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Business News of Sunday, 9 August 2020

Source: angelonline.com.gh

Parliament approves GH¢11.9 billion for govt to meet public expenditure

Parliament has approved GH¢11.896 billion as supplementary estimates for the 2020 financial year to meet government expenditure.

The approval followed the request made by government in the Mid-Year Fiscal Policy Review of the 2020 Budget Statement and Economic Policy to Parliament pursuant to Section 28 of the Public Financial Management Act, 2016 (Act 921).

Mr Ken Ofori-Atta, Minister of Finance, moved the motion for the House to adopt an amount of GHS11.896 billion as supplementary estimates for the 2020 financial year which included the GH¢1.2 billion from the Contingency Fund, approved this year.

He said the supplementary estimate of GH¢11.9 billion would enable government respond to the adverse socio-economic impact of the COVID-19 pandemic.

He said the withdrawals from the Contingency Fund would be replenished through transfers of excesses from the cap of the stabilization Fund.

Mr Ofori-Atta stated the COVID-19 pandemic continues to have dire consequences both globally and domestically.

He said globally, there had been 19 million infections, with over 700,000 deaths, the global economy contracting by 5.2 percent and resulting in the negative growth of 4.9 percent.

This has disrupted the global supply chains, forced OECD countries to enact stimulus packages of over US$11 trillion as all responsible government would do.

He said request for the supplementary estimates had been necessitated by the need for government to incur additional health expenditure rising out of the pandemic, including the need to provide incentives to health workers who have risked their lives to provide care to Ghanaians.

Furthermore, the supplementary estimates are to enable government provide reliefs to societies, vulnerable people, households and businesses who have been affected and continue to face the brunt pandemic through loss of incomes and livelihoods.

He said this would continue to allow government to provide water, electricity to households, support agriculture to ensure food security, to continue fumigations and ensure sanitary protocols at markets, schools, public spaces across the country.

Dr Mark Assibey-Yeboah, Chairman, Finance Committee, presenting the Committee’s report, observed that the implementation of the 2020 budget for the first half of the year has been relatively successful, albeit with some significant challenges, mostly related to the COVID-19 pandemic.

He said on one hand, there had been less robust revenue mobilization relative to programme targets, adding that total revenue and grants from January to June 2020 amounted to GH?22 billion, compared to the programme target of GH?29.8 billion, resulting in a shortfall of 26 per cent or a performance rated of 74 percent.

The provisional outturn constituted 32.8 per cent of the annual target compared to the programmed execution of 44.4 percent of the annual projection.

Dr Assibey-Yeboah also noted there has been faster execution of expenditures, adding that the execution of expenditures for the period January to June 2020 exceeded the programme target by 11.5 per cent, reflecting a faster rate due to unprogrammed COVID-19 related expenses.

He said the total expenditure (including arears clearance) for the period amounted to GH?46.4 billion compared to a programme target of GH?41.2 billion.

These developments had pushed the financing requirements above the programmed levels for the period and had consequently widened the fiscal deficit target for the 2020 from the original programmed target of 4.7 per cent of GDP to a revised target of 11.4 per cent of GDP.

Mr Cassiel Ato Forson, Ranking Member on Finance, raised concerns about the increase in interest payment projected to hit GH¢4.5 billion by close of 2020 largely coming from the domestic sources and as such increased the supplementary estimates.

He said for 2020, the Government intended to borrow additional GH¢24 billion, which he claimed, was why the interest payment kept increasing and that “something urgent should be done about it” .