Government Asks For More Cash

The government has presented a supplementary budget to Parliament, requesting approval for spending approximately GH¢253 million additional resources to shore up its general expenditure.

The expenditure would be financed by expected inflows from the National Fiscal Stabilisation Levy, which would bring in about GH¢11 million for the rest of the year; the removal of exemptions, which has saved the country some GH¢28.9 million for the first half and additional $150 million expected from the World Bank as budgetary support.

Presenting the supplementary estimates on behalf of the President in Accra yesterday, Finance Minister, Dr Kwabena Duffuor, said, “The revenue measures that have been outlined will result in additional net revenue of GH¢99.8 million. This, together with GH¢153 million expected from cocoa revenue, will generate total additional receipts of GH¢252.8 million.”

He said part of the additional expenditure estimates would be used to retire domestic and external debts interest arrears.

Dr Duffuor explained that the build-up in the stock of domestic debt and associated high cost of borrowing had necessitated the need to liquidate some arrears and outstanding commitments in excess of earlier estimates for the year.

“Consequently, resources will be required to meet these additional payments,” Dr Duffuor stated in his presentation, which was interrupted by a power outage for about 20 minutes.

He said statutory funds such as the Ghana Education Trust Fund (GETFund), the National Health Insurance Fund (NHIF) and the District Assemblies Common Fund (DACF), which were directly linked to revenue performance, would increase by GH¢4.3 million, GH¢16.6 million and GH¢7 million respectively as a result of the review in exemptions, which would swell import Value Added Tax (VAT) and levies such as the National Health Insurance Levy. Dr Duffuor said those transfers would translate into more development projects at the local level.

The finance minister said the government had discovered additional arrears and public indebtedness to the tune of GH¢1.7 billion, which had further enlarged the fiscal deficit from the estimated 14.9 per cent of the total value of goods and services produced within the country also known as Gross Domestic Product (GDP), to 24.2 per cent of the GDP.

He said the ministries, departments and agencies (MDAs) did not make that information available at the time of the budget preparation and that the government would subject the new discovery to due diligence and audit to ascertain their authenticity or otherwise.

On that account, the usually soft-spoken finance minister did not mince words in declaring that “the economy of Ghana at end of December 2008, was not as robust and resilient as we were made to believe.

The overall budget deficit, including divestiture receipts, would have been in the threshold of 24.2 per cent of GDP if the arrears and commitments had been taken into account”.

For example, domestic interest payments amounted to GH¢342.6 million, 29.4 per cent higher than the budget target of GH¢264.7 million and indicating 78.1 per cent increase over the outturn for the same period last year.

Therefore, for the first half of the year, the overall budget balance, including divestiture, amounted to a deficit of GH¢965.4 million, equivalent to 4.5 per cent of GDP, as against a target deficit of GH¢1,400.3 million, or 6.5 per cent of GDP.

Youth In Agriculture
Part of the supplementary funds would help in sustaining the GH¢10.7 million support to the youth in agriculture to encourage more youth to take up ventures in the sector.

It would benefit the youth who are into the farming of crops such as maize, rice, sorghum and soya beans, who find themselves in the Northern, Upper East, Upper West, Brong-Ahafo, Ashanti, Central and Volta regions.

Dr Duffuor said a total of 14,001 hectares of land would be cultivated under the youth-in-agric programme.

Investments in agriculture are considered pro-poor as the sector employs about 54 per cent of the country’s population, mostly in the rural areas, and contributes about 20 per cent to the total value of goods and services produced within the country in a year.

To increase productivity in that all-important area, the government also announced the release of GH¢10 million to provide the 50 per cent subsidy on fertiliser.

Irrigatin Dams
“Forty-one dams are being rehabilitated in the three northern regions to support dry season farming. It is expected that farmers will take advantage of the investment that the government is making, to increase food production,” Dr Duffuor stated.

The minister gave scanty updates on the progress of implementation of some of the initiatives introduced in the 2009 budget and said in spite of the challenges encountered during the first half of the year, the government was determined to achieve the fiscal deficit target of 9.4 per cent of GDP indicated in the 2009 Budget.

Preparatory work on the establishment of the Savannah Accelerated Development Authority (SADA) had begun with the inauguration of the SADA Implementation Committee to chart a way forward, he stated.

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