The Minister for Finance, Ken Ofori–Atta is expected to appear in Parliament today, August 6, 2020, to justify his request 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, owing to the effect of COVID-19 on government estimates, the Minister made clear his intentions to suspend the law in the mid-year budget review.
Minister of Monitoring and Evaluation and member of the Economic Management Team, Dr. Anthony Akoto Osei, told Citi News that the rationale behind the suspension has been reviewed and was considered satisfactory by the finance committee.
“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 law passed in December 2018, four months before Ghana stepped out of its four-year IMF bailout program, was intended to preserve the country’s progress in achieving macroeconomic stability.
In the mid-year budget analysis, the Finance Minister stated that in the first half of the year projected revenues from taxes and grants dropped by 26 per cent to GHS 22 billion.
He attributed the shortfall to the COVID-19 outbreak.
“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, in the face of the economic devastation caused by the COVID-19 pandemic, Parliament, on Wednesday 29 July 2020, granted the Minister ‘s request for GH¢11.8 billion to be granted to supplement the 2020 budget.
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