Relief for Finance Minister  --Parliament suspends fiscal rules for 2020
Mr Ken Ofori-Atta

Relief for Finance Minister --Parliament suspends fiscal rules for 2020

The Minister of Finance, Mr Ken Ofori-Atta will escape the punishment of removal of office after Parliament last Thursday decided to suspend the fiscal rules for 2020.

Under the Fiscal Responsibility Act, the minister was to be removed from office if the country’s deficit exceeds five per cent of GDP and does not maintain a positive primary balance but this will not happen after the minister made a justification to the house on why the five per cent target will not be feasible this year.

The minister, in his mid-year budget review, indicated that the fiscal rules would not feasible in the next four years due to the impact of the COVID 19 pandemic.

He said the scale of the damage and macroeconomic distortions caused by the pandemic was unprecedented in the country and it would, therefore, take a while to return to the pre-COVID-19 fiscal path.

“According to our revised fiscal framework, the economy is only likely to return to the five per cent fiscal deficit threshold set in the Fiscal Responsibility Law no sooner than 2024.”

He said the government had, therefore, opted to suspend the fiscal rules and targets for the 2020 fiscal year.

In accordance with the Fiscal Responsibility Act, which mandates the minister to within 30 days present before Parliament, for approval, facts and circumstances for the suspension of the rules,presented the reasons to the house.

Minority disagrees

Some members of the minority, however, disagreed with the minister’s presentation, calling for his removal from office.

They argued that the minister has breached provisions of the Act which made him liable to removal from office under the same Act.

The Minority Leader, Mr Haruna Iddrisu, argued that the house would not entertain the request to suspend the rules.

“We will not suspend the law. He will undergo the sanctions spelt out in the Fiscal Responsibility Act,” he stated.

Approval of suspension

Based on recommendations from the Finance Committee in Parliament, however, the house decided to suspend the rules for this year.

Presenting the report, the Chairman of the Finance Committee, Dr Mark Assibey-Yeboah, said the COVID-19 pandemic had affected virtually all the countries of the world and every aspect of the Ghanaian economy.

He said the slowdown in economic activities had led to a drastic downward revision to the growth of real GDP from 6.8 per cent to 0.9 per cent, an estimated revenue shortfall of GH¢13.41 billion and caused the minister to suspend the fiscal rules and targets for the 2020 fiscal year.

According to him, the impact of the pandemic led to interventions such as the COVID-19 Preparedness and Response Plan, provision of health infrastructure, the Coronavirus Alleviation Programme (CAP), capitalisation of the national development bank to support economic recovery and payment of outstanding claims on government.

To restore the public finances of the country, the plan presented to Parliament shows that the government will implement a number of fiscal consolidation measures to reduce the fiscal deficit from 11.4 per cent of GDP in 2020 to 9.6 per cent in 2021, 7.1 per cent in 2022, 5.2 per cent in 2023 and 3.8 per cent in 2024.

The government also aims to improve the primary balance from a deficit of 4.6 per cent of GDP in 2020 to a deficit of 3.4 per cent in 2021, 1.9 per cent in 2022, one per cent in 2023 and a surplus of 0.1 per cent in 2024.

As part of efforts to rebuild the economy, the government is implementing the Ghana COVID-19 Alleviation and Restoration of Enterprises Support (Ghana CARES) Programme, which will continue over the next three and half years.

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