The Minister for Finance, Ken Ofori–Atta is expected to appear in Parliament later today [Thursday, August 6, 2020] to provide justification for the suspension of the fiscal rule for the 2020 financial year.
The fiscal responsibility act makes it an offence for the annual budget deficit to exceed five percent of GDP.
But the Minister made known his intentions to suspend the rule in the mid-year budget review due to the impact of COVID-19 on government’s projections.
Minister for Monitoring and Evaluation and Member of the Economic Management Team, Dr. Anthony Akoto Osei told Citi News that the justification has been reviewed and the finance committee deems it to be proper.
“The law allows the Minister to suspend the rule under certain conditions and the law says that he must provide a justification… He has brought it, the committee has reviewed it and it is proper and so we will come and report to the house.”
Besides the Minister’s justification before the plenary, the Finance Committee of Parliament will also present its report on the suspension to the plenary.
The Fiscal Responsibility Act, the landmark legislation passed in December 2018, four months before Ghana exited its four-year protracted IMF bailout programme, was intended to safeguard the gains the country had made in achieving macroeconomic stability.
The Finance Minister in the mid-year budget review indicated that expected revenues from taxes and grants dropped by 26% to GHS 22 billion in the first half of the year.
He attributed the shortfall to the outbreak of COVID-19.
“Revenue and grants for January to June 2020 amounted to GH¢22.01 billion, compared with the programme target of GH¢29.76 billion, resulting in a shortfall of 26 per cent or a performance rate of 74 per cent.”
Meanwhile, Parliament, on Wednesday, 29 July 2020, granted the Minister’s request for GH¢11.8 billion to be granted to supplement the 2020 budget in the face of the economic devastation caused by the COVID-19 pandemic.