Finance Minister Ken Ofori-Atta said on Thursday that the government is on course to lower the budget deficit to 9.5 percent of GDP despite undershooting its revenue target in the first half of the year.
At GH¢28.3bn, the government’s total revenue collected from January to June fell short of its goal by GH¢4.1bn, equivalent to about 1 percent of GDP. It responded by keeping expenditure below the limit set for the period, with actual spending coming in GH¢4.5bn lower than projected, at GH¢50.6bn, equivalent to 11.7 percent of GDP.
This kept the budget deficit for the first six months of the year on target, at GH¢22.7bn or 5.2 percent of GDP.
Insisting during his mid-year budget review speech that the government will stay the course of fiscal consolidation despite the underperforming revenues, the Finance Minister told Parliament: “This Mid-Year Fiscal Policy Review that I am presenting does not come with a supplementary budget, and our revised fiscal framework for 2021 is kept within the fiscal target of 9.5 percent of GDP.”
Fiscal consolidation became imperative after the budget deficit soared to 11.7 percent of GDP last year, reflecting the acute financial effects of the coronavirus crisis, and the public debt rose sharply to 76.1 percent of GDP.
“We will continue to pursue our fiscal consolidation agenda to ensure that we remain within the appropriation given by this House,” Mr. Ofori-Atta said.
“We remain fully committed to achieving the fiscal deficit target for the year in order not to derail from the objective of returning to the Fiscal Responsibility Act (FRA) threshold of 5 percent of GDP for the fiscal deficit and a positive primary balance by 2024.”
In his speech, Mr. Ofori-Atta also announced a “One Million Jobs Initiative” to expand youth employment through initiatives including a “Youth banc” that will provide financing to youth-led start-up businesses.
“We are also feverishly working on a scheme that enables the private sector to train new recruits or entrants at a subsidised rate by government,” he added.
He also promised more investments in road infrastructure, with his budget documents showing extra capital spending of GH¢1.5bn was made in the first half of the year, on top of the amount projected for the period of GH¢5.4bn.