The Ministry of Finance (MoF) has expressed concerns about the manner in which the public is interpreting some of the expenditure items captured in the 2022 budget.
To avoid any further misinterpretation and inaccuracies, the ministry of finance, in a statement, has called on the public to seek clarifications on the Budget from the Ministry of Finance when the need arises rather than “misinterpreting” information from the Budget.
On Wednesday, November 17, 2021, the Minister for Finance, Ken Ofori-Atta, presented the 2022 Budget Statement and Economic Policy of Government to the Parliament of Ghana.
According to the Ministry of Finance, the budget statement highlighted the positive developments Government has achieved despite the challenges arising from the COVID-19 pandemic, global inflation and general financing conditions.
Misrepresentation of budget deficit
From the perspective of the Ministry, the feedback from the budget presentation has not been encouraging and therefore, sought to provide further clarifications on some of the items that featured in the 2022 budget statement.
“As part of the feedback from the presentation, the Ministry has noted with concern that the overall fiscal balance (the budget deficit) as a percentage of GDP is being misrepresented. Some section of the public are alleging that the projected budget deficit for 2021 has increased from 9.4% of GDP to 12.1% in the 2022 Budget.
“To set the records straight, this is inaccurate. The fiscal deficit of 9.4% of GDP EXCLUDES finsec clean-up costs and energy sector IPP payments whiles the 12.1% refers to the fiscal deficit INCLUDING the finsec clean-up costs and energy sector IPP payments”.
Finance Minister
The Ministry of Finance further explaining, averred that “it is insightful to note that since 2017, the fiscal operations of Ghana have been presented with financial clean-up costs as a memo item and energy sector IPP payments as part of amortisation as these items were regarded as one-off obligations”.
Finsec clean-up costs and energy sector IPP payments
Thus, the overall fiscal balance reported from 2017 to 2021 excluded the finsec clean-up costs and the energy sector IPP payments, according to the Finance Ministry. Given that the finsec payments are almost complete and the energy IPP payments are still being honoured, the Ministry of Finance decided to report both payments ‘above the line’ from the 2022 financial years, MoF explained.
“The 2022 Budget, therefore, shows the overall fiscal balance including finsec and IPP payments as well as the overall fiscal balance excluding finsec and payments to foster comparison. Same treatment is done for the primary balance”.
Ministry of Finance
The Finance Ministry highlighted that Page 220 of the 2022 Budget made reference to a projected overall fiscal balance on cash basis (excluding finsec and IPP payments) of 9.4 percent of GDP for 2021. For the period Jan-Sept 2021, the overall fiscal balance on cash basis (excluding finsec and IPP payments) was 7.7 percent against a target of 7.4 percent, MoF added.
The same page 220 of the 2022 Budget, the Ministry said, also reports the overall fiscal balance on cash basis (including finsec and IPP payments). MoF further detailed that the projected outturn for the overall fiscal balance increases to 12.1% of GDP when the finsec clean-up costs and energy sector IPP payments are included.
For the period January to September 2021, the MoF stressed that the overall fiscal balance was 9.3 percent of GDP against a target of 9.9 percent.
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