Latest news with #fiscaldeficit
Reuters
a day ago
- Business
- Reuters
Ghana narrows fiscal deficit target after better-than-expected first half
ACCRA, July 24 (Reuters) - Ghana has narrowed its fiscal deficit target for 2025 after a better-than-expected first six months of the year, its finance minister said on Thursday, pledging to get public finances back on track. The West African country is emerging from its worst economic crisis in a generation, featuring turmoil in its cocoa and gold industries, a severe cost-of-living squeeze and a lengthy debt-restructuring process. But this year, key macroeconomic indicators have improved, with growth accelerating to 5.3% year-on-year in the first quarter and inflation falling to 13.7% in June, its lowest since 2021. The government now expects a fiscal deficit of 3.8% of Gross Domestic Product (GDP) this year, narrower than the 4.1% targeted in March, Finance Minister Cassiel Ato Forson told parliament during a mid-year review of public finances. In the first six months the deficit was 1.1% of GDP, ahead of the 2.4% targeted. Forson said economic growth could possibly exceed the March target of 4% and officials were hopeful they could hit the year-end inflation target of 11.9% ahead of schedule. "We have borrowed less than we planned, signifying strong expenditure control and fiscal discipline," Forson said. "This is a strong signal to the investor community and all stakeholders that the needed fiscal consolidation is happening here in Ghana and it will be sustained." In the first half of the year, total revenue and grants were roughly 3% short of target, but expenditure came in 14% below target. Forson said risks to the public purse included a shortfall in customs revenue, mounting wage pressures and smuggling of marine gas oil, adding Ghana was not out of the woods yet.
Free Malaysia Today
17-07-2025
- Business
- Free Malaysia Today
Malaysia to miss fiscal deficit target this year, says BMI
BMI, a Fitch Solutions company, has predicted that economic growth will moderate to 4.2% this year. (Envato Elements pic) PETALING JAYA : Malaysia will likely miss its fiscal deficit target this year, as spending is seen exceeding projections and revenue may fall, according to BMI, a Fitch Solutions company. 'Malaysia's budget gap will narrow to 4% of gross domestic product (GDP) from 4.1% last year,' BMI said in a report. 'That misses the official target of 3.8% of GDP and will delay policymakers' goal of bringing down the deficit to 3% by 2028,' it added. A failure to meet the target would be a setback for Malaysia, which has the highest credit rating among developing nations in Southeast Asia. On July 8, S&P Global Ratings warned that tariffs and trade wars have increased risks for Asia-Pacific sovereign ratings. BMI forecasted revenue to amount to 16.4% of GDP in 2025, down from 16.8% in 2024, as subdued economic activity limits tax collection. BMI has predicted that economic growth will moderate to 4.2% this year. 'That compares with the official forecast of 4.5% to 5.5% economic growth, which is under review. 'Petroleum-related revenue is also expected to undershoot the budget,' it said. The government will see more pressure to further subsidise utility costs following the 14% increase in electricity tariffs that took effect July 1, according to BMI. 'There have also been scant details about the government's plans to cut subsidies for RON95, the country's most popular gasoline,' it noted. 'We suspect policymakers will overshoot planned expenditure in 2025, as they have consistently done so in recent years,' it said.
Yahoo
16-07-2025
- Business
- Yahoo
Colombia government weighs tax hikes to fund 2026 budget
BOGOTA (Reuters) -Colombia's government is weighing a tax reform proposal that, if passed, would help raise 26 trillion pesos ($6.48 billion) to fund its 2026 budget, two government sources told Reuters on Wednesday. Most of the funds would be raised through tax increases, the sources said. The proposed amount is higher than the 19 trillion pesos announced in June by Finance Minister German Avila during the presentation of the government's medium-term fiscal framework. A drop in tax income has caused Colombia's public finances to weaken, prompting the government of Latin America's fourth-largest economy to suspend the country's fiscal rule. The Finance Ministry has raised this year's fiscal deficit target to 7.1% of GDP, compared to the earlier target of 5.1%. For 2026, the deficit is projected at 6.2% of GDP. According to preliminary figures presented by Avila on Tuesday night at a cabinet meeting, the government will propose a 2026 spending budget of 551.66 trillion pesos to Congress, which is 7.9% higher than the 2025 budget of 511 trillion pesos. Fiscal challenges led ratings agencies S&P and Moody's to downgrade Colombia's sovereign debt by one notch in June, citing the country's weaker fiscal performance. ($1 = 4,015.04 Colombian pesos) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
16-07-2025
- Business
- Reuters
Colombia government weighs tax hikes to fund 2026 budget
BOGOTA, July 16 (Reuters) - Colombia's government is weighing a tax reform proposal that, if passed, would help raise 26 trillion pesos ($6.48 billion) to fund its 2026 budget, two government sources told Reuters on Wednesday. Most of the funds would be raised through tax increases, the sources said. The proposed amount is higher than the 19 trillion pesos announced in June by Finance Minister German Avila during the presentation of the government's medium-term fiscal framework. A drop in tax income has caused Colombia's public finances to weaken, prompting the government of Latin America's fourth-largest economy to suspend the country's fiscal rule. The Finance Ministry has raised this year's fiscal deficit target to 7.1% of GDP, compared to the earlier target of 5.1%. For 2026, the deficit is projected at 6.2% of GDP. According to preliminary figures presented by Avila on Tuesday night at a cabinet meeting, the government will propose a 2026 spending budget of 551.66 trillion pesos to Congress, which is 7.9% higher than the 2025 budget of 511 trillion pesos. Fiscal challenges led ratings agencies S&P and Moody's to downgrade Colombia's sovereign debt by one notch in June, citing the country's weaker fiscal performance. ($1 = 4,015.04 Colombian pesos)
