Coronavirus affected 2020 fiscal policy objectives - Government

Government says its 2020 fiscal policy objectives were adversely affected by the outbreak of the COVID-19 pandemic.

This resulted in the recalibration of the 2020 fiscal framework during the 2020 mid-year fiscal policy review to accommodate the unanticipated shocks and to enable the government to implement policies and programmes to ensure that both lives and livelihoods were protected.

Mr Osei Kyei-Mensah-Bonsu, Minister for Parliamentary Affairs, who presented the 2021 Budget statement to Parliament, said total revenues and grants were revised downwards by GH¢13.4 billion to reflect the impact of the COVID-19 pandemic on revenues.

On the other hand, total expenditures were adjusted upwards by GH¢11.8 billion to take care of COVID-19 related expenditures, resulting in a revised budget deficit of 11.4 per cent of GDP for 2020.

The theme for the 2021 Budget was: “Consolidation, Completion and Continuation.”

He said the unprecedented impact imposed by the COVID-19 pandemic led to the suspension of the fiscal responsibility rules for the 2020 financial year.

The Minister said despite the adverse impact of the pandemic on the Ghanaian economy, especially in the first half of the year, implementation of the 2020 revised budget was largely on track.

He said the provisional data on the government’s fiscal operations from January to December 2020 showed that total revenue and grants exceeded the revised target by 2.7 per cent, amounting to GH¢55.1 billion.

Total expenditures, including arrears clearance, amounted to GH¢100 billion, exceeding programmed expenditures by 2.4 per cent.

“The consequent modest increase in total expenditures, despite the force majeure imposed by COVID-19 induced expenditures, is a clear indication that Government adopted prudent expenditure management measures over the period,” he added.

He said the above revenue and expenditure performance resulted in an overall fiscal deficit of 11.7 per cent of GDP, excluding the financial sector clean-up cost, compared to the programmed deficit target of 11.4 per cent of GDP.

The Minister said the corresponding primary balance for the period was also a deficit of 5.3 per cent of GDP compared with the revised deficit target of 4.6 per cent of GDP.

“The fiscal deficit including the financial sector cost for 2020 is 13.7 per cent of GDP,” he said.

Mr Osei Kyei-Mensah-Bonsu said the fiscal deficit was financed from both domestic and external sources and given the tightness of the external financial conditions, the government had to rely on domestic financing, including a drawdown in government deposits at the Central Bank, domestic market operations and other sources of domestic financing.

He said Net Domestic Financing amounted to GH¢44.8 billion, equivalent to 11.7 per cent of GDP.