Government spent ¢6.758 billion on interest payments in the second quarter of 2021, the Bank of Ghana has indicated.

It was however 25.1% below the programmed target.

Domestic interest payments alone accounted for 76.7% of the total Interest payment and registered a year-on-year growth of 33.7%.

Also, the external interest payments accounted for the remaining 23.3% and recorded a year-on-year decline of 11.0%.

The high borrowing on the domestic market is in line with government strategy of borrowing more from the domestic market, which unfortunately could crowd out the private sector in accessing funds.

Meanwhile, government expenditure and net lending in the second quarter of 2021 totalled ¢24.87 billion, about 5.7% of Gross Domestic Product compared with a programmed target of ¢26.86 billion (6.2% of GDP).

This was, however, higher than the payments of ¢23.555 billion (6.1% of GDP) in the corresponding period of 2020 by 5.6%.

Instructively, compensation of employees, goods and services and interest payments were the main drivers of expenditure, as they constituted about 71% of total payments made in the period under review.

Grants to Other Government Units

Grants to other government units totalled ¢2.974 billion and recorded a negative deviation of 24.8%.

Out of that payments of ¢170 billion to the National Health Fund, ¢99.0 million went to the District Assembly Common Fund and ¢185.1 million to the Road Fund. They were below their respective programmed targets.

Internally Generated Funds retained by MDAs amounted to ¢762.3 million, also indicating a negative deviation of 27.8%.

Other Expenditures

Other Earmarked Funds totalled ¢766.5 million, while ESLA transfers amounted to ¢553.8 million with COVID-19 related expenditures totalling ¢527.4 million.

The other earmarked funds and ESLA transfers fell short of the budgetary targets by 21.8% and 24.8%, respectively. Similarly, Covid-19 related expenditures also fell short of the target of ¢1.752 billion by 69.9%.

Capital Expenditure

Government acquisition of non-financial assets during the second quarter of 2021 was ¢3.067 billion, above its budgetary target of ¢2.221 billion by 38.1%.

Total domestic financed capital expenditure for the period was however ¢738.8 million, representing 24.1% of total capital expenditure, while foreign-financed capital expenditure was ¢2.328 billion and constituted 75.9% of the total outlay.