Govt’s revised target of 0.59% not possible-Expert
The Director of Strategy and Business Operations at Dalex Finance, Joe Jackson, says it will take a miracle for the government to achieve its new growth target of 0.59% following the review of its targets in the mid-year budget review presented last week.
During his presentation last week, Mr. Ken OforI-Atta said the economy has been hit with a double shock, namely, a health pandemic and a global economic recession which would result in a fiscal deficit of 11.4 percent of GDP, more than double the 5 percent stated in the Fiscal Responsibility Act, hence, his request for the supplementary budget of GH¢11.8 billion to cater to the gaping deficit.
Also, provisional fiscal data for the first half of the year show that revenue mobilisation fell short of, target by 26 percent, resulting mainly from shortfalls in oil revenue, customs receipts and non-oil tax revenues. Total revenue and grants for January to June 2020 amounted to GH¢22 billion compared with a programmed target of GH¢29.7 billion.
Non-oil tax revenue, comprising taxes on income and property, goods and services and international trade, amounted to GH¢16.7 billion or 4.3 percent of GDP, 16.2 percent below the programmed target of GH¢19.9 billion or 5.2 percent of GDP. Revenue from upstream oil and gas amounted to GH¢1.9 billion (0.5% of GDP), 55.4 percent lower than the programmed target of GH¢4.4 billion, mainly on account of lower volumes and significant drop in crude oil prices on the international market.
Aside from these figures, unbudgeted spending shot up total expenditure (including arrears clearance) for the first half of the year to GH¢46.3 billion or 12 percent of GDP compared with the programme target of GH¢41.5 billion or 10.8 percent of GDP. This, together with the US$3billion dollar Eurobond, has increased the public debt stock to GH¢255.5 billion, representing more than 66 percent of GDP.
As a result of the pandemic, Mr Ofori-Atta said the government would now have to spend more than it originally requested and collect less revenue than previously programmed.
Consequently, he said, the gap between revenues and expenditures, measured by fiscal deficit, would widen to GH¢44.1 billion.
Mr. Jackson responding to these figures opined that the reviewed target of 0.59% is an illusion and cannot be a reality.
He explained on Frontline on Rainbow Radio 87.5Fm that the pandemic has thrown the spending of government out of gear.
The impact of the outbreak he added will be truly felt from September this year hence Ghanaians should prepare for difficult days ahead.
The projection of the government to have the COVID-19 dealt within two years he said is a good projection but unrealistic.