Carefully balance fiscal consolidation with growth initiatives – BoG to government

The Bank of Ghana is urging government to carefully balance fiscal consolidation with growth initiatives by coordinating both fiscal and monetary policies more effectively to achieve the desired macro-economic outcomes.

In its March 2022 Monetary Policy Report, it said government’s recent proposal of up to 20% cut in discretionary spending is expected to support the consolidation efforts.

The provisional fiscal data shows that the revenue outturn for the review period was behind target at the end of 2021 and expenditures seemed well contained.

Consequently, the deficit at the end of the period was marginally above target at 9.7% of Gross Domestic Product.

Government budgetary operations resulted in an overall budget deficit of ¢42.523 billion at the end of 2021.

This was higher than the expected target of ¢41.272 billion (9.4% of GDP).

In addition, the primary balance for the period under review recorded a deficit of 2.0% of GDP, achieving its target for the year in review.

The overall fiscal deficit of GH¢42.523 billion was financed mainly from domestic and external sources.

Domestic financing (net) was GH¢23.892 billion (5.4% of GDP), substantially lower than the target of GH¢26.506 billion (6.0% of GDP).

Foreign financing, on the other hand, was a net inflow of GH¢12.481 billion (2.8% of GDP), lower than the target of GH¢15,874.3 million (3.6 % of GDP).