Ghana’s Finance Minister, Ken Ofori-Atta will today, Thursday, July 23, 2020 present before Parliament, the 2020 mid-year budget review and supplementary estimates for the financial year in Parliament.
The presentation of the budget review by Mr. Ofori-Atta as per Section 28 of the Public Financial Management Act, 2016 (Act 921) is expected to touch on key aspects of economic indicators such as growth rate, primary balance, budget deficit, GDP, revenue and expenditure targets among others.
Stay with us for all the live updates from the Minister’s presentation below:
According to Mr. Issah Fuseini, a Member of Parliament’s Finance Committee, he disagrees with Mr. Forson’s claim that government intends to borrow some more to win elections. He explains that Ghana, like other countries, is suffering from the impact of COVID 19. He explains the government will be seeking to make an adjustment that ensures the economy survives the pandemic.
About the Finance Minister’s presentation delay
Regarding the delay of the Finance Minister’s presentation, Mr. Fuseini says he expects the Minister to start at 12. He says he’s not sure of what is accounting for the delay. But reports say the Minister, although in Parliament, is currently holding a meeting with some key actors.
Parliament is in session.
The House just passed the Lands Bill 2019 to guide and regulate land acquisition and usage. The bill consolidates reforms made so far in Ghana’s land sector following the implementation of the National Land Policy in 1999. This was after the third reading was done.
Parliament is currently taking the Aircraft Accident Investigation and Prevention Bureau Bill 2020 through the second reading after which they will debate the principles of the bill. Aviation Minister Kofi Adda is on the floor explaining the rationale behind the bill.
It seeks to regularise how accidents involving aircraft in Ghana should be handled. The bill establishes a bureau to undertake investigations of accidents that happen in the country.
Deliberation on the Bill
Members of Parliament are currently debating the Aircraft Accident Investigation and Prevention Bureau Bill 2020. Minority Leader Haruna Idrissu, has asked MP for South Dayi, Rockson Dafeamekpor, to wrap up the debate on behalf of the Minority.
Mr. Dafeamekpor recounts some aircraft accidents Ghana has experienced over the years and states that the bill, currently lying before the house is crucial for ensuring that this is minimized and dealt with.
Mid-year budget review: Govt to pay laid off workers temporary incomes
Ahead of the presentation, the Minister of Finance is set to announce a temporary financial relief programme for persons who lost their jobs as a result of the raging novel Coronavirus disease (COVID-19). To be known as the National Unemployment Insurance Scheme, the initiative is to be a temporary income and will be paid to workers who were laid off by their employers following the emergence of the pandemic.
Meanwhile, Majority Leader Osei Kyei Mensah Bonsu says the Finance Minister has been around and is currently in the holding room. He continues that he had reached an agreement with the Minority Leader Haruna Idriuss for other items to be dealt with before the Minister for Finance comes to read the budget. Adding that, due to the time spent on the Aircraft bill, he thinks its appropriate the Minister is called upon to do the presentation.
Mr. Fuseini notes that the Minister is just walking in. In his remarks:
“After three hours, he has come in. We understand, but this might probably be his last mid-year review so we understand”
(The finance Minister finally walks in)
The Speaker, Professor Aaron Oquaye calls on Finance Minister, Mr. Ofori-Atta to address the House. As usual, he has worn his white outfit, a white mask with the Ghana flag brochure on his left chest, as he takes the podium.
Ken Ofori-Atta begins his presentation
Mr. Ofori Atta begun by stating that the statement he will be reading is an abridged version of the full statement. He wants the Hansard Department to capture the full document which will be made available after his presentation.
According to Mr. Ofori-Atta, the state has put GH¢2.2 billion in the pockets of Ghanaians across the country.
“1.5 million farmers under Planting for food and jobs.”
“1.2 million for farmers nationwide as well as catering for food for everyone.”
Also, he said in order to protect the country’s purse, “my ministry contacted the auditor to audit GH¢11 billion”. Adding that, “this gov’t has indulged in prudent financial management.”
He adds that the government has so far changed the story. The economic indicators he argues look better affording citizens the opportunity to improve their livelihoods, something they couldn’t do previously.
