Ghana reports lower-than-expected H1 budget gap, but warns full-year target endangered by oil prices

By bne IntelliNews September 4, 2015

Ghana’s budget performed better than expected in the first half of the year, with the cash fiscal deficit reaching 2.3% of GDP, compared to a target of 3.4% and a shortfall of 4.3% of GDP in H1 2014, Finance Minister Seth Terkper told a news conference in Accra on September 3. However, he warned that the recent steep drop in global oil prices could have negative implications for the full-year budget outcome, his statement, published by Joy News, shows.

In July, the government revised down its oil benchmark to $57 per barrel, but the recent plunge in crude prices will translate in lower than projected revenue. In addition to oil, Ghana is a major producer of gold and cocoa, which have also suffered price declines. This, coupled with lingering energy sector problems and depreciation of the local cedi currency have contributed to elevated inflationary pressures and a significant slowdown in economic growth.

The minister announced that total revenue and grants reached 11.2% of GDP in H1, according to preliminary data, above a target of 10.6%. In nominal terms, the outturn was 5.4% higher than target and 32.9% higher y/y, mainly due to a strong growth in domestic revenue. Tax revenue rose 32.1% y/y to GHS11.4bn ($3.1bn) in H1, exceeding target by 8.4%.

Total expenditure, including payments for the clearance of arrears, increased 14.1% y/y to GHS18.07bn, equal to 13.5% of GDP. It was by 3.9% below the target, which was equal to 14% of GDP.

“The Ministry of Finance is taking necessary steps to control spending to ensure that the continuous fall in the crude oil prices does not derail the achievement of our fiscal deficit target for the year as well as our medium term fiscal consolidation objectives,” Terkper said.

Ghana aims to cut its budget gap to 7.3% of GDP this year from 10.2% in 2014

Earlier this week, the IMF urged Ghana’s government to firmly continue with its fiscal consolidation efforts to fully restore macroeconomic stability and mitigate financing risk, pointing at continued strict control of the wage bill and adherence to the domestic arrears clearance plan, as well as avoidance of fiscal overruns in connection with next year’s election simultaneously with implementing structural reforms to strengthen expenditure control. Further enhancing revenue performance will also be key for continued fiscal consolidation, the fund said.

Related Articles

Almaty cost of living lowest among major cities

Kazakhstan’s largest city and business centre Almaty has dropped to last place on the Economist Intelligence Unit’s bi-annual ranking of the ... more

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

IMF slashes South Africa’s 2016 growth outlook to 0.7%

The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss