Ghana’s Parliament, on Wednesday, 29 July 2020, passed Finance Minister Ken Ofori-Atta’s request for GHS11.8 billion to supplement the 2020 budget in the face of the economic devastation caused by the COVID-19 pandemic.
The Akufo-Addo government made the request when Mr Ofori-Atta presented the 2020 mid-year budget review to Parliament last week.
“Mr Speaker, this Mid-Year Fiscal Policy Review and its programmes draw us closer to our collective aspirations. While this pandemic requires us to exceed the limits imposed by the FRA, Act, 982, we have had to make these major expenditures to protect lives and livelihoods of Ghanaians and sustain businesses. We, therefore, request a supplementary budget of GH¢11,896,477,566.00 to enable us to continue this extraordinary task”, Mr Ofori-Atta said to the law-making chamber on Thursday, 23 July 2020.
Mr Ofori-Atta has also projected Ghana’s fiscal deficit to hit 11.4% as a result of a GH¢13.6 billion revenue shortfall occasion by the COVID-19 pandemic and its accompanying global economic downturn.
“Mr. Speaker, 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”.
“This will result in a projected fiscal deficit of 11.4% of GDP. This is above the 5% limit as stated in the Fiscal Responsibility Act, 2018 (Act 982). 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 are having to suspend our fiscal rule due to exogenous factors. We intend to return to compliance with the FRA in the shortest possible time”.
The government hopes the approval of the GHS11.8 billion will help the government keep the economy afloat.
The Minority Leader, however, raised concerned about the government’s borrowing and COVID-19 expenditure.
In a debate on the mid-year budget review, Mr Iddrisu accused Mr Ofori-Atta of relying on Section 30(6) of the BoG Act to borrow the $10 billion without resort to Parliament.
He said Mr Ofori-Atta was in Parliament to request for the money under the guise of COVID-19 emergency, noting: “As we speak, the minister stands in violation of the Constitution; Article 181, the minister stands in violation of the Public Financial Management Act. Show me a resolution of Parliament where that 10 billion borrowing was approved? He stood here and made a statement”.
“We’re a serious house”, he said, adding: “The Minister of Finance must take us seriously”.
“You cannot come and want to expend 10 billion just by a mere statement. It is not procedurally acceptable”, he insisted.
Mr Iddrisu said: “Borrowing is borrowing, either borrowing under COVID or outside COVID or beyond COVID. You took USD10 billion”.
Meanwhile, the Finance Minister has justified the need for the GHS11.8 billion.
“Mr Speaker, please allow me to restate what the GHS11.8 billion supplementary estimate, which includes an amount of GHS1.84 billion that Parliament approved in March 2020 for emergency COVID-related expenditures was requested for.
“GHS1.84 billion for the implementation of the COVID-19 preparedness plan to be implemented by the Ministry of Health, the plan to focus on expanding laboratories to increase the network of functional laboratories for COVID-19 testing for improved database management and coordination, creating isolation centres in all regions and districts, revitalising the systems for tracking case confirmation and management among others, GHS600 million to mobilise the construction for the Agenda 111 district hospitals, GHS1.204 million for CAP 1 programme, which includes the GHS600 million support for small businesses, relief for water during the first three months, support for frontline workers, etc.”