Present fiscal challenge a major threat to economic stability – Seth Terkper
Former Minister for Finance, Seth Terkper, has said that government should urgently prioritize fiscal consolidation narrowing the gap between revenue and expenditure or undertake fiscal realignment to bring the economy back to the path of recovery, describing the country’s present fiscal challenge as a threat to economic stability
The call by the erstwhile Minister was made in a post-budget forum organized by tax consultancy firm, PFM Tax Africa.
Speaking further in the forum Mr Terkper noted that government must cease borrowing to finance recurring expenditure or consumption but rather focus on aggressive revenue mobilization as well as address wastage in the system.
Ghana’s high fiscal deficit and public debt have become a subject of concern for multilateral institutions such as the IMF.
With the country’s high public debt, credit rating agencies such as Fitch, have called for the country to go for an IMF programme to help restore investors confidence in the country’s ability to service its debts and effectively restore its market access.
Currently, the country’s public debt as a ratio of GDP stands at 77.6% with a projected fiscal deficit of 9.4% for end-2021.
Speaking on the floor of Parliament during the presentation of the 2022 budget, Mr Ofori-Atta noted that, preliminary data for the first nine months of the year indicate that, both revenue and expenditure were below their respective targets for the period.
However, the shortfall in revenue was higher than that of expenditure, resulting in a fiscal deficit of 7.7 percent of GDP against the target of 7.4 percent of GDP.
Total Revenue and Grants for the first three quarters of 2021 amounted to GH¢47,235 million (10.8% of GDP), against the revised target of GH¢51,314 million (11.7% of GDP) for the period. The end-September outturn, nonetheless, compares favourably with the GH¢37,445 million recorded in the same period in 2020.
Total Expenditures (including arrears clearance and discrepancy) for the period amounted to GH¢81,093 million (18.5% of GDP) against the target of GH¢83,890 million (19.1% of GDP). The end-September provisional outturn was 15.3 percent above the GH¢70,316 million recorded for the same period 2020.
Expenditure on Compensation of Employees amounted to GH¢23,394 million, 0.3 percent above the revised target of GH¢23,323 million and 14.4 percent above the outturn in the corresponding period 2020.
Interest Payment, was marginally above the target for the period by 0.9 percent, totalling GH¢25,394 million against a revised target of GH¢25,158 million. Of this amount, domestic interest payment amounted to GH¢20,576 million, 4.9 percent higher than the revised target, while external interest payment of GH¢4,818 million was below the programme for the period by 13.2 percent.
