Revenue and grants for 2014 drops marginally

Mr Seth Terkper, Minister of Finance, has attributed the shortfall in total revenue and grants for the 2014 fiscal year to low disbursement of grants from the development partners and the low performance of domestic revenue.

Total revenue and grants for the period was GH¢ 19,471.6 million, equivalent to 20.8 percent of GDP, against a target of GH¢ 22,533.4 million, equivalent to 25.4 per cent of GDP.

Mr Terkper was addressing Parliament on Wednesday during the presentation of the mid-year review of the National Budget Statement and the Economic Policy and Supplementary Budget Estimates of the government for the 2014 fiscal year.

He said the outturn was 13.6 per cent lower than the budget target and 16.8 per cent higher than the outturn for the same period in 2012. Domestic revenue, made up of tax and non-tax revenue, amounted to GH¢ 18,732.1 million, against the budget target of GH¢ 21,275.0 million.

“The shortfall in domestic revenue was due to weak tax revenue performance in all tax types, except corporate income tax from the oil companies and communication service tax. The outturn was 12.0 per cent lower than the budget target and 20.8 per cent higher than the outturn for the same period in 2012, “he added.

Mr Terkper said non-oil tax revenue, excluding exemptions for the period, amounted to GH¢ 12,708.3 million (13.6 per cent of GDP), 18.7 per cent lower than the budget target of GH¢ 15,634.5 million (17.6 per cent of GDP). He said including oil and exemptions, tax revenue amounted to GH¢ 14,307.7 million, equivalent to 15.3 percent of GDP. This was 16.3 percent lower than the target of GH¢ 17,090.8 million (19.3 per cent of GDP). In nominal terms, tax revenue was 14.3 percent higher than the outturn recorded in 2012.

“In total, these revenue measures yielded revenue of about GH¢ 168 million or 0.2 per cent of GDP in 2013. The full effect of these measures are expected to strongly impact on revenue performance in 2014 and contribute to the continuing fiscal consolidation, in line with the multi-year adjustment effort,” he said.

The Minister said the weak performance of tax revenue in 2013 was partly due to lower import volumes which negatively affected import taxes; decline in world commodity prices, particularly gold, which resulted in lower than expected corporate taxes and mineral royalties; the slowdown in economic activities during the first half of the year, due partly to the energy crisis; and low tax compliance and disruptions due to tax administration reforms.

He said although the performance of tax revenue from the traditional sources was weak, oil revenue performance for the year was very strong as a result of higher than expected crude oil prices, higher production levels and higher corporate income taxes from the sector.

Total oil revenue for 2013, amounted to GH¢ 1,634.0 million (1.7 per cent of GDP), against a target of GH¢ 1,103.9 million (1.2 per cent of GDP). “On the other hand, grant disbursement from our development partners was 41.2 percent lower than the budget target of GH¢1,258.5 million and 36.3 per cent lower than the outturn recorded during the same period in 2012.

“The lower than expected outturn of grants was mainly due to the non-disbursement of budget support from some of our Multi-Donor Budget Support (MDBS) partners as well as the slow disbursement of project grants, he said. Mr Terkper said in addition to the revenue measures that were announced in 2013, expenditure measures were introduced to help contain expenditures and to ensure the achievement of the fiscal deficit target for the year.

These measures, he said included agreement on a lower percentage increase in salaries compared to immediate past years; regular adjustment of fuel and utility prices to reduce subsidies to the barest minimum; minimising the award of new contracts and contracting of new loans.

The rests are refinancing of short term debt with a view to extending the tenure and reducing interest costs; and processing of all Government of Ghana expenditures on the Ghana Integrated Financial Management and Information System (GIFMIS) to control unauthorised commitments. He said these expenditure rationalisation measures helped to contain most expenditures within the 2013 total Appropriation.

“Total expenditure, including payments for the clearance of arrears and outstanding commitments for 2013 amounted to GH¢ 28,926.2 million (31.0 per cent of GDP), against a target of GH¢ 30,544.3 million (34.4 per cent of GDP). The outturn was 5.3 per cent lower than the budget target and 14.3 per cent higher than the outturn for the corresponding period in 2012.

“As a result of the shortfall in revenue and grants, government reduced spending on goods and services as well as other expenditure items. This led to total expenditures being lower than budgeted. Although overall spending was lower than planned, spending on wages and salaries as well as interest cost were higher than budgeted.