Accra, Nov. 15, GNA - There was an overall budget deficit of GH=A2897.1 million in 2006 due mainly to the financing of critical emergency expenditures, Mr Kwadwo Baah-Wiredu told Parliament on Thursday. Mr Baah-Wiredu said domestic financing of the budget for 2006 amounted to a net borrowing of GH=A2476.5 million, equivalent to 4.2 per cent of GDP, against a budget target of a net borrowing of GH=A221.5 million. He attributed the deficit to the shortfall in total revenue and grants, unanticipated transfers to Volta River Authority (VRA) as
a result of the energy crisis, transfers to Tema Oil Refinery (TOR)
for under recovery and the extraordinary pressures on the
labour front, which led to effective nominal increases in the
wage bill and the consequential increase in salary-related
expenditures, such as, pensions, social security contributions
and allowances. Mr Baah-Wiredu said the main factors underlying the fiscal
outturn were shortfalls in revenue target amounting to 0.8 per cent of GDP;
shortfalls in divestiture receipts of about 0.7 per cent of GDP;
unbudgeted transfers of about US$90 million to the VRA for the
purchase of crude oil for thermal operation in the face of the
looming energy shortage and high crude oil prices; public sector
wage overrun equivalent to 0.9 per cent of GDP. Mr Baah-Wiredu said the underlying overall budget deficit
was still sustainable in 2007 and in the medium term.
