Finance minister Seth Terpker is asking Parliament to approve GHC1.8 billion to support the budget after huge revenue shortfall.
The minister is presenting the six-months of the economy’s performance in 2016 to parliament.
He says several global developments did not change the course of government’s direction.
The minister in recounting what government has achieved economically said homegrown policies, now part of IMF was to reduce high budget deficit and stabilize the rise of post-HIPC public debts. Government is on the path to achieving these goals.
GDP grew by 3.8 percent by 2015 better than projected 3.5%. The economy, he said is growing at 4.9 percent by the first quarter of 2016 compared to 4.5% in 2015.
Also, GDP expected to end in 2016 at 4.5% or better. HIPC reduced public debt from over 100% to about 26% and gave considerable room to borrow.
Debt to GDP ratio falling from 72% to 63% by the end of May 2016. Certainly this is not the trajectory that will take the nation back to HIPC as some have suggested, the minister said.
Mr Terkper indicated that the currency is fairly stable and private sector confidence is bouncing back.
Fiscal Stabilization levy have been removed because of the positive developments in the economy.
Price of crude oil at an all time low ($28 per barrel in January) compared to $53.06 per barrrel used for the budget affected it. The current $45 to $48, according to the minister, is still below oil price projection used in the 2016 budget.
Defects in FPSO affected Ghana’s production of oil and revenue it gains from the sale.
Government is therefore compelled to come to parliament to review budget. Despite the set backs, a new FPSO is ready.
Agriculture grew by 2.8% in 2015 while the Services sector grew by 2.7%. These indicate an improvement of 1.7% and 1.5% respectively in 2015.
Monetary policy rate remained at 26% against mixed trend in money market.
Between January to April 2016, the cedi recovered against the dollar. It however experienced a cumulative depreciation of 2.8% agianst the Euro and appreciated by 1.7% against the pounds sterling.
Ghana had three months import cover as at the end of the first quarter. Tax revenue GHC10 billion, that is GHC1 billion short of the targeted GHC11 billion. The shortfall according to the minister was due to a decline in commodity prices notably crude oil. Government had only one crude oil lifting in 2016.
From the 1.9 million barrels lifted, government received $66.23 million instead of the budgeted $484 million.
Government is living within its means and borrowing less from the capital market, the minister said.
He said financing of the deficit not in jeopardy as some media outlets have reported. For the first time in Ghana’s history, deficit financing is not benefitting from any monies from the Central Bank.
Fast pacing of debt accumulation has started slowing down from 72% of GDP in 2015 to 63% as at May 2016.
He said government has for the first time in post-HIPC era slowed the rate of accumulation as measured by debt to GDP ratio.
We have achieved this feat against the background of enormous pressures, he said.
Government will be managing public debts through escrow and self financing programmes which as seen with the Ports and Harbours Authority, Ghana Airport Company and Metro Mass. This programme will enable these companies to take loans on their own for the first time in many years.
Government will also extend the tenure of loans and use sinking fund to pay off loans and interest.
For the financial sector, the minister said a board has been approved for the Ghana Exports Import Bank created by Parliament’s passing of Act 911 in 2016. The bank will promote diversified export led economy.
The Ghana EXIM bank follows India, Turkey, US, China examples to improve exports.
Mr Terkper said government has issued four medium term bonds since November 2015, which have all been over-subscribed. Government is targeting pension funds, mutual funds to finance long-term projects instead of using short-termish treasury Bills.
Ghana Fixed Income Market is to provide an efficient secondary market for fixed income and similar securities.
Ghana Deposit Insurance Scheme seeks to protect small depositors from losses as experiences by some Fun Clubs and microfinance institutions.
To curb the incidences in the micro-finance sector, a non-bank Financial Institutions programme to help set up an apex institution to check Microfinance operations just as there is an Apex Bank for rural banks.
Unclaimed funds like balances from dormant accounts, dividend, bond interests, pensions entitlements are to be transferred to government and managed effectively by government until their owners or next-of-kin are identified.
Sinking Fund is to periodically pay of mounting debts rather than wait for them to be re-financed. As at April 2016, $100 million has accumulated.
Government he said, has used the $30 million of the 2007 Sovereign Bond.
As at June 2016, $257.3 of the 2015 Eurobonds was used to re-purchase short term domestic debts as part of a plan to restructure domestic debts.
Old tax laws have been harmonized into a single tax law. The National Single Window for instance is entering Phase Two to involve other institutions tapping into the Window.
Review of Exemptions
There are tax exemptions equaling about 2% of GDP. But this according to the minister is being abused. A committee has been set to review and streamline it.
Mr Terkper said government has adopted electronic module to manage the payroll and cash management system. GIFMISS is allowing a move from paperwork.
Government is introducing E-travel and E-fuel cards to minimise the use of cash by government officials during their travels.
Payrolls are being electronically validated which has led to a reduction in ghost names.
Government is aligning statutory funds with National budget and weaning of state agencies like DVLA, EPA, Energy Commission, Data Processing Commission.
HEALTH SECTOR (Infrastructure development)
He listed government’s most far reaching investment in the health sector.
617 bed Univer Ghana teaching hos 95%
500 miliary hospital in Kumasi is
420 Ridge Hospital is abot 90% complete.
Second phase of the Tamale Teaching Hosptial 20% complete
The upgrade of the Upper East regional Hospital into 380 bed is 80% complete.
Dodowa Hospital has been compelted
Fomena and Kumawu hospital are less than 50% complete.
Construction of eight more district hospitals in some parts of the country is underway. He mentioned Kumasi, Salaga, Atomic Junction and Konogo.
10,642 CHIPPs compounds have been completed.
The hospitals are expected to the self-sustaining and are not to rely on government budget.
In the education sector, Mr Terkper indicated that 133 Day SHS are being constructed across the country. President Mahama has commissioned nine on his Accounting to the Peoples’ Tour.