Overall budget deficit GH¢44bn; wages alone swallowed GH¢27bn of revenue — Ken Ofori-Atta

Fiscal operations for the year 2022 “resulted in an overall budget deficit of GH¢44,022 million (7.4% of GDP), against a target of GH¢36,684 million (6.2% of GDP)”, Finance Minister Ken Ofori-Atta has said.

He told Parliament on Thursday, 24 November 2022 when he presented the 2023 budget that the corresponding primary balance for the period was a deficit of GH¢11,921 million (2.0% of GDP), against a deficit target of GH¢5,794 (1.0% of GDP).

Mr Ofori-Atta said the fiscal deficit for the period was financed mainly from domestic sources amounting to GH¢37,491 million (6.3% of GDP), accounting for 85.2 per cent of the total financing.

Foreign financing for the period amounted to GH¢6,531 million (1.1% of GDP) and accounted for the remaining 14.8 percent of the financing, he indicated.

He told the house that total revenue and grants amounted to GH¢65,399 million (11.0 per cent of GDP), compared with a target of GH¢67,307 (11.4 per cent of GDP) and the GH¢49,108 million (10.7 per cent of GDP) recorded in the corresponding period in 2021.

The outturn for total revenue and grants represents a shortfall of 2.8 per cent compared to the period’s target and year-on-year growth of 33.2 per cent, Mr Ofori-Atta explained.

He said the shortfall in revenue stemmed from the “less robust” performance recorded in all the revenue handles for the period.

Domestic revenue for the period amounted to GH¢64,601million (10.9 per cent of GDP), falling below the target of GH¢66,503 million (11.2 per cent of GDP) by 2.9 per cent.

The outturn, however, represents a year-on-year growth of 34.0 per cent and constituted 98.8 per cent of total revenue and grants, he mentioned.

Also, he said total expenditure (including arrears clearance and discrepancy) for the period amounted to GH¢109,421 million (18.5 per cent of GDP), above the target of GH¢103,992 million (17.6 per cent of GDP) by 5.2 per cent.

Meanwhile, compensation of employees amounted to GH¢27,146 million (4.6 per cent of GDP), 2.9 per cent below the budgetary provision of GH¢27,947 million (4.7 per cent of GDP).

The wage bill constituted 91.3 per cent of the total compensation and amounted to GH¢24,734 million.

He noted that interest payments for the period amounted to GH¢32,101 million (5.4 per cent of GDP), against the target of GH¢30,890 million (5.2 per cent of GDP) reflecting the higher cost of borrowing and the adverse impact of the currency depreciation on external interest.

Domestic interest payments constituted 78 per cent of total interest payments for the period.