Government increases revenue projections by 220 per cent
The government says it is projecting a total revenue and grants of GHS144 billion, 18.0 per cent of the Gross Domestic Product (GDP).
The projection represented a 220 per cent increase compared to a target of GHS65.4 billion set in 2022.
Mr Ken Ofori-Atta, Minister of Finance, made this known on the floor of Parliament on Thursday when he presented the 2023 Budget Statement and Economic Policy.
The government has inadvertently increased its expenditure projections by GHS205,431 million (25.6% of GDP) compared to a target of GHS104 billion, equivalent to 17.6 per cent of GDP, representing 197.5 per cent.
The overall Budget balance to be financed is a fiscal deficit of GHS61.5 billion, equivalent to 7.7 per cent of GDP while the corresponding Primary balance was a deficit of GHS8.9 billion, equivalent to 1.1 per cent of GDP.
Projected Expenditure, he said entailed compensation of employees projected at GH¢45 billion; Goods and Services at GH¢8.05 billion; Interest Payment at GH¢52.6 billion; Grants to other Government Units estimated at GH¢30.08 billion while Capital Expenditure (CAPEX) was projected at GH¢27.7 billion.
“Mr Speaker, Other Expenditure, mainly comprising Energy Sector Levies (ESL) transfers and Energy Sector Payment Shortfalls is estimated at GHS26.7 billion.
“This estimate shows a contraction of 0.3 percentage points of GDP in primary expenditures (commitment basis) compared to the projected outturn in 2022 and a demonstration of the Government’s resolve to consolidate its public finances,” the minister said.
Mr Ofori-Atta explained that the 2023 revenue projections were underpinned by permanent revenue measures – largely tax revenue measures that would amount to 1.35 per cent of GDP.
These measures he said included a review on the electronic levy, reforms to the income tax regime, a review of the upper limits for vehicle benefits and the introduction of an additional income tax bracket of 35 per cent.
To achieve fiscal consolidation, he said the government has proposed the reduction of the threshold on earmarked funds from the current 25 per cent of tax revenue to 17.5 per cent of Tax Revenues and migrating all earmarked funds onto the GIFMIS platforms.
He said the government intends to continue with a 30 per cent cut in the salaries of the President, Vice President, Ministers, Deputy Ministers, MMDCEs, and political office holders including those in State-Owned Enterprises.
“We will place a cap on salary adjustment of SOEs to be lower than negotiated base pay increase on Single Spine Salary Structure for each year” he added.