Preliminary banking data on the execution of the Government budget for the year up to August 2009, shows a significant reduction in the deficit on a cash basis relative to GDP, Dr Paul Acquah, Governor, Bank of Ghana said on Wednesday.
Speaking at a press conference after a meeting of the Monetary Policy Committee, Dr Acquah said the overall budget operations for the first eight months of the year resulted in a narrow cash deficit (including grants) of GH¢901.55 million (4.17 percent of GDP) compared with GH¢1,433.99 million (8.8 percent of GDP) for the same period in 2008.
The deficit was financed mostly on the domestic money market.
Dr Acquah said total expenditure (excluding foreign financed capital expenditure) at the end of August was GH¢4,439.94 million (20.5 percent of GDP) compared with GH¢4,300.31 million (26.4 percent of GDP) for the same period in 2008.
This represents a year-on-year growth of 3.25 percent compared with 41.6 for the same period in 2008. Some GH¢250 million of this spending represent payments for 2008 in arrears.
He said total revenue and grants at the end of August 2009 was GH¢3,703.80 million (17.1 percent of GDP) compared with GH¢3,021.24 million (18.5 percent of GDP) for 2008.
In year-on-year terms, total revenue and grants increased by 22.6 percent, compared with 9.7 per cent recorded in 2008.
Grants for the period amounted to GH¢426.00 million (1.97 percent of GDP) compared with GH¢405.19 million (2.49 percent of GDP) for the same period in 2008.
Dr Acquah said while revenue growth was somewhat robust, the collections represented 78.6 percent of the projection for end of September.
Donor disbursement for the period was also about 50 percent of projection, leading to a shortfall in projected budget resource envelop.
"Partly because of this shortfall, there are some outstanding payments, including statutory payments to District Assembly Common Fund and the Ghana Education Trust Fund, that would need to be settled later in the year," he said.
The stock of domestic debt, which was GH¢4,800.2 million (27.2 percent of GDP) at the end of 2008, increased to GH¢5,489.66 million (25.4 percent of GDP), at the end of July 2009.
External debt also increased from US$3,9826 million (28.1 percent of GDP) at the end of December 2008 to US$4,470.2 million (30.2 percent of GDP), bringing total public debt stock to US$8,120.04 million (54.9 percent of GDP) at the end of July 2009, up from US$7,918.1 million (54.6 percent of GDP) at the end of December 2008.
Dr Acquah said the external payments position showed significant adjustment with sharp reduction in the trade and the current account deficits.
Total merchandise exports during the first half of 2009 was US$3,056.27 million, compared with US$2,845.83 million for the same period in 2008. Exports of cocoa beans and products grew by 17 percent in year on year terms amounting to US$1,064.8 million for the six month to June, compared with 22.6 percent growth in 2008.
On the other hand, total merchandise imports amounted to US$4,010.67 million in the first half of the year, compared with US$5,000.85 million for 2008 (a decline of 19.8 percent).
Non-oil import for the period was US$3,429.12 million compared with US$3,674.39 million in 2008.
Oil imports for the period was US$581.55 million as against US$1,326.46 million for 2008. The significant drop in the oil bill has been driven by lower crude oil imports mainly as a result of shifts in the hydro/thermal mix to 75.8 percent hydro as at July 2009 compared with 52 percent in July 2007; and lower prices for higher product imports.
Dr Acquah said as a result the merchandise trade deficit for the first half of the year narrowed to US$954.4 million in June 2009, compared with US$2,155.02 million for the same period in 2008, with sharp cut in the oil import bill, while exports held firm.
He said the current account (including official transfers) for the first half of the year is provisionally estimated to be in a deficit of US$299.06 million, an improvement of US$1,160.53 million over the deficit recorded for the same period last year.
The consequence was that overall balance of payments deficit reduced to US$625.98 million, as against a deficit of US$782.67 million in 2008, he said.