Claim: The Director of Legal Affairs for the National Democratic Congress, Edudzi Tamakloe, has alleged that the budget deficit for 2016 and 2020 were 6.1% and 15.7% respectively.
Verdict: Mostly False. Data from the World Bank, International Monetary Fund, and the Ministry of Finance revealed that even though the budget deficit in 2020 was 15.7%, the budget deficit in 2016 was not 6.1%. The three institutions recorded 9.3%, 9%, and 8.7% respectively.
Full Text
The Director of Legal Affairs for the National Democratic Congress, Edudzi Tamakloe, said that the budget deficits for 2016 and 2020 were 6.1% and 15.7%, respectively. He shared the data on TV3’s Newday show.
On the show, Mr Tamakloe said, “In 2016, John Mahama had an election to contest. He could have simply gone to the Bank of Ghana to say Bank of Ghana, give me money for an election, or win an election. He demonstrated self-restraint. So, by the time he left office, he had a budget deficit of 6.1%. The Akufo-Addo Bawumia administration has not broken that record in 7 years. The most important thing is that if you compare the 2016 and 2020 elections. By the time Akufo Addo finished the 2020 election, he had done a budget deficit of 15.7%.”
This can be found from 20:22- 21:25 minutes of the video published on YouTube.
Verification
A budget deficit occurs when a government’s expenditures on public services, infrastructure, and other projects exceed the revenue it generates from taxes, fees, and other sources. The International Monetary Fund (IMF) explains that a budget deficit can adversely impact the financial health of a country when expenditures surpass revenue.
In light of this, DUBAWA researched the Budget Statement and Economic Policy published by the Ministry of Finance, data from the World Bank, and the International Monetary Fund to verify the accuracy of claims made by Mr Tamakloe.
Budget Deficit for 2016
After a search through the 2017 Budget Statement and Economic Policy revealed that the overall budget deficit was 8.7% of GDP.
According to a press release issued by the IMF on Feb. 10, 2017, after it visited Ghana, it placed Ghana’s overall budget deficit at 9%.
“In 2016, the overall fiscal deficit (on a cash basis) deteriorated to an estimated 9 per cent of GDP, instead of declining to 5¼ per cent of GDP as envisaged under the IMF-supported programme.”
A programme document dated Nov. 21, 2017, regarding a proposed credit of 200 million dollars to Ghana for the second phase of macroeconomic stability for competitiveness and development policy financing by the World Bank, revealed that Ghana’s budget deficit for 2016 peaked at 9.3%.
The document states, “Ghana missed its 2016 fiscal target by a large margin, with the fiscal deficit on a cash basis estimated at 9.3% of GDP compared with the target of 5.2%. The spillage was largely due to the failure to adjust overall expenditure due to the revenue shortfall.”
| BUDGET DEFICIT | |||
| MINISTRY OF FINANCE | IMF | WORLD BANK | |
| 2016 | 8.7% | 9% | 9.3% |
| 2020 | 11.7% | 15.2% | 15.2% |
Budget Deficit for 2020
The World Bank’s October 2021 update on Ghana’s Economic Outlook reported that the country’s fiscal deficit reached 15.2% of GDP in 2020.
Likewise, following the conclusion of the IMF’s 2021 Article IV Consultation with Ghana, the reported budget deficit was adjusted to 15.2% of GDP. Notably, the figures provided by the Ministry of Finance differ from those presented by the World Bank and the IMF.
According to the 2021 Budget Statement, the Ministry asserted that the budget deficit accounted for 11.7% of the GDP. The statement said, “The overall budget deficit on a cash basis was 11.7 per cent of GDP against a revised target of 11.4 per cent.
Conclusion
Even though the data that the budget deficit in 2020 was 15.2% is accurate, as figures from the World Bank and the IMF state, the claim that the budget deficit for 2016 was 6.1% is false. The budget deficit for that year was 8.7% as recorded by the Finance Ministry, 9% from the IMF, and 9.3% from the World Bank.
