The Ghanaian government is targeting to attain a fiscal deficit of 4.2 percent of Gross Domestic Product (GDP) in 2019, Finance Minister, Ken Ofori-Atta announced on Thursday when he presented the 2019 budget and economic policy of the government to parliament.
The budget, which is under the theme: “A Stronger Economy for Jobs and Prosperity” is expected to build on the macroeconomic gains in the last two budgets to create more job opportunities for people.
In its attempt to maintain fiscal discipline in the coming year, the government, the minister emphasized will submit a bill to Parliament with “the objective of ensuring that fiscal deficit is capped at 5 percent of GDP. Additionally, Government will institute a Fiscal Council to further strengthen fiscal management.”
Ofori-Atta assured the people and the international community the government would not compromise on its fiscal consolidation agenda.
“Consistent with the Public Financial Management Act, 2016 (Act 921), we will pursue our growth objectives without compromising fiscal consolidation. We will reduce the fiscal deficit to make the overall debt burden sustainable. We will pursue prudent monetary and external sector policies to keep inflation under control and achieve favorable current account balance to underpin exchange rate stability.”
In view of the government’s overall macroeconomic objective of sustaining and restoring macroeconomic stability and pursuing inclusive growth, as well as job-creating programs, the minister outlined the targets that has been set for the 2019 fiscal year as including overall real GDP growth of 7.6 percent, non-oil real GDP growth of 6.2 percent and end-period inflation of 8.0 percent.
The country in 2019 targets a fiscal deficit of 4.2 percent of GDP, primary surplus of 1.2 percent of GDP and gross international reserves to cover not less than 3.5 months of imports.
The agriculture sector is expected to grow by 7.3 percent, industry by 9.7 percent and the services sector at 6.1 percent.
Total revenue and grants for 2019 is estimated at GH¢58.9 billion or 12.5 billion United States Dollars USD), 17.1 percent of the rebased GDP, up from a projected outturn of GH¢46.8 billion or 10 billion USD, 15.7 percent of rebased GDP in 2018.
Domestic revenue is estimated at GH¢57.8 billion or 12.3 billion USD, representing an annual growth of 25.5 percent over the projected outturn for 2018. Of this amount, non-oil tax revenue will constitute about 74.2 percent of domestic revenue and amount to GH¢42.9 billion or 9.1 billion USD.
Non-Tax Revenue, excluding oil, will amount to GH¢6.5 billion or 1.4 billion USD (1.9 percent of GDP) in 2019, equivalent to 11.3 percent of total domestic revenue. Of this amount, GH¢4.4 billion or 94 million USD is expected to be retained by institutions as internally generated funds (IGF). In addition, as a result of the IGF capping, an amount of GH¢282.2 million or 60 million USD is expected to be paid into the Consolidated Fund.
The West African country is expected to spend a total expenditure (including clearance of arrears) at GH¢73.4 billion (15.6 billion dollars), equivalent to 21.3 percent of GDP, and representing a growth of 27.0 percent above the projected outturn for 2018.