‘GH¢34bn revenue target still feasible’
The government is confident of achieving its GH¢34 billion revenue target this year, despite a shortfall of GH₵ 1.4 billion in the first quarter of 2017.
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The government intended to raise an amount of GH₵ 9.7 billion in the first quarter but ended the quarter with a revenue of GH₵ 8.34 billion, representing a deficit of GH₵ 1.4 billion, but the Head of the Tax Policy Unit of the Ministry of Finance, Mr Anthony Dzadra, told the GRAPHIC BUSINESS there was no cause for alarm since the government was confident of raising adequate revenue in the second, third and fourth quarters of the year to make up for the deficit of the first quarter.
“The budget was read in March and was approved in March so that was when government started implementing its policies so there are so many policies that have been rolled out which takes time to be effective and that explains the shortfall. But as the policies are being rolled out, we will catch up with the revenue target,” he stated
“We are very confident of meeting the target for the second quarter and the overall target for the year,” he added.
He believed it was too early to doubt the government’s ability to raise the targeted revenue since about 30 per cent of government revenues were normally collected in the last quarter.
An economist, Dr John Gatsi, was, however, of the view that the government would likely miss the revenue target for the second quarter and its target for the year.
Considering the fact that, the government’s tax policies started kicking in at the beginning of the second quarter, he said the policies would take time to be fully operational and therefore did not see the government would be able to meet the second quarter target, thereby missing the end of year target as well.
“The revenue shortfall may also emanate from low economic growth and I am wondering how the economy and economic activities in the 2nd, 3rd and 4th quarter will be so robust that they will cater for the shortfall in the first quarter and meet the revenue target,” he noted.
“This is also when the issues related to over expenditure starts so it means it spells more doom for the economy in terms of revenue mobilisation and in the face of increasing expenditure,” he added.
Challenges of businesses
An Economic Analyst with Databank Research, Mr Courage Kwesi Boti, in an interview with the GRAPHIC BUSINESS, said the revenue shortfall was an indication that the challenges that businesses faced last year extended into this year, considering that the major shortfall came from tax revenues which fell short by GH¢733 million, with a chunk of it coming from company taxes.
“This tells you that the economic challenges we ended the year with extended into this year and that affected the companies,” he pointed out.
The other major shortfall was with grants which was projected to fetch the country GH 495 million but ended at the first quarter at GH₵ 234 million, representing a deficit of GH¢261 million.
Mr Boti, said this could be attributed to the fact that a new government had just come in and they were now announcing their fiscal policies and putting things in place so donor partners have to see what is happening before they release their funds.
“They want to know the projects you want execute and how sustainable they are before they release the funds,” he said.
Expenditure contained
Despite the shortfall in revenues, there is, however some good news as the government managed to contain its expenditure in the first quarter.
The government projected to spend GH¢12.4 billion in the first quarter but ended up spending GH₵ 10.7 billion, thereby saving an amount of GH¢1.7 billion in the first quarter.
Mr Boti, however, cautioned that it was early days to rejoice yet since the government was not really functional in the first quarter as it was then appointing District Chief Executives (DCE) and Municipal Chief Executives (MCE).
“So basically we didn’t spend so much on goods and services as the government budgeted for GH₵ 518 million but used only GH₵ 94 billion. Now that the government has put all the structures in place, this side of the budget is, however, likely to increase,” he mentioned.
“The issue is, therefore about sustainability so going forward, the government has to always adjust its expenditure to compensate for the losses in revenue,” he added.