Adnan Adams Mohammed
Finance Minister, Ken Ofori-Atta is seeking to increase the government’s total appropriation to almost GH¢110 billion for the year 2020as it is seeking Parliamentary approval to spend about GH¢12billion more in the supplementary budget presented to Parliament last week.
In the 2020 budget and economic policies statement of the government presented in November 2019, the government presented a total appropriation of GH¢98.0 billion, the unexpected global pandemic has pushed up government’s expenditure beyond initial estimations prompting the request for additional GH¢12.0 billion in appropriation.
The government, through the Finance Minister, explained that the virus has not only plundered government’s revenues but has taken a heavy toll on businesses with some requiring assistance to stay afloat. Should the extra funds being requested by the Finance Minister be granted, it would bring the 2020 the total Appropriation to GH¢109.9bn.
“Ghana has been hit with a double shock: a health pandemic and a global economic recession. These have resulted in revenue shortfall of GH¢13.6 billion and unanticipated but necessary expenditures of approximately GH¢11.7 billion”, Mr Ofori-Atta told Parliament, adding that, “Whiles this pandemic requires us to exceed the limits imposed by the Fiscal Responsibility Act, we have had to make these major expenditures to protect the lives and livelihoods of Ghanaians and sustain businesses.
The Minister further explained that, the supplementary budget would go into areas such as utility tariffs reliefs for consumers, soft loans for businesses, special allowance for front line workers, governance and security, among others.
Ghana’s fiscal deficit is projected to hit 11.4% of GDP as a result of a GH¢13.6 billion revenue shortfall occasion by the COVID-19 pandemic and its attendant global economic downturn. This is above the 5% limit as stated in the Fiscal Responsibility Act, 2018 (Act 982).
According to the Finance Minister, revenue mobilised in the first half of the year was GH¢22billion which was 26 percent lower than the estimated GH¢29.7bn for the period. Over the past five years, government has struggled to raise enough domestic revenue despite its tax-to-GDP already behind peers in the sub-region.
However, government’s total expenditure for the period, GH¢46.3bn, was 11.5 percent more than what was projected in the 2020 budget presented last year.
“Mr Speaker, Ghana is not unique in this regard. The pandemic has caused other countries including the 26 countries in the EU, Brazil, Jamaica, Costa Rica, etc. to suspend their fiscal rules in 2020 in light of their sharply increased fiscal deficits.
“Mr. Speaker, given our history of fiscal rectitude, it is with great difficulty that we have to suspend our fiscal rule due to exogenous factors. We intend to return to compliance with the FRA in the shortest possible time”, the minister said.
Apparently, Mr Cassiel Ato Forson, Ranking Member on Parliament’s Finance Committee, has described as empty, the Government’s Mid-Year Budget Review presented by Finance Minister, Ken Ofori-Atta on Thursday.
“There’s nothing in it for Ghanaians to be happy about,” Mr Forson said, after the Minister had presented the budget review to the nation through Parliament, in Accra.
He said government claimed to have spent GH¢11.1 billion to address challenges brought about by the COVID-19 pandemic without giving breakdown of expenditure.
“This is sad and unacceptable,” Mr Forson added, saying “we thought the Minister would have used this golden opportunity to provide us with some breakdown on what the GH¢11.1 billion was used for; unfortunately it is all Bible quotations and nothing in the mid-year budget statement.”
According to Mr Forson, in the 2020 budget, the Government informed the nation that it would borrow an additional GH¢18 billion, and wondered why that figure had shot up to GH¢44 billion this year.
This, the Ranking Member and former Deputy Finance Minister, said meant that by the end of 2020, Ghana’s public debt would be approximately GH¢280 billion from the GH¢120 billion they inherited, representing over 72 per cent of GDP.