Budget deficit at GH₵24.8bn

– For first 7 months of 2024

Story: Daniel NONOR, ACCRA

GOVERNMENT reported a budget deficit of Ghc24.8 billion equivalent to 2.4 percent of the country’s Gross Domestic Product for the first seven months of the year 2024.

Speaking during an economic update, Dr Mohammed Amin Adam, Minister for finance said the figure is a notable improvement from the target of Ghc28.7 billion or 2.8% of GDP.

According to the minister, the development was reflection of the government’s successful fiscal consolidation measures, as total revenue and grants for the period amounted to GHC 89.4 billion representing 8.8% of GDP, which surpassed the projected target of GHC 88.7 billion or 8.7% of GDP.

On the expenditure side, he said the government managed to keep spending in check, with total expenditures amounting to GHC114.1 billion, or 11.2% of GDP, falling below the budgetary provision of GHC117.4 billion, or 11.5% of GDP.

Dr. Amin Adam expressed confidence in the trajectory of Ghana’s economic growth, citing a 4.7% expansion in the first quarter of 2024, up from 3.1% in the same period of 2023.

He noted that recent data from the Bank of Ghana’s Composite Index of Economic Activity (CIEA) indicated sustained growth, with a 3.3% increase in May 2024, compared to a 3.7% contraction in May 2023.

This, he said signals a robust recovery that could lead to higher growth by the end of the fiscal year.

Dr. Amin Adam further stated government’s commitment to protecting the poor and vulnerable. He made mention of the increased allocation to social protection programs, including the Livelihood Empowerment Against Poverty (LEAP) program, which saw transfers increased from GHC428 million in 2023 to GHC 720 million for the 2024 financial year.

Furthermore, benefits under the Ghana School Feeding Program and the Capitation Grant were both increased by 25%.

The Finance Minister also reported significant progress in controlling inflation, which declined to 20.9% in July 2024, down from 22.8% in June 2024, and a steep drop from the 54% inflation rate recorded in 2022.

He attributed the disinflation process tightened monetary policies, fiscal consolidation efforts, and improved exchange rate stability.

Notably, food inflation dropped to 21.5% in July 2024 from 24% in June 2024, while non-food inflation decreased to 20.5% from 21.6% over the same period.

The minister also touched on the relative stability of the national currency against major trading currencies, with the year-to-date depreciation moderating to 7.7% in the first quarter of 2024, compared to 22.1% in the same period in 2023.

 Dr. Amin Adam attributed this stabilization to the Bank of Ghana’s tight monetary policies, the implementation of the Gold for Oil and Gold for Reserves programs, and the disbursement of the third tranche of the IMF Extended Credit Facility.

On the public debt front, the Minister disclosed that Ghana’s nominal central government debt stood at 761.1 billion Ghana cedis (approximately 51.1 billion U.S. dollars) as of July 31, 2024, up from 587.7 billion Ghana cedis. He clarified that the increase in debt was due to cedi depreciation, disbursements from multilateral institutions, and domestic budget financing.

Dr. Amin Mohammed  Adam also provided an update on Ghana’s external debt restructuring program, noting that the government had officially launched an exchange offer to bondholders. The offer includes two options, one with no nominal haircut but lower interest rates, and a discount option with a 37% nominal haircut but higher interest rates.

He expressed optimism that the debt exchange would reach high participation levels, contributing to Ghana’s fiscal sustainability. The Minister reiterated the government’s commitment to maintaining economic stability and achieving higher growth, with ongoing efforts to secure additional inflows from the IMF and the World Bank. He also reassured stakeholders that the government remains focused on ensuring the financial viability of key sectors, including the cocoa industry, as part of the broader economic recovery plan.