The amount, which would be disbursed from the Energy Sector Levy Fund, would be used to fund government’s projects and programmes outlined in the 2016 budget.
The Minister of Finance, Seth Terkper, explained that the request had become necessary due to some revisions made to the 2016 budget.
“Mr. Speaker, since the approval of the 2016 Budget Statement and Economic Policy in December 2015, there has been a number of developments on the global and domestic economic environment. As noted earlier, these have affected some of the assumptions underpinning the 2016 Budget,” he said when he delivered the supplementary budget to the House yesterday.
The minister said there has been a revision to the Benchmark Revenue and its associated expenditures outlined in the 2016 Budget to enable the government to achieve the macro-economic objectives set in the budget in line with the government’s policy of prudent budget and fiscal management.
He said based on the prevailing market conditions and projections in the International Monetary Fund (IMF) World Economic Outlook, the Finance Ministry had adopted an average crude oil price of US$45.35 per barrel for 2016.
Of the revised estimates for total petroleum receipts, he said GH¢524.5 million (0.3 percent of GDP) would be transferred to the National Oil Company, GH¢262.9 million (0.2 percent of GDP) to the Ghana Petroleum Funds and GH¢613.5 million (0.4 percent of GDP), as ABFA for specific projects and programmes in the Budget.
He noted the amount estimated for ABFA was about 39.2 per cent lower than the GH¢1.0 billion estimated in the 2016 Budget.
“Mr. Speaker, as a result of the revisions made to the Benchmark oil revenue and the fiscal performance for the first five months of the year, the 2016 revenue and expenditure estimates have been revised to reflect these developments,” he said
Touching on the revisions to total revenue and grants, the finance minister indicated that based on the crude oil price assumption of US$45.35 per barrel and revised oil output of 34.7 million barrels, total petroleum receipts for 2016 was now estimated at GH¢1.4 billion (0.8 percent of GDP), compared with the 2016 Budget estimate of GH¢2.0 billion (1.3 percent of GDP).
The difference of GH¢600.0 million, according to him, was about 32 per cent lower than the 2016 Budget target.
“Based on tax revenue performance in 2015 and the first five months of 2016, non-oil tax revenue is estimated to be lower than what the 2016 Budget projected. It is worth noting that estimates for some tax types such as Value Added Taxes and International Trade Taxes were revised upwards”.
“Mr. Speaker, you may recall that in December 2015, this august House passed the Energy Sector Levies Act, 2015 (ACT 899). Hence, the revenues from the levies and corresponding expenditures were not in the 2016 Budget estimates. To ensure transparency and accountability for the proceeds from the levies, the associated projected revenues that traditionally go through the Consolidated Fund and spending, have been included in the revised fiscal framework,” he said.
Mr. Terkper pointed out that in 2016, total revenue to be generated from the Road Fund Levy, Energy Fund Levy, the Price Stabilisation and Recovery Levy, Public Lighting Levy and National Electrification Levy as a result of the implementation of the Energy Sector Levies Act (ESLA) was estimated at GH¢1,092.7 million.
As a result of the revisions of those receipts, he said total revenue and grants for the 2016 fiscal year had been revised downwards by GH¢148.7 million, from GH¢38,038.1 million (24.0 per cent of GDP) to GH¢37,889.3 million (22.7 per cent of GDP).
Touching on revisions to expenditures, he said total expenditure and arrears clearance had been revised downwards, from GH¢46,445.7 million (29.3 per cent of GDP) to GH¢46,297.0 million (27.8 per cent of GDP) mainly on account of lower spending from oil revenues.
“Mr. Speaker, as a result of the downward revision made to oil revenue estimates and in line with Section 4 of the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), the Annual Budget Funding Amount (ABFA) estimates in the 2016 Budget have been revised downwards”.
“Consequently, Goods and Services have been revised downwards by GH¢409.9 million from GH¢2,536.8 million to GH¢2,126.9 million. Likewise domestic-financed capital expenditure has also been revised downwards by GH¢177.7million from GH¢1,783.2 million to GH¢1,605.5 million,” he said.
The finance minister noted that due to the lower estimated revenue from oil and in accordance with the Petroleum Revenue Management Act (Act 815), transfers to GNPC from the oil revenue had been revised downwards from GH¢567.0 million to GH¢524.5 million.
Foreign-financed capital expenditure, he said, had also been revised downwards from GH¢4,893.7 million to GH¢4,787.5 million on account of a change in the exchange rate assumption for the Budget.
On the other hand, Mr. Terkper said transfers to the Ghana Education Trust Fund (GETFund) had been revised upwards by GH¢60.6 million to GH¢1,082.1 million on account of higher estimates for VAT revenue collection.
“Transfers to the Road Fund is estimated to increase by GH¢784.3 million, from GH¢277.5 million to GH¢1,061.8 million on account of the increase in the Road Fund Levy as indicated in the ESLA (Act 899)”.
Mr. Terkper said on the basis of the revised revenue and estimates, the revised 2016 budget would result in an overall budget deficit of GH¢8,407.7 million (5.0 percent of GDP) same as the deficit of GH¢8,407.7 million (5.3 per cent of GDP) in the original 2016 Budget.
”This will ensure that the pace of public debt accumulation remains as envisaged in the 2016 Budget and in line with our debt sustainability objectives.The revised budget deficit will be financed from foreign and domestic sources” he said.
He said the foreign financing of the deficit was estimated at GH¢2,237.0 million, 34.2 percent lower than the amount of net foreign financing projected in the 2016 Budget and added that the lower net foreign financing was mainly on account of government’s plan to buy back the Ghana 2017 Bond in 2016 to avert the possible refinancing risk in 2017.
“It is, however, important to note that the country expects to receive additional programme loan of US$75 million from the World Bank and increased financing of about US$208 million from the IMF for Budget Support”.
“Net domestic financing of the 2016 fiscal deficit is now estimated at GH¢6,406.3 million, 17.7 per cent higher than the projected amount of GH¢5,441.2 million in the 2016 Budget”.
“Mr. Speaker, the revisions to the fiscal framework will result in a requirement of an appropriation of GH¢51,998,055,121 against an amount of GH¢50,109,851,734 appropriated in the 2016 Budget,” he said.
By Yaw Kyei