The Finance Minister Ken Ofori-Atta has revealed that the government suffered a revenue shortfall of nearly GH¢8bn as the COVID-19 pandemic exacerbated weak revenue mobilisation efforts.
Delivering the 2020 mid-year budget review and supplementary estimates on the floor of Parliament on Thursday, Mr. Ofori-Atta revealed that the government’s prudent spending made sure that the shortfall’s impact was minimised.
According to the Finance Minister, revenue mobilised in the first half of the year was GH¢22bn which was 26 percent lower than the estimated GH¢29.7bn for the period. Over the past five years, government has struggled to raise enough domestic revenue despite its tax-to-GDP already behind peers in the sub-region.
However, government’s total expenditure for the period, GH¢46.3bn, was 11.5 percent more than was projected in the 2020 budget presented last year.
“The consequent modest increase in expenditure, despite the devastating impact of COVID-19-related unanticipated spending, is a clear indication that the government is adopting prudent expenditure management measures to minimise the effects of the associated slow revenue performance,” Mr. Ofori-Atta stated.
These developments for the period resulted in an overall fiscal deficit of 6.3 percent of GDP compared to a programmed deficit target of 3.1 percent of GDP, the Minister revealed.
Mr. Ofori-Atta further explained that the fiscal deficit for the period more than doubled what was envisioned because government increased its financing programme to address the shortfall in revenue mobilisation and, to deal, in part, with the force majeure imposed by COVID-19-induced expenditures.
Meanwhile, the corresponding primary balance for the period was also a deficit of 3.3 percent of GDP, compared with a programmed deficit target of 0.9 percent of GDP.