Ghana realizes GH¢5.8b revenue, spends GH¢6.9b as budget deficit narrows in first seven months 2011

The government of Ghana for the first seven months (January – July) of 2011 realised an amount of GH¢5.8 billion in revenue and grants compared to a target of GH¢5.7 billion, according to provisional data from the Bank of Ghana (BoG) September 1, 2011.

The data provided shows that taxes on international trade comprising import duty, import Valued Added Tax (VAT), petroleum taxes and import National Health Insurance Levy (NHIL) totaled GH¢1.9 billion, exceeding the target by 7.7%.

However income and property taxes amounted to GH¢1.9 billion, falling short of the expected target by 12.4%, says the BoG.

“Indirect domestic taxes, made up of domestic VAT, excise duty, Communication Service Tax (CST) and NHIL, amounted to GH¢679.2 million, 5.9% below its target. Non-Tax Revenue amounted to GH¢458.8 million, representing 69.6% of budgeted target,” the central bank said.

On grants, the BoG indicated that the country realised an amount of GH¢260.4 million, representing 75.8% of the budgeted target with other receipts amounting to GH¢556.5 million.

According to the Bank, even though the total revenue target for the January – July period was achieved, “the pace of growth in expenditures was higher than programmed.”

“Total expenditure (excluding foreign financed capital expenditure) amounted to GH¢6.9 billion for the first seven months of 2011. Wages and salaries and related expenditures amounted to GH¢2.6 billion, absorbing 46.5 per cent of domestic revenues,” the governor, Mr Kwesi Amissah-Arthur told reporters at the Bank’s head office in Accra.

Mr Amissah-Arthur noted that the overall fiscal operations resulted in a narrow budget deficit of GH¢1.12 billion, compared to a target deficit of GH¢849.8 million. “This was financed by net domestic borrowing of GH¢1.04 billion and net foreign inflows of GH¢84.3 million…The net domestic financing represented 92.7 per cent of budgeted target for the period,” he said.

Balance of trade data deficit of $1.3 billion in the first seven months of 2010 reduced to a provisional deficit of $1.1 billion for the corresponding period in 2011.

The country’s total public debt amounted to GH¢21.6 billion as at the end of July 2011 equivalent to 40.5% of GDP.

In a related development, a survey conducted by the BoG on credit conditions in July 2011 indicates the continued easing of banks’ credit stance for both enterprises and households.

The survey showed that net overall demand for credit by enterprises declined, but enterprise demand for long-term loans increased.

“The stance on credit for mortgages and consumer lending by commercial banks eased, underscored by commercial banks’ favourable expectations of general economic activity.”

The BoG said commercial bank lending rates declined in the period under review with the average base rate of banks falling by 2.21% to 23.58%. Average lending rates were lower by 68 basis points to 26.95%.

Private inward transfers through the banks from January to July 2011 amounted to $9.97 billion, out of which $1.13 billion were accrued to individuals, according to the central bank representing an annual growth of 53.4% over the $6.5 billion transferred during the corresponding period in 2010.

By Ekow Quandzie