According to Mr. Ofori-Atta, 3.2 billion has been invested in free SHS ensuring that some 1.2 million citizens are able to go to school. He says this has reflected in the pockets of their parents and an estimated amount of 2.2 billion in savings.
Mr. Ofori-Atta says there are currently over 70 factories in production under the 1 district 1 factory program. Intermittent power outage, christened “Dumsor,” he say, is now a thing of the past. He says the digital addressing system has ensured that steps are taken towards formalizing Ghana’s economy.
“COVID-19 pandemic is far more than a financial crisis and Ghana has not been spared”
The virus has laid bare the vulnerabilities of the world and has brought to a fall, the cracks in the health sector: Agenda 111.
All district hospitals will be built by Ghanaian companies
On the impact of COVID-19 on Ghana’s economy, Mr. Ofori Atta says the IMF is predicting that the majority of countries will have their economy suffer as a result of the pandemic.
On Economic figures
Mr. Ofori-Atta says a GH¢100 billion programme will be launched by the President, Nana Akufo-Addo to revitalize the economy due to the impact of COVID-19. He continues that it is government’s responsibility to roll out a plan that will steer the nation from the expected recession.
On the performance of the economy in 2019, he says the data available shows that the economy continued to grow in that year as it did in 2018.
“Mr. Speaker, our public debt management programme for the 2019 financial year was successfully executed despite challenges from the global and the domestic economy. As at end- December 2019, the total gross public stock stood at GHȼ217,990.7 million (US$39,344.2 million). Of this amount, external debt amounted to GHȼ112,509.4 million or US$20,306.4 million while domestic debt amounted to GHȼ105,481.2 million or US$19,037.9 million. The debt-to-GDP ratio as at December 2019 was 62.4 per cent, up from 57.6 per cent at end-December 2018, (reflecting the impact of the financial sector bailout cost and the energy sector payments).” Mr.Ofori Atta said.
On the performance of the economy in the first quarter of 2020, he says the overall real GDP growth rate of reached 6.8 per cent.
The non-Oil Real GDP growth rate of 6.7 per cent, End-period Inflation rate of 8.0 per cent, Overall fiscal deficit of 4.7 per cent of GDP, Primary surplus of 0.7 per cent of GDP with Gross international reserves to cover at least 3.5 months of importation of goods and services.
“The Agriculture Sector recorded a growth of 2.8 per cent in the first quarter of 2020 compared to 2.2 per cent during the same period in 2019. Industry Sector recorded a growth of 1.5 per cent in the first quarter of 2020 compared to 8.4 per cent during the same period in 2019. Growth in the Services Sector was strong at 9.5 per cent in the first quarter of 2020 compared to 7.2 per cent recorded during the same period in 2019.”
“Mr. Speaker, headline inflation remained flat at 7.8 per cent from January until March 2020. Inflation, however, rose to 10.6 per cent in April and further to 11.3 per cent in May, reflecting the panic-buying that preceded the market fumigation exercises across the country and the partial lockdown in the two largest cities, Accra and Kumasi. Inflation has declined marginally to 11.2 per cent in June as pressure on food prices begin to decline due to the easing the restriction,” Mr. Ofori-Atta added.
On the aspect of revenue performance
Speaking on revenue performance, Ken Ofori-Atta said that:
“Mr. Speaker, non-oil tax revenue, comprising taxes on Income and Property, Goods and Services and International Trade, amounted to GH¢16,733 million or 4.3 per cent of GDP, 16.2 per cent below the programmed target of GH¢19,952 million or 5.2 per cent of GDP. The lower than programmed performance in non-oil tax revenue was driven by the underperformance of non-oil tax handles such as Domestic VAT, Petroleum Excise taxes, Domestic National Health Insurance Levy, and GETFund Levy. However, personal income tax and Communication Services Tax both out-performed their respective targets for the period.”
