BUDGET: Total receipts fell by 912.6 billion cedis

Accra, Feb. 27, GNA - Total receipts to government last year fell by 912.6 billion cedis from a target of 16,359.7 billion cedis as result of low inflows of both project and programme loans and grants, Finance Minister Mr Yaw Osafo-Maafo announced in Parliament on Thursday.

He said the overall shortfall of 595 billion cedis in external programme support despite a better-than-programmed performance by all the major tax sources- direct taxes, value added taxes and import duties- contributed to the deficit in receipts last year.

Mr Osafo-Maafo said programme loan disbursements for the period amounted to ?159.6 billion, while programme grants were ?558.3 billion, compared to the budget estimates of ?724.8 billion and ?588.3 billion respectively. Similarly, the outturn for project loans was ?1,185.1 billion as against the budget estimate of ?1,999.4 billion while only ?466.4 billion materialised out of a projected grants disbursements of ?922.8 billion, Mr Osafo-Maafo said a total amount of 10.9 billion cedis realised from Divestiture receipts was far lower than the amount of 386.9 billion cedis programmed for the year under review.

He said government's inability to expedite action on the sale of some targeted assets was to allow for better asset valuations and the achievement of greater transparency and efficiency.

The Minister said direct taxes collected by the Internal Revenue Service (IRS) amounted to ?2,795.4 billion, exceeding the budget estimate of ?2,520.0 billion by 11 per cent.

He attributed the good performance of IRS to the good policy implementation and strategies including limitation on the period for accumulated capital allowances carry over of losses, disclosure of foreign exchange gains and losses, acquisition of depreciable assets and intensive fieldwork. Value Added Taxes also yielded ?2,308.8 billion, exceeding the target of ?2,207.7 billion by 4.6 per cent, while Excise amounted to ?368.3 billion against an estimate of ?334.6 billion, an over-performance of 10.1 per cent.

Mr Osafo-Maafo said despite these achievements, there were some businesses which failed to register for VAT and other registered businesses, especially in the hotel and restaurant industry and the retail sector, who had been selective in charging the tax, in contravention of the VAT Act.


"A lot more fail to issue official VAT invoices," he said. Taxes on Petroleum fell short of the expected receipts of ?1,118.7 billion by ?38.7 billion or 3.5 per cent below target.


Mr Osafo-Maafo said Import duties recorded an outturn of ?1,626.1 billion compared with a programme target of ?1,313.1 billion, indicating an over performance of 23.8 per cent despite lower import volumes and faster depreciation of the cedi.


He said the reduction in the range of items admitted at either concessionary rates or exempt from import duty, re-categorisation of warehouses, the upward review of registration and renewal fees and a review of penalties and fees had helped to boost import prices. Export duties comprising cocoa duties and levy on lumber exports fell short of target by ?23.0 billion with an outturn of ?364.6 billion.


The Minister said the outturn for Non-Tax Revenue (NTR) of ?252.4 billion was below the budget estimate of ?449.1 billion, saying the drop was as a result of a re-classification of items that constituted non-tax revenue.

"Under an exercise to clean up the composition of non-tax revenue, most of the revenue items, which hitherto were classified as NTR, were found to be unspent deposits and hence re-classified accordingly."


Inflows from HIPC assistance in the form of grants from multilateral creditors amounted to ?499.2 billion. This was higher than the programmed inflows of ?471.0 billion.


The Minister said the shortfall in external inflows had compelled government to over-rely on domestic financing of the budget.


The net domestic financing of the budget was ?2,331.7 billion compared with the budget target of ?139.0 billion. This was made up of government borrowing of ?1,035.5 billion from the banking sector and ?1,296.3 billion from the non-banking sector.


Exceptional financing of the budget amounted to ?1,242 billion. This was made up of traditional debt rescheduling of ?1,451 billion, HIPC relief from non-multilateral development partners of ?252.0 billion, less the clearance of external payment arrears of ?461 billion.