Government has said it expects the economy to grow by 7.6 percent next year, increasing from its target of 6.8 percent (or 5.6% using the rebased GDP figures) for this year.
Finance Minister Ken Ofori Atta presenting the 2019 national budget to Parliament on Thursday November 15, noted that the 2019 fiscal year also targets single-digit inflation of 8.0 percent by the end of the year.
A fiscal deficit of 4.2 percent of GDP has been targeted, along with a primary surplus target of 1.2 percent of GDP and Gross International Reserves to cover not less than 3.5 months of imports.
These targets, if achieved, would represent considerable progress over the projected out turn for 2018, based on the situation as at end of September, with three months left to run until the end of the year. Real GDP growth has been projected at 5.4%, down from the 8.5% (but lowered to 8.1% by the subsequent rebasing) achieved in 2017.
The fiscal deficit target for 2018, of 4.5% of GDP ( or 3.7% after rebasing) is still attainable but as at September, the deficit had reached 3.0%, ahead of the 2.6% target for the first nine months of the year.
Similarly, this year’s primary balance surplus is now expected to be just 0.5% of GDP, little more than half of the 0.9% originally targeted. Non-oil real GDP grew by 4.6 percent compared to the 2018 target of 5.8 percent; end-period inflation rate declined from 11.8 percent at the end of 2017 to 9.8 percent at the end of September 2018, and further to 9.5 percent as of October 2018.
Meanwhile, total expenditure for 2019, has been targeted at GHc73.4 billion, representing 27 percent growth over the projected out turn for 2018. Like in previous years, significantly higher revenue expectations are being predicated on improved tax administration and compliance although instructively, a revenue shortfall of 9.5% for 2018 is now being projected, a shortfall almost identical to that suffered in 2017.
Expenditure on Wages and Salaries is calculated at GHc9.4 billion representing about 26.5 percent of total expenditure.
The wage bill is however anticipated to reduce to 5.6 percent of GDP from the 5.9 percent, due primarily to a bigger GDP to be used in the computations.
Expenditure on goods and services is projected at GHS 6.3 billion, representing 1.8 percent of GDP. This is 38.8% above the projected out turn for 2018 and the Finance Minister explained to Parliament yesterday, that this is to fully provide for spending on government’s flagship projects such as free SHS and the one district, one factory initiative.
A total amount of GHc18.6 billion has been estimated for interest payments of public debt. Out of that, domestic interest payments will amount to GHS14.5 billion, or 77.8% of total interest payments.
Transfers to Statutory Funds as well as all other earmarked funds, are projected at GHc13.8 billion, equivalent to 4.0 percent of GDP, compared to 3.5 percent in 2018.
Capital Expenditure after two consecutive years of being largely eliminated from government’s actual spending because of spending cuts to match revenue shortfalls, is expected at GHc8.5 billion, equivalent to 2.5 percent of GDP and a growth of 55.7 percent over the 2018 projected turnout.
Of this amount, domestically financed Capital Expenditure is estimated at GHS3.2 billion or 0.9 percent of GDP. An amount of GHS5.3 billion has also been budgeted for Foreign Financed Capital Expenditure and it will be funded by a combination of grants and loans.
By Toma Imirhe & Wisdom Jonny-Nuekpe