Ghana’s economy will expand 7.2 percent, less than the previous estimate of 7.9 percent, limiting the government’s ability to narrow its budget deficit, Vice President Kwesi Amissah-Arthur said.
Gross domestic product will grow at a faster pace next year, helping to narrow the gap, he said in an interview in the capital, Accra, today. The government will target a budget gap of 9.2 percent of gross domestic product this year and 6 percent next year, he said earlier at a conference in Accra.
“We expect tax revenue to grow quite significantly next year as business investments expand,” he said. “The revenue agency is expanding the tax net, putting in place measures to be more efficient.”
Ghana’s credit rating was cut this month by Fitch Ratings after rising government wages and falling revenue from gold prevented the government from narrowing the budget gap to 9 percent target. The deficit had ballooned to 12.1 percent last year because of increases in public sector wages, which consume about 70 percent of tax revenue.
Ghana slashed subsidies on fuel, water and power to curb the budget deficit this year. While the removal has cut government spending, the impact of the higher prices is being passed on to inflation, Amissah-Arthur said. Inflation quickened to 11.9 percent in September, the fastest pace all year.
The cedi dropped 0.5 percent to 2.2053 per dollar at 12:41 p.m. in Accra, extending the decline this year to 14 percent.
To contact the reporters on this story: Pauline Bax in Rotterdam at pba
