The government did not request for additional funding to finance 2022 budget in spite of the fact that revenue underperformed in the first half of the year.
“In spite of the underperforming revenues and strong external headwinds, we are not seeking additional funds in this Mid-Year Review,” Minister of Finance, Ken Ofori-Atta said this when he presented the 2022 Mid-year budget review to Parliament in Accra yesterday.
“We have seen some major shifts in our budget assumptions compared to November, 2021, when we presented the budget. These changes have led to reduced revenues, increased interest payments and changes in interest rates and exchange rates. However, we are committed to staying within the appropriation for 2022,” he said.
The Finance Minister said the government was determined to efficiently use the windfall from the upstream petroleum sector to make-up for our revenue shortfall and aggressively improve our revenues even as we rationalise expenditures.
In view of the economic challenges the economy was going through, Mr Ofori-Atta used the programme to revise the country’s macroeconomic targets.
He said the macroeconomic targets were designed to get the country back to a path of debt Sustainability and increased growth and a programme to mobilise GH¢100.5billion in revenues and grants with estimated total expenditure of GH¢137.5 billion, and an overall budget deficit of 7.4 per cent for the year 2022.
“This was against the backdrop that economic growth had recovered from 0.5 per cent in 2020 to 5.4 per cent in 2021, and the fiscal deficit had declined from 14.7 per cent in 2020 to 11.4 per cent in 2021. While the prospects for 2022 were encouraging, our plans, like many other countries in the world, went awry,” the Finance Minister, said.
Mr Ofori-Atta said total revenue and grants had been revised to GH¢96,842 million (16.4) per cent of Gross Domestic Product (GDP) in 2022, down from the 2022 Budget target of GH¢100,517 million (20.0 per cent of GDP) representing 3.7 per cent reduction.
He said total expenditure (including payments for the clearance of arrears) had been revised downward to GH¢135,742 million (22.9 per cent of GDP) from the original budget projection of GH¢137,529 million (27.4 per cent of GDP).
“Interest Payments have been revised upwards from GH¢37,447 million (7.5 per cent of GDP) to GH¢41,362 million (7.0 per cent of revised GDP), mainly on account of inflationary pressures and exchange rate depreciation resulting in higher cost of financing,” Mr Ofori-Atta, said.
He said the revisions in government’s fiscal operations would result in a fiscal deficit (on cash basis) of GH¢38,900 million (6.6 per cent of revised GDP) up from the 2022 Budget deficit target of GH¢37,012 million (7.4 per cent of GDP).
“The corresponding primary balance is a surplus of GH¢2,461 million (0.4 per cent of revised GDP), up from the 2022 Budget estimate of a surplus of GH¢435 million (0.1 per cent of GDP),” he said, indicating that “Although the deficit is expected to be financed from both foreign and domestic sources, domestic financing will be the key driver while government works to regain external market access.”
The Finance Minister said overall real GDP growth for the first quarter of 2022 was 3.3 per cent compared to 3.6 per cent recorded in the same period in 2021.
Non-oil GDP for the first quarter of 2022, he said grew by 3.7 per cent compared with the first quarter 2020 growth of 5.3 per cent.
BY KINGSLEY ASARE & JULIUS PETETSI