On Ghana’s Debt Stock
On the aspect of Ghana’s debt stock, the finance Minister said:
“The total debt stock was made up of GHȼ134,888.9 million (US$23,992.6 million) and GHȼ120,838.3 million (US$21,493.4 million) of external and domestic debt accounting for approximately 52.7 per cent and 47.3 per cent of the total public debt stock, respectively. As a percentage of GDP, external and domestic debt represented 35.00 per cent and 31.36 per cent, respectively.”
COVID-19 and impact on the financial sector
“Mr. Speaker, as stated earlier, the outbreak of the pandemic is having a negative impact on the financial sector here in Ghana and across the world. All over the world, central banks are being relied upon by governments to find the liquidity to tackle the socio-economic difficulties unleashed by the pandemic. The Bank of Ghana has stepped up to the challenge and announced various policy measures to help support the economy and financial institutions in order to cushion the adverse impact of Covid-19 on the economy. It is important to stress that this has been possible because of the responsible and competent management of both the fiscal and monetary space since 2017.” he said.
On the aspect of expenditures, it is expected to increase by GH¢11,660 million (3.4% of revised GDP), reflecting mainly expenditures on COVID-19 Preparedness & Response Plan, provision of Health Infrastructure (Agenda 88+), Coronavirus Alleviation Programme, Capitalisation of National Development Bank, Security, Elections, and payment of outstanding claims.
COVID-19 Expenses and Breakdown
Finance Minister also said, at the beginning of the year, Government did not anticipate the need to provide over 300,000 COVID-19 test kits, extra allowance to frontline health workers, income tax exemption for all health sector workers, hire over 1,000 contact tracers, supply households with free water, free electricity for over 50 per cent of the population and provide GH¢600 million to support small and medium scale enterprises under the Coronavirus Alleviation Programme.
“Mr Speaker, all these costs to Government come at a time of reduced revenue at our ports, fall in global oil prices, near collapse of the hospitality industry and a general decline in global trade. Such unexpected expenditure often leads to increased budget deficits. However, it should be noted that these are not ordinary times and as such, require extraordinary economic and financial interventions,” the Finance Minister said.
Also speaking on education and easing of restrictions, Finance Minister Ken Ofori-Atta said:
“Government has prioritised the easing of restrictions on education by first allowing final year students at the tertiary level to resume schooling on Monday 15th June 2020.”
To help in the facilitation of this process, a total of 600,000 face masks were supplied to the tertiary institutions. In addition to this, 1,700 Veronica buckets, 200,000 litres of alcohol-based hand sanitizers, 3,400 litres of liquid soap, and 900 thermometer guns were distributed.
According to him, all the 1,167 Senior High Schools (SHS) in the country were fumigated and disinfected. The government also provided 2.4 million pieces of re-usable face masks to students, teaching 33 and non-teaching staff, invigilators and school administrators, with each person receiving three pieces.
Another 3 months of free water, free electricity till the end of 2020 – Ofori-Atta
Also, Ghanaians will enjoy another three months of free water and electricity supply as parts of the government efforts to further reduce the burden placed on the citizens as a result of the COVID-19 pandemic.
The Finance Minister, Ken Ofori-Atta who announced this during his Mid-year Budget review said it is because the government puts the concerns and aspirations of the ordinary Ghanaian first.
“That is also why we further reduced electricity prices by half and completely provided potable water for free for everybody since March this year. And we will extend it for another three months,” he told Parliament.
In April this year, the President, Nana Akufo-Addo announced three-month electricity and water relief for consumers of a particular category, to make up for lost income following a lockdown in Accra and Kumasi due to the Covid-19 pandemic.
He also announced government’s decision to absorb water bills for all Ghanaians for April, May and June following complaints of lack of portable drinking water in many communities affected by the lockdown.
President Nana Akufo-Addo said the decision is part of additional measures being taken by government to mitigate the impact the outbreak of the virus is having on the public.
Announcing yet another package for Ghanaians, Mr Ofori-Atta said it is mean to ease the burden of the virus that has wreak havoc the world over. He said the free water initiative would be for all water consumers while the electricity supply would be limited to only lifeline consumers.
