Ghana government admits economy facing liquidity challenges

The economy of Ghana is still facing liquidity challenges, with both revenue receipts and expenditure falling below their targets, nine months into the year.

The only exception is compensation for workers, which has overshot its target by 2.2 per cent, the Minister of Finance and Economic Planning, Mr Seth Terkper, has said.

Taking his turn at the meet-the-press series in Accra yesterday, Mr Terkper said total revenue and grants for the period amounted to GH¢11.90 billion, as against a target of GH¢14.15 billion.

Although the figure was a shortfall of the target, he said it was 13 per cent higher than what was recorded for the same period last year.

He said although the economy was going through temporary liquidity challenges, mainly due to the more-than-budgeted-for expenditure on public sector wages, the challenges would be a thing of the past given the measures put in place to contain the challenges.

He, however, explained that the measures to resolve the temporary challenges were yielding modest results, with better prospects for the rest of the year, especially with the election petition now dealt with.

Bright future

“Although the performance of domestic revenue from the traditional sources has been weak, oil revenue performance for the period under review has been very strong as a result of higher-than-expected crude oil price, higher production levels and higher corporate income taxes from the sector,” Mr Terkper said.

Revenue accruing from the oil and gas sector between January and August this year amounted to GH¢1.15 billion, as against a target of GH¢788.1 million, the minister said.

The government, earlier this year, increased the prices of petroleum products, while it put a hold on new contracts until those in the pipeline had been dealt with.

Utility tariff increases took effect from October 1.

All these were done in an attempt to resolve cash flow challenges and also reduce fiscal deficits.

The 2013 budget had a target to reduce the budget deficit from last year’s 12 per cent of GDP to 9.0 per cent of GDP this year.

Tax revenues amounted to GH¢8.89 billion, 14.5 per cent lower than the target of GH¢10.39 billion, primarily due to the slow down in economic activities in the first half of the year.

The figure, however, was 13.1 per cent higher than what pertained in the same period last year.

Grants behind schedule

Grants disbursements from development partners (DPs) were sorely behind schedule by 44.7 per cent, almost the same as the 47 per cent under-disbursement the country recorded for the same period last year.

The minister was, however, hopeful that the GH¢204 million Eurobond proceeds earmarked for counterpart funding of DP-financed projects would help speed up the disbursements before the close of the year.

Meanwhile, the Ministry of Finance and Economic yesterday held a stakeholders’ meeting for multi-donor budgetary support members to review the process and make way for more disbursements.

On the expenditure side, the government’s spending of GH¢18.35 billion is 8.5 per cent lower than the target of GH¢20.05 billion.

Mr Terkper said wages and salaries were not only 17.1 per cent higher than what was budgeted for; a whopping GH¢674.8 million was spent on clearing salary arrears.

The minister explained that measures announced in the budget to reduce deficits and resolve the challenges were being implemented.

However, he said “risks remain for the rest of the year, including possible shortfalls in revenue due to economic slowdown and a fall in global commodity prices”.

Source: Daily Graphic