Key Highlights of the 2018 Budget Statement [Infographic]

Tracking the 2018 Budget Statement

Based on the government policy objective of ensuring macroeconomic stability, and growing the economy for job creation, whilst protecting social spending, the following macroeconomic targets are set for the 2018 fiscal year with an estimated budget size of GH¢51 billion (see infographic):

Similarly, the fiscal programme is firmly anchored on the ongoing fiscal consolidation. The prime focus is to ensure that the fiscal deficit, which remains the principal fiscal anchor, is programmed to decline to 4.5 percent of GDP from the projected 2017 end-year estimate of 6.3 percent. Over the medium term, the fiscal deficit is expected to stabilize around 3-5 percent of GDP.

The country will be faced with rising expenditures over the short to medium term, as the government invests more in programmes that will stimulate economic growth and generate jobs. The government will, therefore, need to boost domestic revenue through innovative channels that will not place an undue burden on the entire populace. In this vein, optimizing resource mobilization through improved tax compliance and efficient and effective revenue administration remains an important part of the government fiscal strategy to boost domestic revenue mobilization for 2018 and the medium term. Consequently, in addition to empowering the Ghana Revenue Authority (GRA) to bring to book tax evaders. The government is equally investing in programmes and infrastructure to widen the tax net. This will include the implementation and rollout of a National Digital Address System (to help us track taxpayers especially in the informal sector), an acceleration of the implementation of the National Identification Programme, deployment of Electronic Point of Sale devices (to ensure that vendors are not under declaring VAT), and special audits, among others.

On expenditure front, the government has shown commitment to eliminate expenditure overruns and will remain committed to continuing with the design and implementation of the Public Financial Management reforms with the aim of eliminating inefficient and ineffective allocation of resources.

The proposed 2018 budget has total revenue and expenditure an estimated GH¢51 billion and GH¢62 billion respectively (see infographic).

Government Revenue Mobilisation for 2018

Total Revenue and Grants for the 2018 fiscal year has been conservatively estimated at GH¢51 billion based on the Government’s projection of the level of economic activity in 2018, policy on taxation and donor grant disbursements. Domestic Revenue is estimated at GH¢50.5 billion, representing an annual growth of 26.9 percent. The following are components and estimates of government revenue for 2018 (see infographic);

Government Expenditure for 2018

The Total Expenditure, including provision made for the clearance of arrears, is estimated at GH¢62 billion, equivalent to 25.7 percent of GDP. The estimated expenditure for the year represents an annual growth of 14.5 percent. The subsequent bullets are the major components and estimates of government expenditure for 2018 (see infographic);

 

Overall Budget Deficit and Financing for 2018

Based on the estimates for Government total revenue and total expenditure, the 2018 budget will result in an overall budget deficit of GH¢10.9 billion, equivalent to 4.5 percent of GDP (see infographic).

Financing of the fiscal deficit will be from both domestic and foreign sources. Net Foreign Financing will amount to about GH¢3 billion  (including a Eurobond of up to GH¢1.0 billion), equivalent to 1.2 percent of GDP. Net Domestic Financing (NDF) will constitute about 73 percent of total financing and includes financing from bank and non-bank sectors, other domestic sources such as divestiture proceeds and mineral royalty prepayment.  The total NDF is estimated at GH¢8 billion or 3.3 percent of GDP.

It is worth noting that in 2018, the primary balance, which is an indication of our fiscal effort will be grown to a larger surplus of about 1.6 percent of GDP from the projected 2017 outturn of 0.2 percent. This signifies our resolve to “breaking the back” of a growing public debt from the previous year.

Reference: 2018 Budget Statement by Finance Minister, Ken Ofori-Atta accessed on 14 November 2017

Article prepared: Moro Seidu| iWatch Africa

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