ACCRA Feb 14 Ghana's new finance minister, Seth Terkper, said on Thursday his 2013 budget statement would aim to rein in spending after the country overshot its budget deficit target for the previous year by almost 100 percent.
The cocoa, gold and oil exporting West African country's 2012 deficit hit 12.1 percent of gross domestic product (GDP), almost double its target of 6.7 percent, the central bank reported on Wednesday.
Terkper, who is expected to present his first budget to parliament in early March, would not indicate where he would set the deficit target for 2013, but said it would be much lower than the level reached in 2012.
"For now I can say that the government has taken an economic and fiscal stance to tackle the fiscal challenges that led to the deficit overrun and I am optimistic that we will not experience those slippages in 2013," he told journalists.
Terkper, who served as deputy finance minister for four years, said payments of larger-than-estimated public sector wage arrears and fuel subsidies largely accounted for the deficit overshooting targets in 2012.
There was also a significant shortfall in expected corporate income tax from petroleum companies, after production problems meant they did not meet revenue targets, he added.
"The (wage) arrears payment has taken a toll on the budget beyond what the government had programmed - the fuel subsidies have also widened year after year," he said.
Terkper said the government was currently weighing the options for a possible reduction in fuel subsidies but said no decision had yet be taken.
Fuel subsidies for last year totalled one billion cedis ($526 million) and were expected to rise to 2.4 billion cedis this year.
"It is not going to be an austere budget - it is not going to be painful but at the same time, we are not going to repeat some of the mistakes," Terkper said.
He said the government would continue to issue short- and medium-term bonds as source of funding for capital projects, in addition to accessing loan facilities from China and other bilateral donors.
Ghana's overall balance of payments recorded a deficit of $1.2 billion in 2012, reversing a surplus of $546.5 million in 2011. (Reporting by Kwasi Kpodo; Editing by Sophie Hares)