Gov’t reduces 2015 public expenditure by GH1.5 billion

Mr Seth Terkper,Finance Minister (1)Government has reduced its estimated public expenditure for the 2015 fiscal year by GH¢1.5 billion due to the continuous fall in crude oil prices on the international market, the Minister of Finance, Seth Terkper, has said.

The Minister said, the fall had forced the government to reduce its expenditure from GH¢41.2 billion (30 per cent of GDP), to GH¢39.7 billion (29.8 per cent of GDP).

Mr. Terkper announced this yesterday in Parliament when he delivered a statement on the implication of the fall in crude oil prices on the 2015 budget.

He said there would be a broad reduction in expenditure ceiling on goods and services and capital by GH¢344 million and GH¢868 million respectively, as well as a withdrawal from the Ghana Stabilisation Fund.

Also, he said a transfer to the Ghana National Petroleum Company (GNPC) from government’s carried and participating interest in oil, would be reduced to GH¢468.9 million.

“Based on these expected changes in total revenue and grants as well as total expenditure and arrears, the fiscal deficit for 2015 is estimated to be GH¢10 billion (7.5 per cent of GDP), up from the 20015 budget target of GH8.8 billion (6.5 per cent of GDP),” he said.

He said “It is expected that an amount of GH¢487.2 million would be drawn from the Ghana Stabilisation Fund on a quarterly basis to finance the gap”.

Mr. Terkper said domestic financing of the budget was estimated at GH¢6.4 billion, lower than the 2015 budget estimate and explained that the decision was aimed at freeing up more resources for the private sector and reduce government’s domestic interest cost burden.

He said foreign financing of the deficit was estimated at GH¢3 billion and indicated that GH¢1.7 billion would be raised through the issue of Eurobond in addition to an estimated US$500 million that was expected to be used to refinance the 2007 Eurobond.

“We will come to this august House to seek approval for the issuance of the said Eurobond, in line with the two-year market policy approved by the House in the 2014 budget,” he said.

Mr. Terkper, told the House that the continuous fall of crude oil prices on the international market, had posed serious challenges to the achievement of the government’s 2015 macro-economic objectives.

“The crude oil prices have been falling since July 2014 with significant declines recorded from October 2014 when the Petroleum Benchmark Revenue for the 2015 budget had already been estimated,” he said.

He said the estimated total petroleum receipts for the 2015 budget amounted to GH¢4.2 billion and added that of that amount, GH¢2.5 billion was allocated as Annual Budget Funding Amount (ABFA) to finance specific programmes and projects in the budget.

Based on the new revenue assumptions, he said total petroleum receipts for 2015 was estimated at GH¢1.5 billion (1.1 per cent of GDP), compared with the 2015 budget estimate of GH¢4.2 billion (3.1 per cent of GDP).

“The difference of GH¢2.7 billion is 64.4 per cent lower than the 2015 budget target. Of the projected total petroleum receipts, GH¢468.9 million will be transferred to the National Oil Company,” he said.

By Yaw Kyei

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