The Minister of Finance, during the Mid-Year Budget Review presentation to Parliament, explained that the changes which occurred over the past six months were caused by global developments, delay in passing and implementing revenue mobilisation measures, inflation, and cedi depreciation.
In that regard, he said government had revised the Overall Gross Domestic Product (GDP) growth rate of 3.7 percent down from 5.8 percent; non-Oil GDP Growth rate of 4.3 percent down from 5.9 percent; and end period inflation of 28.5 percent up from 8 percent.
It has also revised the overall fiscal deficit of 6.6 per cent of GDP down from 7.4 per cent; primary surplus of 0.4 per cent of GDP up from a surplus of 0.1 per cent of GDP; and the Gross International Reserves of not less than 3 months import cover.
Mr Ofori-Atta said the 2022 fiscal framework had also been revised due to the fiscal performance for the first half of the year, which was characterised by shortfalls in revenue and some expenditure cut, which included the 30 per cent discretionary expenditure.
“The other expenditure measures are the moratorium on foreign travels except pre-approved critical or statutory travels; 50 per cent cut in fuel coupon allocations for all political appointees and heads of government institutions, including State Owned Enterprises, effective 1st April 2022; earlier in the year,” he said.
The situation, he said, was further compounded by government’s support for 15 per cent Cost of Living Allowance (COLA) to public servants, upward revision to the average weighted domestic interest rates and upward revision in exchange rate on account of higher depreciation.
The Minister, therefore, announced that the Government had set a 3.7 per cent reduction in Total Revenue and Grants from the 2022 Budget target of GH¢100.5 billion thus 20.0 per cent of GDP to GH¢96.8 billion, which is 16.4 per cent.
“Total Expenditure, including payments for the clearance of arrears has been revised downward to GH¢135.7 billion,22.9 per cent of GDP from the original budget projection of GH¢137.5 billion (27.4 per cent of GDP.
“Interest Payments have been revised upwards from GH¢37.4 billion (7.5% of GDP) to GH¢41.3 billion (7.0% of revised GDP), mainly on account of inflationary pressures and exchange rate depreciation resulting in higher cost of financing,” he said.
Mr Ofori-Atta explained that although the revision would lead to deficit in cash of GH¢38.9 billion, “it is expected to be financed from both foreign and domestic sources, domestic financing will be the key driver while Government works to regain external market access”