Tomorrow in Parliament, Seth Terkper, the Minister of Finance, will read his second budget speech in nine months, in which he is expected to put forward a plan for strong growth in 2014 underpinned by macroeconomic stability.

The budget speech takes place against a backdrop of public dissatisfaction with the raft of fiscal austerity measures introduced by government this year -- the most recent of which was the partial removal of subsidies on electricity and water -- in an effort to trim last year’s large budget deficit of 11.8 percent of GDP.

Despite the measures -- which also included the cancellation of subsidies on fuel products, tax hikes, and the lowest percentage-increase in public-sector wages since 2010 -- Mr. Terkper is set to admit in Tuesday’s budget that government will miss its budget deficit target of 9 percent of output in 2013.

This is partially because the economy is growing less briskly than predicted this year -- 7.4 percent compared to 8 percent -- leading to tax revenues coming in short of expectation. The other reasons are that wages and interest spending have been running above their targets, and external grants that were budgeted for have not been fully released by the country’s donors.

Amid this stress on the government finances, a more plausible deficit outcome in 2013 is a figure above 10 percent of GDP, analysts say. Barring a dramatic improvement in growth and taxes from 2014, as well as better success in managing expenditure, this deficit deviation could prolong the time required for reducing the gap to the medium-term target of 6 percent of GDP -- which Mr. Terkper in his last budget in March predicted will be achieved in 2015.

The big question is whether Mr. Terkper, given the prospect of failure to meet key fiscal targets, will ask Ghanaians to further tighten their belts as the economy rides out the storm.

For sure, the Finance Minister will reiterate that the era of expensive universal fuel and utility subsidies is over, and argue that it is a sine qua non of a more disciplined fiscal future. Even before it is read, the budget has incurred a liability of GH¢400million from the partial climb-down on the electricity tariff hike that took effect from October.

Mr. Terkper’s budget will not have room for another bail-out by government of households, paving the way for the Public Utilities Regulatory Commission (PURC) to begin quarterly adjustments of utility tariffs in January.

Analysts and the country’s donors hope that the Finance Minister will lay out a credible path for containing the growth of the public-sector wage bill, which currently devours more than half of tax revenue -- compared to the standard ratio of 35 percent.

Speaking to the Business & Financial Times in an interview recently, Claude Maerten, the European Union’s most senior diplomat in Ghana, said: “No country can survive with such a high percentage of total revenue used to pay government workers. This is really not sustainable. There is a need to look at how to limit or decrease the share of the wage bill in the revenue in future.”

This year, public-sector salaries rose by 10 percent, the lowest annual increase since 2010, and any success at limiting the cost of wages for government hinges partly on agreeing future pay increases set within an affordable ceiling.

But that also depends on the rate of inflation, which has been heading upward since the removal of energy subsidies in February and October. Last month, annual consumer price index inflation surged to 13.1 percent following the 78.9 percent jump in the power tariff -- now reduced to 59.2 percent -- and the 52 percent hike in the price of water.

While the reduction in the power tariff rise could moderate inflation in November, the weak cedi and the approach of the high-spending Christmas season will keep prices rising for the rest of the year -- with no comfort in sight as utility prices start to be adjusted quarterly from January.

Monetary policy, in the light of this, will remain tight -- with the Bank of Ghana (BoG) sticking to its traditional target of single-digit inflation. This will not necessarily keep market interest rates high, because the rates -- as they have done in the past few months -- could fall if government continues to substitute short-term debt for longer-tenor instruments and sends a credible signal of fiscal consolidation in 2014.

Infrastructure expansion has been a recurring theme of the budget statements of the past few years, and Mr. Terkper will sound an optimistic note on the sector because of the impending completion of the natural gas pipeline in Atuabo.

If, as forecast, gas begins to flow from the second half of next year, the Volta River Authority (VRA)’s problems with finding adequate, cost-effective fuel supply for its thermal plants will be alleviated -- with possibly beneficial effects on the price of electricity.

This is what, perhaps, will lead next year’s budget to aim for President John Mahama’s manifesto pledge of at least 8 percent GDP growth per annum up to 2016 -- despite the slowdown witnessed this year.

Keeping growth up is crucial to preventing debt distress in future, given that public borrowing will remain elevated because of large deficits. To improve debt management, the Finance Minister will say he’ll continue the strategy of extending the yield curve by boosting the sale of five- and seven-year bonds -- which will be used for investment rather than footing recurrent bills such as wages.

As 2014 will be yet another year of fiscal stabilisation, the private sector cannot expect any respite from taxes: but Mr. Terkper will probably emphasise government’s policy of promoting the participation of the local private sector in the downstream segment of the oil and gas sector, as well as its new foreign direct investment law which, apart from protecting some sectors, stresses partnerships between foreign investors and indigenous businesses.

Mr. Terkper told B&FT in August that -- unless he engineers a fiscal turnaround --he is not likely to launch a second Eurobond as Finance Minister. Now that the prospect of a foreign bond has been weakened by Fitch’s downgrade of Ghana’s sovereign debt rating to B from B+, Mr. Terkper’s budget speech on Tuesday is more significant for its propensity to begin the journey toward regaining the country’s former position with the rating agency.