Government may spend beyond 2013 budget limits - Finance Minister
Posted on: 2013-Oct-18        
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Finance Minister Seth Terkper has conceded that government spending is likely to exceed the limits which it set in the 2013 budget.

Government, set itself a deficit of 9% but speaking on Super Morning Show Friday, Seth Terkper said "advisedly" this target may not be achieved.

He admitted that the deficit is likely to be higher than the original plan.

Government has also failed to achieve a first quarter budget deficit target of 3% of GDP( GH˘2.7 billion) and has reached a 3.8% of GDP (GH˘3.4 billion).

The debt stock has also more than quadrupled from GH˘9.5 billion at the end of 2008 to GH˘38.3 billion (43.2% of GDP) as of April 2013.

Government has blamed high expenditure on the Single Spine Salary Structure where government spends about 70% of its tax revenue on paying public sector workers instead of a recommended level of 35%

But, development partners view this development as a signal of weak fiscal discipline. Fitch, the international credit rating agency, has downgraded Ghana from a B+ to a B, largely because of the country’s handling of its wage bill.

The Finance Minister said Fitch only looked at the short-term in downgrading the economy because in the medium term the economy will be more resilient.

He said a Key Performance Indicator this year was to keep a an "ambitious" deficit target of 9% because government wanted to prove its "seriousness".

But with the benefit of September figures, the Finance Minister said "advisedly" the deficit could reach 10%- a figure he says the IMF deems realistic.

Seth Terkper said government had been able to spend within 2013 limits set for subsidy, recurrent goods and services and debt servicing.

But it would need to improve in areas like grants, compensations and meeting commitments to pay statutory funds.