Government to seek permission for more spending
The Minister of Finance, Mr Ken Ofori-Atta, will today request permission from Parliament to spend more this year than was initially budgeted for in the 2019 Budget and Economic Statement that was presented in November last year.
The planned upward revision in the 2019 appropriation ceiling and its underlying measures is to enable the government to achieve the objectives of this year’s budget theme of expanding the economy and increasing jobs, the ministry said in a statement.
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On December 24, last year, Parliament, after a heated debate that dragged past midnight, passed the 2019 Appropriation Bill, which allowed the government to spend GH¢78.77 billion in 2019.
However, the Ministry of Finance’s statement, which was a precursor to today’s Mid-Year Budget Review, said: “The government will, therefore, seek the approval of Parliament for supplementary estimates.”
When announced, it will be the first time Mr Ofori-Atta will be requesting an upward review in the appropriation ceiling and supplementary estimates since taking office in 2017.
In 2017 and 2018, when revenues were below their targets, the minister reduced expenditure to enable him to stay within the budget targets.
Deficit
An Economist and a Research Fellow with the Institute for Fiscal Studies (IFS), Dr Said Boakye, said that meant that the 2019 deficit target of 4.2 per cent of gross domestic product (GDP) would go up.
“They need Parliamentary approval to increase borrowing and increase the deficit limit so that they can spend, so the deficit is going to go up,” he said.
The country’s first budget after exiting the extended credit facility programme (ECF) with the International Monetary Fund last April, the 2019 budget was deemed an expansionary revenue and expenditure estimation tool, having announced a GH¢15.62 billion jump in total expenditure over the 2018 figure.
The 2019 budget also required that the government borrowed a total of GH¢14.5 billion to finance the deficit.
Dr Boakye said the planned request for permission to spend more was peculiar with the country in years when it was not under IMF programmes.
“You see, this is one thing that when the IMF is not here, it is a normal practice.
If IMF were here, they would find it difficult to increase spending because they would be breaching the deficit target,” he said.
He blamed the development on weak inflows of revenues at a time when the government was implementing a plethora of programmes and further called for realistic implementation of the programmes and policies.
He said the rebasing of the GDP in 2018, which saw the economy expand by almost a quarter, was luring the government into wanting to record a larger deficit.
“Artificially, the GDB, which is the base, has been rebased and is now big. Because of that if even it is a deficit of 4.5 per cent of GDP, it looks manageable and so they can increase the target to say 4.5 per cent or even 4.8 per cent because they will try not to hit the five per cent of GDP level.
Meanwhile, the base is the new rebased GDP,” he said.
Revenue measures
Meanwhile, the Ministry of Finance’s statement explained that the presentation would have a particular focus on issues affecting the energy sector, alongside their planned reforms.
Another major area expected to be addressed is the financial sector’s performance.
Ghana’s debt situation, domestic revenue mobilisation and the review of the Luxury Vehicle Tax will also be highlighted.
Aside from highlighting Ghana’s fiscal performance between January and June 2019, as well as fiscal strategy going forward, this year’s Mid-Year Budget Review will touch on policies leading to increases in industrial output, such as the agro-food sector.
“Roads Rehabilitation and Construction, the strengthening of security, and government priority programmes, among others, will also be addressed,” the statement said.
It added that against the backdrop of the Ghana Beyond Aid vision, the mid-year presentation to Parliament would explain how Ghana would take advantage of the opportunities that would come with the hosting of the Secretariat of the Africa Continental Free Trade Area (AfCTA).
