Government has scaled down the projected 2021 Fiscal Deficit from 9.6% of Gross Domestic Product (GDP) as reported in the Mid-Year Review Budget to 8.3% of GDP.
This reflects improved revenues from the anticipated pick-up of economic activities and a more rationalized public expenditure programme.
According to Finance Minister, Ken Ofori-Atta, it expects the country to return to the fiscal responsibility threshold of 5.0% of GDP and a positive primary balance earlier than the 2024 fiscal year previously announced.
The government exceeded their respective targets for both revenue and expenditure in the first nine months of the year resulting in the fiscal deficit of 9.0% of Gross Domestic Product, Mr. Ofori-Atta emphasised. This is against a programmed deficit of 8.9% of GDP.
Total revenues and grants for the period which totalled GH$36.7billion exceeded the target of GHS35.7 billion by GHS972.7million or 2.7%.
Total expenditures, including arrears clearance, on the other hand, amounted to GHS71.3 billion against a target of GHS70.0 billion, showing a deviation of GHS1.3 billion or 1.8% from target.
The overall fiscal deficit resulting from the revenues and expenditure performance for the period through September 2020 was GHS34.6 billion or 9.0% of GDP against a target GHS34.3 billion or 8.9% of GDP.
The corresponding primary balance was also a deficit of GHS15.7 billion or 4.1% of GDP against the target of GHS15.4 billion or 4% of GDP.
“This means that we can now approach the next financial year with increased optimism, largely because we already have a plan, and may I say, a track-record”, Mr. Ofori-Atta said.
Furthermore, he said “we expect growth to rebound strongly in 2021 at 5.7% as a result of our implementation of the Transformation and Revitalization phase of the Ghana CARES (Obaatanpa) Programme.
“I want to assure this House that we will recover, we will revitalize, and we will transform the economy. We shall pivot off the AFCFTA headquarters in Accra for Ghana to become a dynamic regional hub. We have planted the seeds for a fast-paced and more inclusive recovery”.
Fitch, World Bank, IMF forecast higher fiscal deficit
International ratings agency, Fitch is forecasting a fiscal deficit to Gross Domestic Product of 10.5% for Ghana in 2020.
This will be more than twice the 2019 commitment basis deficit of 4.7 percent.
The World Bank and the IMF are also forecasting fiscal deficit to GDP of about 12% and 16.4%.
Their arguments are that revenue mobilization will be slow during the period.