 per cent of gross domestic product (GDP), total expenditure, including provision for the clearance of arrears and outstanding commitments in 2013, is estimated at GH¢30.54 billion, equivalent to 34.4 per cent of GDP.
The Finance Minister, Mr Seth Terkper, who outlined this in the 2013 Budget Statement and Economic Policy of the government, said given the revenue and expenditure estimates, “the 2013 budget will result in an overall budget deficit of GH¢8.01 billion, equivalent to 9.0 per cent of GDP”.
Although the deficit is still wide, it represents a cut back, when compared to the 12 per cent of GDP that was estimated to have occurred in the 2012 financial year.
However, the modest cut back of expenditure to 9.0 per cent of GDP means that the government would still keep an appreciable spending momentum that could spur private sector growth.
The Minister of Finance said the government would look at both domestic and foreign sources to finance the budget deficit, comprising an estimated GH¢5.47 billion or 6.2 per cent of GDP from the private sector and an estimated GH¢2.54 billion, equivalent to 2.8 per cent of GDP, from the non-inflationary foreign sources.
Generally, he outlined broad macroeconomic targets that included a real non-oil GDP growth rate of 6.5 per cent, real overall GDP growth, including oil, of 8.0 per cent and an average inflation of 8.9 per cent.
Subsequently, he said, the economic policies were expected to lead to an end-of-period inflation of 9.0 per cent, overall budget deficit equivalent to 9.0 per cent of GDP and gross international reserves of not less than three months of import cover for goods and services.
He said the government also expected to procure loans up to about GH¢3.68 billion from external sources to finance projects and general budget support, as it set aside GH¢1.29 billion to repay external debts as they fell due within the year.
The government had projected to receive an estimated GH¢1.12 billion from oil resources, taxes on goods and services estimated at GH¢5.57 billion and GH¢3.69 billion from international trade taxes.
Mr Terkper also said the government expected grants of about GH¢1.26 billion, equivalent to 1.4 per cent of GDP, from development partners which would contribute 5.6 per cent to the estimated total revenue and grants for 2013.
Out of the inflows, the government would allocate GH¢9 billion, representing 10.1 per cent of GDP, to the payment of salaries and allowances (compensation to employees), with GH¢1.74 billion, representing 2.0 per cent of GDP, allocated to expenditure on goods and services.
Although the government increased petroleum prices, the increases could still not make for full recovery, as GH¢1.02 billion had been provided for the payment of fuel and utility subsidies, including GH¢586.2 million payment of promissory notes issued for the importation of crude oil by the Volta River Authority in 2012 which Mr Terkper explained would fall due in 2013.
The Minister of Finance announced that as part of public financial management reforms and in conformity with new standards for compilation and presentation of fiscal statistics, the government would adopt new guidelines of Government Finance Statistics (GFS 2001) as the basis for compilation and reporting of government finance statistics for Ghana beginning the 2013 fiscal year.
“The GFS 2001 is part of a worldwide effort to improve government accounting and transparency in operations and oversight, with particular emphasis on the introduction of accrual accounting,” he said.
