We’re not seeking additional funds in mid-year budget – Ofori-Atta

Finance Minister Ken Ofori-Atta has said that government would manage its current financial resources without seeking approval for additional funds for 2022.

This implies that the government is expected to stay within its expenditure ceiling of the GH ¢ 137 billion approved by parliament at the beginning of the year.

Presenting the 2022 Mid-Year Fiscal Policy Review to parliament on Monday, 25 July 2022, Mr Ofori-Atta was concerned about “some major shifts in our budget assumptions compared to November 2021, when we presented the budget”.

He pointed out that the changes have led to reduced revenue, increased interest payments and changes in interest rates and exchange rates.

“However, we are committed to staying within the appropriation for 2022. In spite of the underperforming revenues and strong external headwinds, we are not seeking additional funds in this mid-year review,” he stated.

He further assured that the government was “determined to efficiently use the windfall from the upstream petroleum sector to make up for our revenue shortfalls and aggressively improve revenue even as we rationalize expenditure”.

The expenditure estimate for 2022 represents an increase of 23.2 per cent above the projected outturn of GH¢111.6 billion, equivalent to 25.3 per cent of GDP for 2021.

According to him, provisional Q1-2022 National Accounts Statistics published by the Ghana Statistical Service (GSS) in June 2022 show that the overall real GDP growth for the first quarter of 2022 was 3.3 percent compared to 3.6 percent recorded in the same period in 2021.

Non-oil GDP for the first quarter of 2022 grew by 3.7 percent compared with the Q1-2020 growth of 5.3 percent.

Furthermore, based on the developments for the first six months of 2022 and outlook for
the rest of the year, he said government has accordingly revised the macro-fiscal targets for 2022 as
follows:
 Overall GDP Growth rate of 3.7 percent down from 5.8 percent;
 Non-Oil GDP Growth rate of to 4.3 percent down from 5.9 percent
 End period inflation of 28.5 percent up from 8 percent;
 The overall fiscal deficit of 6.6% of GDP down from 7.4%
 Primary surplus of 0.4% of GDP up from a surplus of 0.1% of GDP; and
 The Gross International Reserves of not less than 3 months import cover.

o Total Revenue and Grants have now been revised to GH¢96,842 million (16.4% of GDP) in 2022, down from the 2022 Budget target of GH¢100,517 million (20.0% of GDP) representing 3.7 percent reduction.
o Total Expenditure (including payments for the clearance of arrears) has been revised downward to GH¢135,742 million (22.9% of GDP) from the original budget projection of GH¢137,529 million (27.4% of GDP).
o Interest Payments have been revised upwards from GH¢37,447 million (7.5% of GDP) to GH¢41,362 million (7.0% of revised GDP), mainly on account of inflationary pressures and exchange rate depreciation resulting in higher cost of financing.

High debt, low revenues, record-high inflation figures, skyrocketing depreciation and other factors have adversely affected the economy, prompting the government to seek economic support from the International Monetary Fund (IMF).

The dire situation of the economy has not been entirely due to domestic factors, with the Russia-Ukraine war and the COVID-19 pandemic playing a role.

After approval of the 2022 budget by parliament, the government proceeded, in a prudent fiscal consolidation move, to cut down on its expenditure, up to a whopping 20 per cent.

Mr Ofori-Atta had earlier said the expenditure management by the government is expected to continue from this year and beyond, in the midst of the global economic impact on Ghana.

“To ensure that the government matches all expenditure to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection,” the Finance Minister announced.

“Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across board for all covered entities benefiting from the 2022 Budget, subject to revenue performance,” the Minister of Finance, Ken Ofori Attah announced at a briefing.