Public sector wages to swallow GH¢25.7 billion of government's GH¢113 billion 2021 expenditure

The government of Ghana’s total expenditure (including clearance of arrears) is projected at GH¢113,750 million, equivalent to 26.2 percent of GDP for 2021, caretaker Finance Minister Osei Kyei-Mensah-Bonsu has said.

The Majority Leader told Parliament on Friday, 12 March 2021 when he delivered this year’s budget that the amount “represents a growth of 13.7 percent above the outturn of GH¢100,052 million recorded in 2020”.

“Mr Speaker, wages and salaries are projected to amount to GH¢25,799 million and constitute 22.7 percent of the total expenditure (including arrears clearance) for 2021”, the Minister of Parliamentary Affairs said.

As a percentage of GDP, the wage bill is projected to be 5.9 percent in 2021 compared to the 6.5 percent recorded in 2020.

The Suame MP said the use of goods and services is also projected at GH¢5,967 million or 1.4% of GDP.

It represents 5.2 percent of the projected total expenditure (including arrears clearance).

Also, he noted, interest payments are projected at GH¢35,864 million, equivalent to 8.3 percent of GDP in 2021.

“Of this amount, domestic interest payments will constitute about 79.1 percent and amount to GH¢28,368 million. Transfers to statutory funds as well as all other earmarked funds are estimated at GH¢18,081 million (4.2% of GDP), representing 52.2 percent growth over the recorded outturn for 2020,” he detailed.

Capital expenditure is projected at GH¢11,423 million (2.6% of GDP) in 2021, a decline of 5.5 percent over the 2020 outturn,

“Of this amount, domestic financed capital expenditure is estimated at GH¢3,310 million (0.8% of GDP),” the lawmaker said.

Further, an amount of GH¢8,112 million has been estimated for foreign-financed capital expenditure and this will be funded by a combination of project grants and loans.

On budget balances and financing operations for 2021, Mr Kyei-Mensah-Bonsu said based on the estimates for total revenue & grants and total expenditure, the 2021 fiscal operations will result in an overall fiscal deficit of GH¢41,298 million, equivalent to 9.5 percent of GDP.

“Mr Speaker, financing of the fiscal deficit will come from both domestic and foreign sources,” he told Parliament, adding: “Net domestic financing will amount to GH¢25,424 million (5.9% of GDP) while net foreign financing will amount to GH¢15,870 million (3.7% of GDP) and will include a planned international capital market programme to raise up to US$5 billion, of which US$1.5 billion will be used to support the implementation of the 2021 budget and the rest for liability management.”

“Mr Speaker, a corresponding Primary deficit equivalent to 1.3 percent of GDP, is also projected for the year.”