“It takes a caring government of the people, and with that, I mean, a Government of all the people, to offer cost-free water to all across the country: representing all domestic and commercial customers in Ghana for three months. It takes a caring government to be for the people and for business, large and small, to choose to subsidise electricity consumption by 50 per cent to 4,086,286 households and 686,522 businesses at a cost of ¢1.02 billion in three months. And we will extend the coverage for lifeline customers for another three months,” he said.
Whiles accounting for the various donations received, the Minister said the COVID-19 National Trust Fund established under Act 1013 in April 2020 had mobilised about GHȼ53 million from individuals, churches, corporate bodies, the staff of organisations, non-governmental organisations, groups, and associations, among others as at end June 2020. Out of the amount, a sum of GHȼ32 million had so far been used for the same period.
He said, in a commendable effort towards increasing the country’s infectious disease treatment capacity, the Private Sector Fund has undertaken to construct four 100-bed facilities each with a 21-bed Intensive Care Unit, a level 2.5 laboratory and staff block in Accra, Kumasi, Tamale, and Takoradi.
“The first of these four, which commenced through a virtual sod cutting by the His Excellency the President on 17th April, 2020, is expected to be commissioned by end-August 2020. This is real partnership at work”
Also, Mr. Ofori-Atta disclosed that the government is set to establish a National Unemployment Insurance Scheme.
“We are mindful of the fact that some businesses may have to shed some labour in order to survive. In the unlikely event that this happens, Government, through the Ministry of Employment and Labour Relations (MELR), will collaborate with the Social Partners (Labour and Employers) to establish a National Unemployment Insurance Scheme”.
“The scheme will provide temporary income support to workers that are laid off and also provide them access to re-training to help them take advantage of employment opportunities in new fields.”
Again, the Finance Minister has said governance is all about the wellbeing of the people, the reason for which “we have been elected to serve. Ours is the government for the ordinary people of Ghana.”
That is why since 2017 we have spent a total GHȼ900,531,258.00 in keeping nearly 100,000 trainee teachers and trainee nurses in training.
We are for the ordinary Ghanaian, that is why, until schools were forced to close down, we were feeding 2,980,000 children every day, 78% more than the 1,671,766 who were fed in 2016.
We are in government for every family in Ghana, no matter where you are, that is why we have spent GHȼ3 billion to provide free education for 1.2 million senior high school and TVET students.
We connect with the aspirations of hardworking Ghanaians looking for a push to start or support their small business, that is why 19,000 young people have been trained and some funded to start-up their own business under NEIP. In addition, 97,876 Ghanaians have seen their businesses benefiting from some GHȼ100 million (GHȼ99,302,484) credit facility so far disbursed by MASLOC since 2017.
We feel the desperation of young graduates struggling to land a job, that is why we have invested GHȼ1.6 billion to recruit 100,000 of them under NABCO.
Adding that with all the difficulties that the Akufo-Addo administration have had to endure and overcome since January 2017, the government stayed focused on the all-important task of making government work for every Ghanaian.
He said “In the short term, we will reduce the CST from 9% to 5% to reduce the cost of communication services to the consumer as more and more people work remotely and utilize online services.
“We will count on the Telcos to match this reduction in the CST by reducing their tariffs. This is important for our youth, entrepreneurs and the burgeoning FINTEC industry.” Ken Ofori-Atta said.
Finance Minister, Ken Ofori-Atta outlines the President’s plan for the next three and a half years.
(i) An unprecedented GH¢100 billion Ghana Cares Obaatanpa Programme to transform and modernise our society
(ii) For the next 6 months:-
a. Reduce CST from 9% to 5%
b. Establish a GH¢2 billion Guarantee Facility to support all sectors of business and job retention
c. Establish an Unemployment Insurance Scheme
d. Create a GH¢100 million Fund for Labour and Faith-based organisations for retraining and skills development
e. Increase the CapBuss Programme by GH¢150 million to, among others, facilitate credit of GH¢50 million to support the Creative Arts, the Media and the Conference of Independent Universities.
f. Retain provision of free water for the next three months
g. Retain free electricity for all life-line customers for the rest of the year.
In his conclusion, the Finance Minister is also requesting a supplementary Budget of GH¢11,896,477,566.00 to enable the government to continue its task.
