There is a request from the Minister of Finance, Ken Ofori-Atta, to parliament for a supplementary budget of GHS11. 8 billion to support government’s expenditure for the rest of the year 2020.
COVID-19 has affected Government projections for the 2020 financial year making the government unable to meet its economic obligations, but it hopes to restrategize to generate more revenue to revamp the economy.
Earlier in the year, the Finance Minister announced that about GhC9. 5 billion would be required by government will require to fight the COVID-19 pandemic, a situation which may move the 2020 budget deficit to about more than 7%.
This development will constitute 2.5% of the Country’s revised GDP resulting in a fiscal gap of GHS11.4 billion.
But at the mid-year budget presentation in Parliament on Thursday, July 23, 2020, Mr. Ofori-Atta said the supplementary budget is to assist government to implement various initiatives to strengthen various sectors of the economy due to the revenue shortfalls and budget deficit created by the impact of the Coronavirus pandemic.
“Mr. Speaker, this Mid-Year Fiscal Policy Review and its programmes draw us closer to our collective aspirations. Whilst this pandemic requires us to exceed the limits imposed by the FRA, Act, 982, we have had to make these major expenditures to protect lives and livelihoods of Ghanaians and sustain businesses. We, therefore, request a supplementary budget of GH¢11,896,477,566.00 to enable us to continue this extraordinary task”, he requested.
According to him, the Ghana has been hit with a double shock: a health pandemic and a global economic recession and this he says has resulted in revenue shortfall of GH¢13.6 billion and unanticipated but necessary expenditures of approximately GH¢11.7 billion.
This, therefore, leaves the country with a projected fiscal deficit of 11.4% of GDP, a figure which is above the 5% limit as stated in the Fiscal Responsibility Act, 2018 (Act 982).
He further explained that “the overall fiscal deficit will increase from the programmed GHȼ18.9 billion to GHȼ30.2 billion, which will be 7.8 percent of revised GDP.”