The Government of Ghana has for the first time in 10 years achieved a Positive Primary Balance, two years in a row. Head of Ghana’s Economic Management Team, Dr Bawumia has said.
Primary balance, Dr Bawumia explained, is the tax revenue exceeding all government expenditure, excluding debt service payment.
Speaking at an Economic Management Team town hall meeting at the College of Physicians and Surgeons in Accra on Wednesday, 3 April 2019, Dr Bawumia said the primary balance had a surplus of 0.5 per cent of GDP in 2017 and 1.4 per cent in 2018 compared to a deficit of 1.1 per cent to GDP in 2016.
He explained that a positive primary balance is important because it means “a slowing down of debt accumulation”.
To maintain fiscal discipline, Dr Bawumia said the government has, for the first time in the country’s history, passed a law – the Fiscal Responsibility Act – that limits the fiscal deficits, in any year, to a maximum of 5 per cent to GDP, and requires by law a positive primary balance.
“In addition, a Fiscal Council has been established to provide oversight and advice in the implementation of fiscal policies,” he added.
At the same event, Dr Bawumia said the measures implemented by the government have resulted in increased Gross Domestic Product (GDP) growth exceeding the average of what was recorded in sub-Saharan Africa in 2018.
He said: “GDP growth for 2017 was 8.1 per cent, one of the highest in that year, significantly exceeding the average sub-Saharan growth of 2.7 per cent. GDP growth remained robust in 2018, almost double the average in sub-Saharan Africa”.
