Ghana likely to overshoot budget spending in 2014 – Fitch

Fitch Ratings is not convinced about Ghana’s plans to cut down deficit as it sees the government likely to make budget overruns in 2014.

The credit ratings agency today November 25, 2013, said the Ghana’s 2014 budget which was presented last week November 19, 2013 aims for a very limited fiscal correction following slower-than-anticipated consolidation this year.

“We do not think it will effectively address the deterioration in government finances over the past two years that has substantially eroded Ghana’s creditworthiness,” Fitch said in a statement copied to ghanabusinessnews.com.

The Ghana government is targeting a deficit of 8.5% of GDP in the 2014, following an upward revision of the 2013 deficit to 10.2% against a target of 9% at the time of the previous budget.

According to the budget, Ghana plans to spend $15.5 billion in 2014.

The budget also pushes back a year (until 2016) the target deficit of 6% of GDP.

But Fitch maintained that “…the pace of fiscal consolidation over the next two years will be slower than the government projects”. The ratings agency forecasted a deficit slightly above 9% for 2014.

According to Fitch, there are still persistent shortfalls in revenue collections over the past two years.

The Ghanaian authorities expect revenue to be 7.7% below target in 2013.

By Ekow Quandzie