Parliament has approved government’s request for ¢11.8 billion in supplementary estimates for the 2020 financial year.
This comes after the Finance Minister Ken Ofori-Atta asked the House last week during the presentation of the Mid-year budget. Parliament in 2019 approved ¢85.9billion for government’s expenditure for 2020. From the presentation of the Finance Minister, this amount has been rendered insufficient for the fiscal year.
According to the Minister, Government need the ¢11.8amount to cater for its planned expenditure for the rest of the year. The additional amount has become relevant, especially because of the economic impact of COVID-19, according to the Finance Minister.
Specifically, the Minister indicated that, revenue shortfalls and budget deficit created by the impact of the Coronavirus pandemic is the main reason for the additional request.
According to him, the pandemic and the ensuing global economic recession it has caused, has triggered the loss of GH¢13.6 billion in revenues and an unanticipated but important expenditures of about GH¢11.8 billion.
After the Finance Minister made the request, some analysts let out their concerns with regards to the impact of the proposed spending on the economy. This is because, the approved amount will increase the budget deficit to 11.4% of GDP which is more than double the 5% spelt out in the Fiscal Responsibility Act 2018.
This deficit, according to Mr Asare Evans of KPMG is problematic because government, regardless of how much it spends, will have to settle its excess spending and the sources of the money to settle the deficit, according to him is where the problem lies.
Head of the financial advisory accountant firm, Deloitte, Yaw Lartey has pointed out that the current situation is growing worse largely because of the unplanned expenditure of government.
“The minister of finance had earlier presented a revised budget to Parliament just immediately after we were hit by the pandemic and in that budget presentation the minister had revised the GDP estimate to about 2.5%/2.6% from a 6.8% projection. As we speak, the minister has revised it further downwards to 0.9%. So it’s just a clear indication that the situation is worsening and this is partly due to our unplanned expenditure arising out of the coronavirus pandemic.”
Also, the pressing need of revenue and the government’s decision to reduce the Communication Service Tax from 9 to 5 percent seem to be a contradiction, according to some analysts.
Government, in the Mid-year budget review has also extended free water supply to Ghanaians for the next three months and free electricity supply to lifeline consumers for the rest of the year.
As the 2020 general elections approaches, some analysts have also raised the obvious alarm that, election years are somehow synonymous with spending over board. Dr Theo Acheampong of IMANI Africa has warned that if care is not taken, government’s budget deficit after the election may go way beyond projections.
Ahead of the approval of the ¢11.8 billion on Wednesday, July 29, 2020, the Minority Leader, Haruna Iddrisu, questioned how responsible government has been in the use of resources for the management of the COVID-19 pandemic.
In response, the Finance Minister pointed out that, the funds used in management of the pandemic were approved by Parliament.
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