2023 Budget: Gov’t makes GHS 32bn interest payments; expends GHS 109bn; mobilises GHS 65bn at end-Q3 2022
Government, for the first three quarters of 2022, has expended some GHS 109bn in total expenditure.
The GHS 109bn total expenditure (including arrears) represents 18.5% of Gross Domestic Product (GDP) and above the target of GHS 103.9bn (17.6%) of GDP.
Reading the 2023 Budget Statement in Parliament on Thursday, November 24, Minister for Finance, Ken Ofori-Atta noted compensation of employees amounted to GHS 27,146 million (4.6 percent of GDP), 2.9 percent below the budgetary provision of GHS 27,947 million (4.7 percent of GDP).
The wage bill constituted 91.3 percent of the total Compensation and amounted to GHS 24,734 million. Interest payments for the period amounted to GHS 32,101 million (5.4 percent of GDP), against the target of GHS 30,890 million (5.2 percent of GDP) reflecting the higher cost of borrowing and the adverse impact of the currency depreciation on external interest.
Domestic interest payments constituted 78 percent of total Interest Payments for the period.
Fiscal operations by government for the period, the Minister stated, resulted in an overall budget deficit of GHS 44,022 million (7.4% of GDP), against a target of GHS 36,684 million (6.2% of GDP). The corresponding primary balance for the period was a deficit of GHS 11,921 million (2.0% of GDP), against a deficit target of GHS 5,794 (1.0% of GDP).
Fiscal deficit for the period, the Finance Minister added, was financed mainly from domestic sources amounting to GHS 37,491 million (6.3% of GDP), accounting for 85.2 percent of the total financing. Foreign financing for the period amounted to GH¢6,531 million (1.1% of GDP) and accounted for the remaining 14.8 percent of the financing.
Regarding total revenue and grants mobilised within the three quarters, Mr Ofori-Atta averred total revenue and grants amounted to GHS 65,399 million (11.0 percent of GDP), compared with a target of GHS 67,307 (11.4 percent of GDP) and the GHS 49,108 million (10.7 percent of GDP) recorded in the corresponding period in 2021.
The outturn for total revenue and grants represents a shortfall of 2.8 percent compared to the period’s target and year-on-year growth of 33.2 percent. The shortfall in revenue stemmed from the less robust performance recorded in all the revenue
handles for the period.
“Mr. Speaker, Domestic Revenue for the period amounted to GHS 64,601 million (10.9 percent of GDP), falling below the target of GH¢66,503 million (11.2 percent of GDP) by 2.9 percent. The outturn, however, represents a year-on-year growth of 34.0 percent and constituted 98.8 percent of total revenue and grants,” the Minister quipped.
Meanwhile, the country’s total debt stock as at end September 2022 stood at GHS 467,371.31 million (US$48,871.34 million), representing approximately 75.9 percent of GDP.
The domestic debt component is GHS 195,657.60 million, which is 31.79 percent of GDP, whilst external debt is GHS 271,713.71 million, representing 44.15 percent of GDP. The increase in the domestic debt is largely on account of rising interest costs.
Domestic debt as a share of total public debt reduced from 51.6 percent in 2021 to 41.9 percent as at end September 2022.
External debt as a percentage of the total debt stock is 58.1 percent as at end September 2022. The sharp growth in the external debt stock is largely driven by the depreciation of the local currency. The depreciation of the Ghana cedi added GHS 93,855.15 million to the external debt stock.
“Overall, debt accumulation increased from 20.7 percent in 2021 to 32.7 percent as at end September 2022, reflecting the impact of the depreciation of the Ghana cedi on the external debt side,” the Minister added.
