Government expenditure driven by compensation, interest payments – the two largest expenditure items of government – has outpaced tax revenues by some 200 percentage points.
This is according to Public Financial Management Consultancy firm, PFM Tax Africa Network headed by former Minister for Finance, Seth Terkper.
Speaking to journalists in a virtual press briefing on Friday, July 16, 2021, Executive Director of PFM Tax Africa Network, Seth Terkper, averred government expenditure grew to 216.9 percent of tax revenues, an increase of some 58.3 percent from the 2019 figure of 158.6 percent of tax revenues.
Also, for the first quarter of 2021, expenditure as a ratio of tax revenues stood at 225 percent.
Government expenditure for 2019, 2020 and Q1 2021 amounted to Ghs 67.8 billion, Ghs 96.4 billion and Ghs 23.4 billion respectively.
Mobilised tax revenues for 2019, 2020 and Q1 2021 on the other hand amounted to Ghs 42.7 billion, Ghs 44.4 billion and Ghs 10.4 billion.
As against total revenue, government expenditure exceeds revenues by 180 percent rising steadily from 125 percent in 2019.
“Expenditure to total revenue has risen steadily from 125 percent (2019 actual) to about 180 percent in the Revised 2020 Budget. The increase shows in the provisional actual outturn for 2019 (127 percent) to 2020 (175 percent) and, alarmingly, overshoots to 183 percent in the Q1-2021 numbers,” said Mr Terkper.
Speaking further at the press briefing, erstwhile Minister for Finance noted that government expenditure will continue to rise with pressure from interest and compensation on the back of the recent negotiation of the minimum and basic salaries leading to an increase in arrears as well as from more borrowing in the second and, likely, other quarters of the year to finance a widening deficit.
To remedy the ballooning expenditure of government, the former Finance Minister averred government must double its intake of revenue to reach an ideal balanced budget goal.
