Report on Financial Performance and Position of Country X and Country Y

Introduction
In this report, two countries’ financial performance and financial position has been examined using some ratios. The report aims to perform a comparative analysis of the two countries to direct economic debates of the think tank of civil society.

Discussions and Analysis
The financial performance of the two countries is examined. The revenue performance of the two countries is measured by the domestic tax per capita income ratio. Country Y has higher domestic tax per capita than A, showing that Country Y perhaps has a more effective tax administrative system than Country X. it also means that the citizens of Country Y may be responsible citizens than Country X. both countries receive less than 3% of their revenue from grants, indicating that both countries may be winning themselves from aid as much as possible

Country Y manages its expenditures better than Country X. Country Y uses only 397% of its tax revenues to pay wages and salaries, whilst Country X spends 56% of its revenues on paying wages and salaries. Wage bill 43% of total expenditure in Country Y and 47% in Country X, indicating that Country Y manages its wage bill better than Country X. in addition, on 20% of the revenue of Country Y is spent on interest expenses whilst A applies 37% . In short, Country Y manages its expenditure better than Country X.

In relation to financial position, the Debt to GDP of Country X is 65%. In contrast, Country Y is as high as 40455%, revealing that Country X manages its debt far better than Country Y. debt burden on the citizens of Country Y is lighter than Country X as shown by debt per capita ratio of GH¢404.6 for Country Y and GH¢4,722.50 for Country X. In Country X, over 50% of debt are used to acquire assets whilst less than 3% of debts is reflected in the capital assets of Country X.

Limitations
The analysis above should be appreciated in the face of these limitations.

• The basis of accounting used by the two countries may differ as this information is not given in the financial reports.
• The stage of development of the two countries may also be different, which may affect their financial performance and conditions.
• The type of governance system runs by the two countries may not be the same. The governance variables may affect the financial conduct of the countries.

Conclusion
The analysis reveals that Country Y is outperforming Country X in all counts. Therefore, country X must examine its expenditure management policies and debt management policies as most of the problem comes from these ends.

Introduction = ½ marks
Body= ½ x4 point = 2 marks
Limitation = ½ x2points =1 mark
Conclusion= ½ marks
Total (4 marks)

.                                                                                    A                          B
i) Grants to total revenue ratio (%)                            2.43                     2.11
ii) Wage Bill to Tax Revenue ratio (%)                     66.74                    52.96
iii) Interest to revenue ratio (%)                                36.78                    20.03
iv) Debt to GDP ratio (%)                                          65.13                   404.55

(8 ticks @ 0.5 marks = 4 marks)

Report on the Financial Performance and Position of Country A and Country B

Introduction
In this report, the financial performance and financial position of the two countries has been examined using some ratios. The aim of the report is to perform a comparative analysis of the two countries to direct the economic debates of the think tank of the Civil Society.

Discussions and Analysis
Both countries receive less than 3% of their revenue from grants, indicating that both countries may be winning themselves from aid as much as possible.

Country B manages its expenditure better than Country A. The wage bill to tax revenue is 53% for country B and 67% in Country A, indicating that B manages its wage bill better than country A. This is evident in the fact that country A generates more tax revenue than country B.
In addition 20% of the revenue of County B is spent on interest expenses whilst A applies 37%. This is an indication that in relative terms, country B spends less of its revenue on paying interest.

In relation to financial position, the Debt to GDP of country A is 65% whereas country B is as high as 405%, revealing that A manages its debt far better than B. For country B, its debt is over 4 times its GDP indicating a complete crisis situation.

Limitations
The analysis above should be appreciated in the face of these limitations:

• The basis of accounting used by the two countries may differ as this information is not given in the financial reports.
• The stage of development of the two countries may also be difference and this may affect their financial performance and conditions
• The type of governance system runs by the two countries may not be the same. The governance variables may affect the financial conduct of the countries.

Conclusion
The analysis reveals that country B is outperforming country A in all counts, country A required to examines its expenditure management policies and debt management policies as most of the problem comes from these ends.

.                                                                                             2018                    2017
Gross Debt (interest bearing liabilities) GH¢’m            128,640              114,400

.                                                                                                                    2018                    2017

Net Debt percentage (Financial Asset -Gross Debt) GH¢’m             -114,290              -98,520

.                                                                                              2018                    2017

Domestic Debt per Capita (Debt/Pop*) GH¢                5145.60                 4786.6

.                                                                                           2018                    2017

Debt to GDP (Debt/GDP*100) %                                    62.72                   61.64

.                                                                                               2018                    2017

Total Asset to debt (Total Asset/debt *100) %                 16.71                   21.04

.                                                                                                 2018                    2017

Capital Asset per Capita (Capital asset/pop) GH¢            568.00                 736.00

Report of the Financial Position of the Consolidated Fund for 2018 financial year.
Introduction
The financial position of the Consolidated Fund has been analysed using some ration and other indicators. The report examines the financial condition of government based on the assets and liabilities disclosed in the financial reports.

Discussions and Analysis
Gross debt measures the total interest-bearing liabilities of the Consolidated Fund. The result shows an increase in total debt of government from GH¢114.4 billion in 2017 to GH¢128.64 billion in 2018, a percentage increase of 12.45%. This gives a bad signal for the financial position of the government as this will negatively affect financial performance of subsequent years in the form of high interest expenses. The debt sustainability of the country is threatened by a high debt to GDP ratio which is in the increase from 61.64% in 2017 to 62.72% in 2018. Domestic debt per capita also increase from GH¢4786.60 in 2017 to GH¢5145.60 in 2018 showing increasing debt burden of each citizen. Thus, the debt position of the Consolidated Fund is not encouraging and it has serious consequences for sustainability and future service delivery.

The use to which the debt is put is very important. The ratios included that the debt might have been used for current purposes and repayment of matured debt. The net debt position is unfavourable deepening from GH¢98.5 billion in 2017to 114.3 billion in 2018. This shows that debt stock of the Consolidated Fund is not backed by adequate financial assets and this increase the countries risk exposure. The amount of debt used in the acquisition of capital infrastructure is insignificant. The result shows that only 21% of debts reflects in capital infrastructure in 2017 but drop further to only 16% in 2018. This shows that the debt is being used for recurrent spending and debt pay offs. This trend is disturbing more when the capital asset per capital is very low. The negligible amount of GH¢736.4 share of capital assets by individual citizen in 2017 further drop to GH¢568 in 2018.

Conclusion
It is observed that the financial condition of the Consolidated Fund is precarious and a drastic measures and reforms are required to reverse the trend. Effective debt management policies are needed to reverse the situation. The use of debt for financing recurrent expenditures should be avoided as much as possible.