Budget deficit slips to 3.4% in first quarter

Budget deficit slips to 3.4% in first quarter

The country’s budget deficit slipped to 3.4 percent in the first quarter of 2020, according to latest figures by the Bank of Ghana.

This is against the 1.9 percent budget deficit recorded in the first quarter of 2019.

The larger budget deficit in the first quarter of 2020 was caused by shortfalls in tax revenues, international trade taxes, taxes ion goods and services and taxes on income and property which has been caused by unfavorable external and domestic conditions and higher pace of spending, which included some unbudgeted Covid 19 related expenditure.

The expanded deficit led to an increase in the debt stock to 59.3 per cent of GDP at the end of March 2020

Leading economic indicators

The Governor of BoG, Dr Ernest Adisson, said the leading indicators of economic activity during the first quarter of the year also suggested some slow down reflecting the restrictions, social distancing, and the partial lockdown measures introduced by the government in the middle of March.

He said retail sales picked up in March 2020 due to panic buying which preceded the partial lockdown, while consumption, proxied by domestic VAT receipts dipped.

 

“The slow conditions in economic activity is reflected in port activities and a sharp decline in tourist arrivals. The slowdown also affected the private sector’s contributions to social security. As a result of these developments, the Bank of Ghana’s Composite Index of Economic Activity (CIEA) contracted by 2.2 percent in March 2020, compared to a growth of 5.6 per cent for the corresponding period of 2019,”

“Preliminary estimates by the Bank of Ghana shows that growth in 2020 is likely to be between 2.0 and 2.5 percent,” he stated.