The World Bank is projecting a much lower fiscal deficit of 7.2% of Gross Domestic Product for Ghana this year, lesser than the government’s revised forecast of 12.2%, according to its Africa Pulse Report.
The fiscal deficit of GDP will be about 5% lower than government’s revised forecast of 12.2%.
Government had earlier projected a fiscal balance of -4.4% of GDP, but covid-19 compelled it to revise the target by a wider margin.
However, recent pick-up in economic activities which is expected to bring in some needed revenue may have led to this adjustment.
Nevertheless, the country’s fiscal deficit-that is the shortfall in revenue compared with spending – is expected to be second to South Africa, in Sub Saharan Africa.
Revised total Revenue and Grants for this year are estimated at GHS51 billion, while total expenditure including arrears is projected at GHS99 billion.
The estimated total revenue is about GHS1.6 billion lower than last year’s estimate.
The World Bank said the average increase in the fiscal deficit in Sub Saharan Africa this year is considerably smaller, relative to that of advanced economies.
Globally, the nation’s budget deficit for this year will be lower than the United States of America, but higher than Germany and the United Kingdom.
However, neighboring Nigeria with over 200 million population will register a budget deficit of 1.3 percent of GDP.
The sub-Saharan Africa average is forecast at 3.5 percentage points of GDP.
The World Bank however expressed concerns about the fiscal support deployed by governments in the region.
September 2020 Monetary Policy Report
The Monetary Policy Committee report said provisional data on budget execution for the first seven months, showed an overall budget deficit of 7.4 percent of GDP, against the revised target of 7.2 percent of GDP as the COVID-19 pandemic continued to impact fiscal operations.
The primary balance also recorded a deficit of 3.7 percent of GDP, above the planned target of 3.4 percent of GDP.
Over the review period, total revenue and grants amounted to GHS27.7 billion compared with the target of GHS26.8 billion. Total expenditures and arrears clearance amounted to GHS56.2 billion, above the target of GH¢53.3 billion.