The 2021 Budget Statement and Economic Policy of the Government of Ghana has been approved by Parliament giving permission to government to expend over GHC110 billion in the year.
Parliamentarian voted 137 as against 134 to approve the ‘ambitious’ budget targeting to grow the economy at five percent by the end of 2021.
Presenting the 2021 budget to parliament, the acting minister said the government expected the Ghana COVID-19 Alleviation and Revitalization of Enterprises (CARES) program and other government policy interventions to help restore the economy to the growth path.
“We also target to achieve an end-point consumer inflation rate of 8.0 percent and a fiscal deficit of 9.5 percent,” Osei Kyei Mensah-Bonsu, the acting finance minister said.
The government also targets to achieve a gross international reserve equivalent to four months of import cover.
The government’s total expenditure (including clearance of arrears) is projected at GHS113,750 million, equivalent to 26.2 percent of GDP for 2021.
The Majority Leader told Parliament last week when he delivered this year’s budget that the amount “represents a growth of 13.7 per cent above the outturn of GHS100,052 million recorded in 2020”.
“Mr Speaker, wages and salaries are projected to amount to GHS25,799 million and constitute 22.7 per cent of the total expenditure (including arrears clearance) for 2021”, the Minister of Parliamentary Affairs said.
As a percentage of GDP, the wage bill is projected to be 5.9 per cent in 2021 compared to the 6.5 per cent recorded in 2020.
The Suame MP said the use of goods and services is also projected at GHS5,967 million or 1.4% of GDP.
It represents 5.2 per cent of the projected total expenditure (including rrears clearance).
Also, he noted, interest payments are projected at GHS35,864 million, equivalent to 8.3 per cent of GDP in 2021.
“Of this amount, domestic interest payments will constitute about 79.1 per cent and amount to GHS28,368 million. Transfers to statutory funds as well as all other earmarked funds are estimated at GHS18,081 million (4.2% of GDP), representing 52.2 per cent growth over the recorded outturn for 2020”, detailed.
Capital expenditure is projected at GHS11,423 million (2.6% of GDP) in 2021, a decline of 5.5 per cent over the 2020 outturn,
“Of this amount, domestic financed capital expenditure is estimated at GHS3,310 million (0.8% of GDP)”, the lawmaker said.
Further, an amount of GHS8,112 million has been estimated for foreign financed capital expenditure and this will be funded by a combination of project crants and loans.
On budget balances and financing operations for 2021, Mr Kkyei-Mensah-Bonsu said based on the estimates for total revenue & grants and total expenditure, the 2021 fiscal operations will result in an overall fiscal deficit of GHS41,298 million, equivalent to 9.5 per cent of GDP.
“Mr Speaker, financing of the fiscal deficit will come from both domestic and foreign sources”, he told Parliament, adding: “Net domestic financing will amount to GHS25,424 million (5.9% of GDP) while net foreign financing will amount to GHS15,870 million (3.7% of GDP) and will include a planned international capital market programme to raise up to US$5 billion, of which US$1.5 billion will be used to support the implementation of the 2021 budget and the rest for liability management”.
“Mr Speaker, a corresponding Primary deficit equivalent to 1.3 per cent of GDP, is also projected for the year”.
