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Weekly Insights – Ghana – 23/06/2017 – Nimed Capital Limited

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THOUGHT OF THE WEEK

Ghana Missed Revenue Target for Q1 2017

In the Quarterly Brief on the 2017 Budget Performance issued by IMANI Ghana, revealed the shortfalls in the government’s projected targets on revenue and expenditure for the First Quarter. Showing a signal that calls for closer monitoring and alternative economic strategies are needed. The revenue shortfall indicates that the impact on the removal of certain corporate taxes dubbed “nuisance taxes” by the Ministry of Finance is yet to stimulate in corporate profitability.

Revenue targets have been missed for Q1 by 14%, of which domestic revenue fell short of the target by 12%. Company taxes, a component of the domestic tax revenue slipped off the target by 27% for the quarter. On the external economy, taxes on International Trade, specifically import duties missed the projection by 23% for the quarter. Non-tax revenue and grants amounted for the largest target miss by 21% and 53% respectively. On a positive note, expenditure targets for the quarter were short by 14%.

Outlook

The performance on revenue particularly domestic tax revenue for Q1 raises concerns within the short term. Without significant recovery of real sector productivity to drive the tax revenue over the upcoming quarters beyond the projections of government, efficiency and effectiveness of the 2017 economic plan could be undermined.

Moving forward, we expect more to be done, for the economy to get back on track and stimulate job creation. The stability in the country’s power supply and low exchange rate volatility is expected to sustain the current low inflationary environment and associated low interest rate regime. This we believe will spur economic growth, corporate profitability and attainment of the projected taxes receipt.

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