Business & Markets

Fiscal deficit target revised to 6.3% of GDP

The government has revised the 2017 fiscal deficit target to 6.3 per cent of gross domestic product (GDP) down from the 6.5 per cent announced in the budget.

It has, however, maintained the growth target at 6.3 per cent of GDP, in spite of a downward reduction in nominal GDP.

The revision in the deficit is the outcome of sluggish revenue inflows from the non-oil sector in the first half of the year.

In line with the reduction, total public expenditures for the year have been revised downwards by 1.1 per cent of GDP to GH¢55 billion.

Revenues have also seen a 0.9 per cent of GDP to GH¢43.1 billion.

The Finance Minister, Mr Ken Ofori-Atta, announced the new targets when he appeared before Parliament to present the mid-year budget review.

The presentation is in line with the Public Financial Management Act, (2015), Act 921, which requires the Finance Minister to, “not later than July 31 of each financial year, prepare and submit to Parliament a mid-year fiscal policy review.”

In the area of expenditure cuts, the minister said goods and services, capital investment and transfers to earmarked funds, among others, will be affected.

That of social welfare projects such as the Planting for Food and Jobs, Free SHS, LEAP, and NHIS will not be affected.

On the revenue side, the Minister said the government had realised that weak inflow of tax revenue will make it difficult to attain the 2017 budget target of GH¢44.5 billion.

As a result, he said revenue had been revised downward by GH¢1.5 billion, equivalent to 0.5 per cent of GDP, in line with weak inflow from the non-oil sector.

The revisions validate earlier concerns by some policy think-tanks and analysts that the deficit and growth targets were over ambitious, given that the economy performed poorly in the past three years.

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