Gov’t recoups subsidies from Ghanaians

It has now become evident that Government is taking back all monies it ostentatiously pumped into petroleum price subsidies since it assumed office to make it appear to Ghanaians that it is sensitive to their plight.

The recent astronomical adjustments in utility tariffs and the 20 percent hike in the price of petroleum products attest to these.

Seth Terkper, Minister of Finance, at a press conference yesterday in Accra on the economy and preparation for the 2014 budget, laid credence to it, saying “For the first eight months of the year, there has been less fiscal pressure from subsidies due to the adjustment of petroleum prices and more recently utility prices, and corporate income taxes on petroleum, but adverse impact from compensation to employees, interest costs and grants.”

Government’s thirst for upward adjustments of the aforementioned can also be explained from the lower-than-targeted revenue, grants as well as taxes. “Total revenue and grants for the period was GH¢11,902.8 million, equivalent to 13.4 million of GDP as against a target of GH¢14,175.0 million, equivalent to 16.0 percent of GDP. In nominal terms, the provisional out-turn was 13.1 percent higher than the out-turn for the same period in 2012.

“The shortfall in total revue and grants was mainly as a result of low disbursement of grants from our development partners and partly due to lower-than-anticipated domestic revenue collection by GRA.”

The Finance Minister also noted that total tax revenue amounted to GH¢8,887.6 million, 14.5 percent lower than the Budget target of GH¢10,391.3 million.

The under-performance of tax revenue systems from low performance of almost all the tax types except petroleum revenue, reflected lower imports, a slowdown in economic activities during the first and second quarters of the year. These also resulted partly from the energy crisis and the decline in commodity prices on the world market.

“Grant disbursements from our development partners was 44.7 percent lower than the budget target of 47.0 percent lower than the out-turn recorded during the same period of 2012. The lower-than-expected outturn of grants is due to the non-disbursement of budget support from our Multi-Donor Budget Support (MDBS) partners – a trend that is continuing from 2012.

“The growth in expenditure was mainly due to the increase in interest costs and the growth in compensation of employees during the period.”