The International Monetary Fund (IMF) in its revised forecast on Ghana’s economic growth has projected a 9.5 per cent fiscal deficit of Gross Domestic Product (GDP) by the end of the year.
The projected 9.5 per cent fiscal deficit is much higher than government’s 4.9 fiscal deficit projected for 2020 and the 5 per cent fiscal deficit ratio to GDP as stipulated by the Fiscal Responsibility Act, 2018.
Excluding energy and financial costs, the budget deficit of GDP will, however, be 6.4% of GDP, IMF said.
The now projected higher fiscal deficit, according to The Fund, is due to the coronavirus pandemic.
The IMF says revenues are expected to be lower by 2.2 per cent of GDP, because of lower oil revenue and weaker tax collections coupled with lower tax compliance due to the slowdown of growth.
Further, the Fund says COVID-19 spending is expected to amount to 0.4 per cent of GDP, composed of higher health and social expenditures (0.2% of GDP), and the Coronavirus Alleviation Programme fiscal stimulus package (0.2% of GDP).
Gross government financing needs based on IMF’s 2019 Article IV Consultations with Ghana (IMF’s study and recommendations on Ghana’s economy in 2019), are expected to be higher by 6.1 percentage points of Ghana’s GDP.