Yahoo
14-07-2025
- Business
- Yahoo
Analysis-A slew of T-bills coming? Money market funds say 'bring 'em on'
By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -More than $1 trillion in U.S. short-term bills are expected to flood the market over the next 1-1/2 years following the increase in the debt ceiling, as the Treasury replenishes its diminished cash balance while funding the country's huge fiscal deficit. There is, however, no shortage of buyers, with money market funds leading the way. Armed with a record $7.4 trillion in assets as of July 1, money funds, which invest in short-term, low-risk securities such as Treasury bills and repurchase agreements, or repos, are ready to take on more supply. The debt ceiling increased by $5 trillion to $41.1 trillion two weeks ago following the signing into law of the "One Big Beautiful Bill." The Treasury's operating balance had dropped to $313 billion on July 3, data from money market research firm Wrightson ICAP showed, the day before President Donald Trump's tax and spending bill was enacted. Treasury bills are critical to financial markets and the broader economy, given their role as safe and liquid assets, and are a key tool for funding government spending. In turning to short-term debt to fill its coffers, U.S. Treasury Secretary Scott Bessent had said it does not make sense to increase long-term bond sales at current interest rates. The Federal Reserve has kept the benchmark federal funds rate in the 4.25%-4.50% range since December. J.P. Morgan, Barclays, and TD Securities have estimated new issuance of Treasury bills alone over the next 18 months of between $900 billion and $1.6 trillion, higher than their initial projections before the debt ceiling resolution. "It sounds like a large amount of issuance coming from the Treasury, but we welcome it and feel that we will have no trouble accommodating it," said Susan Hill, senior portfolio manager and head of the government liquidity group at Federated Hermes, with assets under management of $631.1 billion. The firm has a suite of government and prime money market funds. Bank estimates on short-term supply over the next 1-1/2 years, however, paled in comparison to Treasury bills issued following the last debt ceiling saga two years ago. The Treasury had issued $1.1 trillion in three months from June 2023, as it reloaded its cash account that had dwindled to just $23 billion. Lou Crandall, Wrightson's chief economist, said the Treasury is in a much stronger position now than in 2023. "The debt ceiling impasse didn't go down to the wire this time, so they're starting out with $300 billion more in cash," said Crandall, providing ample cushion for the Treasury. Still, this year's projected T-bill supply exceeds that of past debt ceiling events. In 2011, the Treasury issued about $300 billion in T-bills in the months following the debt limit increase in August 2011. In 2013, the Treasury issued roughly $400 billion in bills by the end of that year. Fast forward to 2025, and bank estimates of additional T-bill supply for the next five months ranged from $650 billion to $830 billion. RAMPING UP; REVERSE REPO DECLINE With the spending bill's approval, the Treasury last Tuesday raised the size of last week's four-week and eight-week bill auctions by a larger-than-expected $25 billion each to $150 billion for both offerings. It also announced another $225 billion in three T-bill auctions scheduled this week. Those increases are likely to represent the bulk of adjustments for bill auction sizes for July, although the Treasury might not be quite done yet. "There's plenty of money market funds that had been avoiding maturities like those on August bills (due to the debt ceiling restrictions), so that part of the curve is going to be pretty well subscribed," said Jan Nevruzi, U.S. rates strategist, at TD Securities. There is just one hitch. The Fed's overnight reverse repo (RRP) facility, where money market funds park their excess cash, has fallen sharply to $182 billion as of July 11, from a peak of $2.5 trillion in December 2022. Without that excess cash sitting in RRPs, market participants wondered how money funds would absorb more Treasuries if they are fully invested. In 2023, money funds used that buffer sitting in RRPs to buy a deluge of T-bills in the market. In a reverse repo, investors lend overnight cash to the Fed at a 4.25% interest rate in exchange for Treasuries or other government securities, with a pledge to buy them back. The Fed's ongoing quantitative tightening, a process that shrinks its balance, allowed Treasuries and mortgage-backed securities to mature without reinvestment. That drained liquidity from the financial system and reduced excess cash that previously flowed into RRPs. Analysts, however, said money market funds will likely reallocate out of regular repos into T-bills. Repos have grown to 37% of money funds' assets, J.P. Morgan said in a research note. "The overall portion of money fund investments in the repo market is still quite large, so it becomes more of a decision of going out of that normal repo transaction into Treasury bills if the value is there," said Hill of Federated Hermes. Currently, three-month T-bills are yielding 4.353%, higher than the Secured Overnight Financing Rate, a repo rate, of 4.31%. Analysts also pointed to money market funds' continued appeal to investors that should further propel the growth in their assets, which means more cash for T-bills. Money market yields are 170 basis points higher than bank deposits, a historically wide spread, wrote Samuel Earl, U.S. rates strategist at Barclays. Households, which have $10 trillion in time deposits and savings accounts, are likely to continue to move deposits at banks into money funds, he added. Sign in to access your portfolio
