Ghana misses Q1 revenue target

Total revenue and grants for the first quarter of 2020 fell short by GH¢3.59 billion, latest data by the Bank of Ghana has indicated.

During the period under review, total revenue and grants amounted to GH¢10.35 billion, which is lower than the target of GH¢13.94 billion.

This outturn represented a 1.0 per cent year-on-year growth, compared with 9.5 per cent growth recorded in the same period of 2019.

During the review period, domestic revenue amounted to GH¢10.03 billion, below the target of GH¢13.54 billion.

The revenue underperformance reflected shortfalls in tax revenues — driven by shortfalls in international trade taxes, taxes on goods and services, and taxes on income and property in response to unfavourable external and domestic conditions.

Non-tax revenue mobilisation also declined sharply. Of the total revenue and grants, tax revenue (comprising taxes on income & property, taxes on domestic goods and services and international trade taxes) amounted to GH¢8.42 billion, lower than the target of GH¢10.21 billion.

This represented a year-on-year growth of 0.5 per cent, in sharp contrast to the 18.9 per cent growth recorded in the same period of 2019.

Total expenditures

Total expenditures from January to March 2020 amounted to GH¢20.76 billion, lower than the anticipated target of GH¢20.79 billion.

This outturn represents a year-on-year growth of 33 per cent, reflecting some unbudgeted COVID-19-related expenditure.

In detail, compensation of employees (including wages and salaries, pensions & gratuities and other wage-related expenditure) amounted to GH¢6.50 billion, above the envisioned target of GH¢5.94 billion.

This outturn represents an annual growth of 19.8 per cent as wages & salaries experienced some 12 per cent overruns while social contributions were a bit within the proposed target.

In terms of fiscal flexibility, compensation of employees constituted almost 65 per cent of domestic revenue at the end of March 2020, with wages and salaries accounting for about 57 per cent.

Use of Goods and Services for the period under review amounted to GH¢2.21 billion which exceeded its projected target of GH¢1.90 billion.

Total interest payments for the review period amounted to GH¢6.4 billion, in line with the budgeted GH¢6.4 billion.

While domestic interest payments outturn was close to the proposed target, external interest payments was somewhat above the planned target due to additional payments not factored in the programme targets. For the period under review, total interest payments constituted almost 64 per cent of domestic revenue, undermining fiscal flexibility.

Fiscal deficit

The fiscal deficit for the first three months of 2020 was equivalent to 3.4 per cent of GDP, substantially above the envisioned target of 1.9 per cent of GDP.

Government budgetary operations resulted in an overall budget deficit of GH¢13.1 billion at the end of March 2020, significantly higher than the target of GH¢7.2 billion.

In addition, the primary balance ended the first quarter with a deficit of 1.7 per cent of GDP, substantially above the planned target deficit of 0.2 per cent for the period.

The overall fiscal deficit of GH¢13.1 billion was financed from both domestic and external sources.