The government has revised upwards the overall budget deficit to 4.5 per cent of GDP from 4.2 per cent target for 2019.
The increase is 0.3 percentage point higher than the fiscal deficit target of 4.2 per cent of GDP approved previously in November 2018.
Government has also reviewed downward the Real GDP growth rate from 7.6 per cent to 7.1 per cent on the back of a relatively larger GDP base for 2018, as well as the lower projected crude oil and gas volumes.
Presenting the 2019 mid-year review and supplementary budget to Parliament, Mr Ofori-Atta said the revision was necessitated by new trends in macroeconomic aggregates, which pose fiscal risks.
Among the developments that warranted a revision of the 2019 macroeconomic framework are the relatively weak performance of the Ghana cedi against the US dollar, lower-than-programmed Total Revenue and Grants, faster rate of expenditure execution of 92.9 per cent relative to a revenue mobilisation performance rate of 84.5 per cent for the first half-year of 2019.
Others are crystallisation of energy sector-related contingent liabilities, which were not programmed into the 2019 Budget and expenditures on regional security-related concerns; and lower than projected crude oil and gas volumes.
Mr Ofori-Atta said despite the revision, the figure is still below the five per cent ceiling legally set for the deficit.
“This notwithstanding, the fiscal outlook for the remaining half of the year remains sound, even in the midst of strong domestic headwinds. The revised 2019 fiscal framework has carefully considered some measures in the second half of the year to safeguard the revised deficit target of 4.5 per cent of GDP,” he said.
We are, therefore, confident that the implementation of these fiscal measures will enable Government to contain the fiscal deficit within the Fiscal Responsibility Act threshold of 5.0 per cent of GDP.
The fiscal measures are specifically geared towards improving domestic revenue mobilisation, reining in expenditures, as well as addressing some critical protracted structural issues in the energy sector.
Financing of the fiscal deficit for the second half of the year will be a balanced blend of foreign and domestic financing resources.
Expectations are that a World Bank Development Policy Operation (DPO) facility, estimated at US$500 million, will be approved by Parliament for disbursement in the second half of the year.
The Minister said domestic financing was expected to moderate in the second half of the year, given the sizeable frontloading of financing requirements in the first half of the year which were funded from the source.
Proceeds from the monetisation of mineral royalties is also expected to moderate domestic borrowing in the second half-year.