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The government has reduced the projected fiscal deficit for 2021 from 9.6% of gross domestic product (GDP), as reported in the mid-year review, to 8.3% of GDP.
This reflects improved revenue from the anticipated rebound in economic activities and a more streamlined public spending program.
According to Finance Minister Ken Ofori-Atta, the country is expected to return to the fiscal responsibility threshold of 5.0% of the GDP fiscal deficit and a positive primary balance before the previously announced fiscal year 2024.
The government exceeded its respective goals for both income and expenditures in the first nine months of the year, which resulted in a fiscal deficit of 9.0% of Gross Domestic Product, emphasized Mr. Ofori-Atta. This against a programmed deficit of 8.9% of GDP.
Total revenue and grants for the period totaled GH $ 36.7 billion exceeded the target of GHS35.7 billion at GHS972.7 million or 2.7%.
Total expenses, including arrears settlement, on the other hand, amounted to GHS 71.3 billion against a target of GHS 70 billion, showing a GHS 1.3 billion deviation or 1.8% from the target.
The overall fiscal deficit resulting from revenue and expenditure performance for the period through September 2020 was GH 34.6 billion or 9.0% of GDP against a target of GHS 34.3 billion or 8.9% of GDP.
The corresponding primary balance was also a deficit of GHS 15.7 billion or 4.1% of GDP against the target of GHS 15.4 billion or 4% of GDP.
“This means that we can now approach the next financial year with greater optimism, largely because we already have a plan, and I can tell, a track record,” said Mr. Ofori-Atta.
In addition, he said that “we expect growth to recover strongly in 2021 to 5.7% as a result of our implementation of the Transformation and Revitalization phase of the Ghana CARES Program (Obaatanpa).
“I want to assure this House that we will recover, revitalize and transform the economy. We will leave AFCFTA headquarters in Accra for Ghana to become a dynamic regional hub. We have sown the seeds for an accelerated and more inclusive recovery. “
Fitch, World Bank, and IMF forecast higher fiscal deficit
The international rating agency, Fitch, forecasts a fiscal deficit of Gross Domestic Product of 10.5% for Ghana in 2020.
This will be more than double the 2019 pledge base deficit of 4.7 percent.
The World Bank and IMF also forecast a fiscal deficit relative to GDP of around 12% and 16.4%, respectively.
Their arguments are that revenue mobilization will be slow over the period to balance spending.
