The country’s total revenue for July 2020 has showed significant improvement, even surpassing the target, amid lingering pressures from the coronavirus pandemic which have led to deceased economic activity.
Data from the Bank of Ghana’s Monetary Policy Committee (MPC) report show that total revenue and grants for July exceeded the target by 3.4 percent, recording GH¢27.7billion compared with a target of GH¢26.8billion. In terms of growth to GDP, total revenue grew by 7.2 percent compared to the 6.9 percent recorded in June.
The growth is even more significant when the data is analysed in context of the pandemic. The Summary of Economic and Financial data shows a very disappointing growth in revenue at beginning of the year, as it recorded monthly growth of 1.2, 2 and 2.8 percent of GDP in the year’s first quarter. It must be noted that, globally, the virus started taking a toll on the world’s economy from February; thereby, leading to closure of borders and restrictions on movements – measures which nearly shut down economies around the world.
China, which is Ghana’s largest trading partner and the world’s factory, for example, closed its borders in January to contain spread of the virus – thereby affecting its trade dealings with other countries, including Ghana, leading to decreased international trade revenue for the local economy.
The First Quarter Bulletin report shows taxes generated from international trade recorded GH¢829.7million – lower than the budget target of GH¢1.2billion, and still lower than GH¢1.4billion recorded in the same period of 2019. Total import duty realised was 34 percent below target, and recorded a year on year decline in growth of 42.5 percent.
Overall, government receipts (including grants) in the first quarter totalled GH¢10.3billion, representing 2.7 percent of GDP, lower than the target of GH¢13.9 billion – indicating a 25.8 percent shortfall.
However, the situation began to improve as some of the restrictions on businesses and trade were eased both locally and internationally. Locally, President Nana Addo Dankwa Akufo-Addo lifted the lockdown he imposed for three weeks in April, giving way for some economic activities to continue and thereby improving the revenue situation. The Bank of Ghana data backs this claim, as the second quarter’s total revenue to GDP shows significant growth of 4 percent, 4.9 percent and 5.9 percent in those three months.
Domestic revenue mobilisation has also showed an impressive growth for the period, in the same trajectory as total revenue; obviously, also due to the easing of restrictions. It recorded growth to GDP of 1 percent, 1.9 percent and 2.8 percent respectively for all three months of the first quarter. Then it further moved to 3.9 percent, 4.8 percent and 5.9 percent in the second quarter; and to 7.1 percent in July.
These figures come as positive news for the economy considering damage caused by the virus, especially in first-half of the year. The mid-year budget presented by Finance Minister Ken Ofori-Atta showed a grim picture of the revenue situation in the year’s first six months.
According to him, revenue mobilisation fell short of target by 26 percent – resulting mainly from shortfalls in oil revenue, Customs receipts and non-oil Non-Tax revenues. Total Revenue and Grants for January to June 2020 amounted to GH¢22billion compared with a programmed target of GH¢29.7billion.
Non-oil tax revenue, comprising taxes on Income and Property, Goods and Services and International Trade, amounted to GH¢16.7billion or 4.3 percent of GDP – 16.2 percent below the programmed target of GH¢19.9billion or 5.2 percent of GDP. Revenue from upstream Oil and Gas amounted to GH¢1.9billion (0.5% of GDP), 55.4 percent lower than the programmed target of GH¢4.4billion; mainly on account of lower volumes and a significant drop in crude oil prices on the international market.