Govt expenditures for first half of 2024 fall short of target
The Bank of Ghana’s July 2024 Monetary Policy Report reveals that total government expenditures for the first half of 2024, which include arrears clearance and discrepancies, amounted to GH¢101.21 billion. This expenditure represents 9.6% of the Gross Domestic Product (GDP) for the period, falling short of the programmed target of GH¢104.77 billion, or 10% of GDP. Despite this shortfall, the expenditure figure marks a notable increase of 66.5% compared to the previous year, highlighting a significant rise in government spending.
Compensation of employees
Expenditures on Compensation of Employees, which cover wages, salaries, pensions, and other related outlays, totaled GH¢29.30 billion. This amount was marginally below the target of GH¢29.96 billion, falling short by 2.2%. Despite this, the compensation category saw a substantial year-on-year increase of 48.4%. Compensation of Employees constituted 39.5% of the domestic revenue mobilized during the review period, reflecting its significant share in the government’s expenditure.
Goods and services
The expenditure on Goods and Services reached GH¢5.77 billion, exceeding the target of GH¢4.56 billion by 26.6%. However, this figure was lower than the GH¢6.25 billion recorded in the same period of 2023, indicating a year-on-year contraction of 7.6%. This decrease in spending on goods and services may reflect tighter fiscal controls or shifts in government priorities.
Interest payments
Interest payments for the first half of 2024 amounted to GH¢19.03 billion, falling below the anticipated target of GH¢26.35 billion. This represents a significant decrease from the GH¢13.39 billion recorded in the corresponding period of 2023. The reduction in interest payments can be attributed to the government’s ongoing debt restructuring program, which has led to a partial freeze on debt service. This initiative is part of broader efforts to address Ghana’s fiscal and debt vulnerabilities, aiming to stabilize the country’s economic outlook.
Grants
Grants allocated to various government units, including the National Health Fund, Education Trust Fund, Road Fund, Energy Fund, District Assemblies Common Fund, and other earmarked funds, totaled GH¢19.70 billion. This amount exceeded the target of GH¢17.55 billion by 12.2% and represents a substantial year-on-year increase of 83.4%. The rise in grants reflects enhanced funding for critical sectors and support for key government initiatives.
Capital expenditure
Capital expenditure for the review period stood at GH¢13.91 billion, or 1.3% of GDP. This was below the programmed target of GH¢19.13 billion (1.8% of GDP) by 27.2%. Despite the shortfall, this expenditure category saw a significant year-on-year growth of 107.8%. The capital expenditure includes investments in infrastructure and development projects, crucial for long-term economic growth.
Other expenditure
Other expenditures for the second quarter of 2024 amounted to GH¢12.98 billion, representing a notable 95.1% increase over the target of GH¢6.65 billion. This significant deviation was largely driven by energy sector payment shortfalls, which totaled GH¢10.60 billion. This figure was substantially higher than the programmed target of GH¢2.84 billion, contributing to the overall positive deviation from the expenditure target. The total of GH¢12.98 billion for other expenditures dwarfs the GH¢3.76 billion recorded in the same period of 2023, reflecting increased spending in this category. Overall, while total government expenditures for the first half of 2024 fell short of targets, the significant year-on-year increases in several expenditure categories underscore the government’s active spending and investment strategies. The deviations from targets, particularly in capital expenditure and interest payments, highlight ongoing fiscal challenges and the impact of the government’s debt restructuring efforts.
