The government projects to spend a total of GH¢205, 431 million to finance the 2023 budget and its development programmes.
The amount representing 25.6 per cent of the country’s Gross Domestic Product (GDP) would be spent on compensation for employees projected to cost GH¢44.990 million constituting 5.6 per cent of GDP.
The Minister of Finance, Mr Ken Ofori-Atta, who requested to Parliament in Accra yesterday for approval to spend such amount next year, said the total expenditure include arrears to be paid by the government.
“This estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures (commitment basis) compared to the projected outturn in 2022 and a demonstration of government’s resolve to consolidate its public finances,” he said.
Mr Ofori-Atta said goods and services was projected to consume GH¢8,048 million of the total expenditure, representing 1.0 per cent of GDP.
He said interest payment was projected at GH¢52,550 million, representing 6.6 per cent of GDP.
“Mr Speaker, grants to other government units is estimated at GH¢30,079 million 3.8 per cent of GDP.
He said Capital Expenditure (CAPEX), which would be spent on the construction of roads, schools, hospitals was projected at GH¢27,694 million, accounting for 3.5 per cent of GDP.
The Minister of Finance indicated that other expenditure, mainly comprising Energy Sector Levies (ESL) transfers and Energy Sector Payment Shortfalls was estimated at GH¢26,739 million.
“Based on the estimates for total revenue and grants and total expenditure (including arrears clearance), the overall Budget balance to be financed is a fiscal deficit of GH¢61,475 million, equivalent to 7.7 percent of GDP. The corresponding Primary balance is a deficit of GH¢8,925 million, equivalent to 1.1 per cent of GDP,” Mr Ofori-Atta said.
“Mr Speaker, I wish to notify you that, budget items such as interest payments, amortisation and financing will be adjusted accordingly once government’s debt management strategy and financing to be provided by international partners in the context of the Fund-supported programme have been finalised,” he added.
Mr Ofori-Atta said total revenue and grants was projected at GH¢143. 96 billion, representing 18 per cent of GDP and would be underpinned by permanent revenue measures – largely tax revenue measures – amounting to 1.35 percent of GDP.
To increase revenue mobilisation, the Finance Minister said the Value Added Tax had been increased by 2.5 per cent.
The increase in VAT, Mr Ofori-Atta said was projected to raise GH¢2.7 billion to shoreup government’s revenue.
The Minister of Finance stressed that government next would pursue aggressive revenue mobilisation to raise more financial resources to fund the budget and other development programmes.
To this end, Mr Ofori-Atta said the government would promote efficiency in tax collection and deploy technology tools to enhance revenue collection.
He said it had become more urgent to mobilise domestic revenue especially in times like this when the country’s access to the international capital market had been largely closed.
The Finance Minister lauded Ghanaians for their forbearance in spite of the current economic difficulties and called for further co-operation and collaboration among all stakeholders to help the country overcome the challenges it was going through.
BY KINGSLEY ASARE