Today is budget day and the government will outline bold policies backed by action plans to revitalise and stabilise the economy.
The budget and economic policy of the government, to be presented by the Majority Leader and Minister of Parliamentary Affairs, Mr Osei Kyei-Mensah-Bonsu, will focus on stabilisation policies underpinned by innovative revenue measures, all geared towards preparing the economy for transformational growth.
This budget is the first economic policy document in the nation's history to be presented to Parliament on behalf of the President by a minister other than the one put in charge of the country’s finances and the economy.
The first in President Nana Addo Dankwa Akufo-Addo’s second term, the 2021 budget will be laid before the house without a substantive minister in charge of Finance and Economic Planning, as the substantive nominee for the position, Mr Ken Ofori-Atta, has not been vetted because he is indisposed.
The President yesterday assigned temporary responsibility for the Ministry of Finance to Mr Kyei-Mensah-Bonsu.
The assignment to the Member of Parliament for Suame is pursuant to Order 140 rules Two and Three of the Standing Orders of Parliament.
The Speaker of Parliament, Mr Alban Kingsford Sumana Bagbin, who made this known in Parliament, said: “The Minister of Parliamentary Affairs now has a responsibility over the Ministry of Finance.”
That was when he read a correspondence from the Presidency notifying him, as the Speaker, and the entire House of Mr Kyei-Mensah-Bonsu’s temporary designation.
Areas of focus
Multiple sources in government have told the Daily Graphic that one of the key areas on which the budget will focus is the road sector, since the President has declared 2021 the year of roads.
President Akufo-Addo, in his State of the Nation Address last Tuesday, pointed out that the budget would expand on what his government would like to pursue in the roads sector.
Deepening the industrialisation drive, the digitisation of the economy, improving domestic revenue collection and the provision of affordable housing would also be in focus, the sources said.
The initiatives are expected to contribute significantly to a rebound in the country’s total value of goods and services produced over the period, measured by Gross Domestic Product (GDP), to nearly five per cent, above the International Monetary Fund (IMF) projection of 3.2 per cent growth for sub-Saharan Africa for 2021.
The Daily Graphic has gathered, for instance, that the 2021 budget will continue with the agenda of rapid industrialisation, with the aim of transforming the structure of the Ghanaian economy from one dependent on the production and export of raw materials to a value-added, industrialised economy.
For instance, under the One-District, One-Factory (1D1F) initiative, 232 projects which are at various stages of completion will be supported through the budget to enable them to start operations and employ the mass of the population who are without jobs.
Again, measures will be outlined in the budget to unable the Ghana Integrated Aluminium Development Corporation (GIADEC), which has made good progress on the bauxite exploitation programme, to drive the industrial transformation agenda.
Digitising the economy for more revenue
Since 2017, the government has made frantic efforts to digitise the economy, a move which is beginning to bear fruits, as it has gathered a lot of steam.
In this year’s budget, the government is expected to announce measures to ramp up domestic revenue collection, and one of the ways is digitisation.
This is because while the COVID-19 pandemic has had a significant impact on the finances of the country, the citizens have not been spared, for which reason any aggressive tax measure that impacts the incomes of the general population will be counterproductive.
Subsequently, the government will announce how it will leverage the enrolled 15.5 million people on the national ID card system (the Ghana Card). It will also tell the citizenry how it intends to complete the process this year.
This will include the convergence of all national ID numbers, which will also become the default tax identification numbers of the card holders.
Impact on substance
A veteran economist, Mr Kwame Pianim, and a financial economist and former Technical Advisor to the Ministry of Finance, Dr Sam Mensah, had told the Daily Graphic yesterday that although it was the first time that the budget would be presented by someone other than the Finance Minister, they did not expect a drastic change in the substance and the direction of the policy document.
They said precedence showed that budgets were prepared by the technocrats in the ministry, with the guidance of the minister within the government’s policy direction.
“As far as I can remember, this is the first time, but it does not change anything. It is still a policy statement of the government presented to Ghanaians through Parliament,” Dr Mensa, who is the Chairman of SEM Capital Limited, said.
“What changes is the messenger, not the message. The message still represents a policy, which is being driven by the Executive. And so the message still has the same importance,” he said.
For his part, Mr Pianim said he found the Minister of Parliamentary Affairs and Majority Leader an inappropriate replacement for the Finance Minister in the presentation of the budget.
He said he expected the Minister of Trade and Industry, Mr Alan Kyerematen, to have been chosen to present the budget, given that his work was intertwined with that of the Finance Minister.
“Normally, because Trade and Industry is intertwined with Finance, it is the Minister of Trade and Industry who acts on behalf of the Minister of Finance when the latter is indisposed. That is why I had expected Mr Kyerematen to present the budget.
“Also, the Minister of Parliamentary Affairs is not part of the Executive. He is the leader of government business in Parliament, which is under the Legislature,” he added.
When asked if the Vice-President, Dr Mahamudu Bawumia, could have read the budget, Mr Pianim said it would be inappropriate.
He said the 1992 Constitution was categorical when it said the budget should be presented to Parliament on behalf of the President by a “minister”.
Since Dr Bawumia was part of the Presidency, he could not present the budget “on behalf of himself”, he said.
Former Finance Minister voices out
A former Minister of Finance, Mr Seth E. Terkper, in an interview with the Daily Graphic yesterday ahead of the budget, advised the government to use innovative policies and programmes in the 2021 budget to drive the country out of the difficult fiscal situation in which it found itself.
He said the large deficit and the debt stock situation meant that the government must avoid excessive spending and focus only on productive and social spending to help protect lives and stimulate growth.
Mr Terkper said he expected the 2021 budget to be austere, aimed at reducing the gap between revenue and expenditure, which was projected to end this year at 11.4 per cent.
The former Finance Minister in the Mahama government said austerity was the only available option to the country under the current situation where revenue growth had stunted, debt had risen to GH¢286.9 billion, equivalent to 74.4 per cent of GDP, and expenditure pressures were still rising.
"At the moment, only two expenditure items, compensation of employees and interest cost account for between 105 per cent and 115 per cent, depending on the year you are using.
“This means that you have exhausted your tax revenue and you are even borrowing to pay just those two items before you come to the amount needed to service government offices, fund development projects, amortisation, among others," the tax expert said.
Mr Terkper further advised the government to explore securing concessionary loans from development partners to help reduce the impact of interest payments on the debt.