First quarterly review of economy before Parliament

Accra (Greater Accra) 2nd July ?99

Government revenue and grants for the first quarter of 1999 amounted to 858 billion cedis, representing 4.3 per cent of the gross national product (GDP) and exceeding the projected target of 844 billion cedis by 4.2 per cent of GDP.

This was contained in the 1999 first quarterly report on the review of the economy, which was laid before Parliament on Wednesday by Mr Moses Asaga, a Deputy Minister of Finance.

The report said over the same period, government expenditure amounted to 1,355 billion cedis.

Out of this, statutory expenditure was 496 billion cedis, representing 37 per cent while the other 63 per cent was discretionary expenditure.

Discretionary expenditure totalled 859 billion cedis out of which personal emoluments took 289 billion cedis or 21 per cent of the total.

The report said in comparison, this amount is eight billion cedis less than the target for the quarter.

Other items in this category, namely, administration, service and investments recorded 22 billion cedis, 31 billion cedis and 517 billion cedis in that order.

The report said repayment of external principal amounted to 191 billion cedis, 37 per cent above the level of payment during the first quarter of 1998.

It said 65 billion cedis was spent to service external interest obligations, including domestic interest payments on which 177 billion cedis was expended instead of 205 billion cedis that was initially expected for the quarter.

The report indicates that this development reflects the steady decline in Treasury bill interest rates that began in May, last year.

Releases to the District Assemblies' Common Fund amounted to 30 billion cedis while 33 billion cedis was transferred to households in terms of pensions and gratuities.

On fiscal review, the report indicated that the situation was broadly on target, saying domestic revenue collections exceeded the target by 42 billion cedis, while both the overall fiscal deficit on a commitment basis and the domestic primary balance were slightly below the target.

The report explained that because the projected divestiture receipts did not materialise, the overall cash deficit was slightly more than it was in the first quarter of 1998, adding that the domestic primary balance however, continued to be positive.

The overall balance on commitment basis recorded a shortfall of 286 billion cedis (1.4 per cent of GDP), compared with 290 billion cedis (1.5 per cent of GDP) expected for the quarter.

The report said, when account is taken of payment of arrears and divestiture receipts, the overall cash deficit amounted to 306 billion cedis compared with 295 billion cedis targeted for the period.

The domestic primary balance for the review period recorded 99 billion cedis surplus, which is 0.5 per cent of GDP.

The report said the overall budget deficit for the first quarter was financed predominantly from domestic sources, amounting to 283 billion cedis, adding that nearly three-quarters of the funding was from the non-banking sector.

The document explained that the higher borrowing from the non-banking sector was in response to the effort of the Bank of Ghana to reduce total money in circulation and hence help reduce inflation.

It said government borrowing from foreign sources amounted to 213 billion cedis, while amortisation recorded 190 billion cedis, bringing in a foreign inflow of 23 billion cedis.