Ken Ofori-Atta
FINANCE Minister Ken Ofori-Atta is appealing to Parliament to consider and support government’s proposal to lower the cap on the Ghana Stabilisation Fund (GSF) from the current $300 million to $100 million in accordance with Section 23 (3) of the Petroleum Revenue Management Act (PRMA) in order to close the fiscal gap created by the coronavirus pandemic.
Apprising Parliament on the economic impact of the covid-19 pandemic on the economy, the Finance Minister said the measure would enable the excess amount in the GSF account of over the US$100 million threshold to be transferred into the Contingency Fund, in consistent with Section 23 (4) of the PRMA.
According to him, the amount, when transferred into the Contingency Fund, will be used to fund the Coronavirus Alleviation Programme (CAP), adding that “through this process an estimated GH?1,250 million will be transferred into the Contingency Fund to fund the CAP.”
“Mr. Speaker, we therefore wish to seek approval from this August House for the Finance Minister to use the funds which will be available in the Contingency Fund to fund the Coronavirus Alleviation Programme,” he stressed.
He continued that his ministry was seeking to arrange with the Bank of Ghana (BoG) to defer interest payments on non-marketable instruments estimated at GH?1,222.8 million to the year 2022 and beyond.
The Minister disclosed that the government intends to adjust downwards expenditures on goods and services and capex (capital expenditure) by GH?1,248 million, while it secures the World Bank DPO of GH?1,716 million.
He added that preparations are underway to secure GH?3,145 million from the International Monetary Fund (IMF) Rapid Credit Facility, besides reducing the proportion of Net Carried and Participating Interest due the Ghana National Petroleum Company (GNPC) from 30 percent to 15 percent.
He stated further that the government was also seeking to amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake emergency expenditures in periods of national emergency, saying: “There is an estimated $591.1 million in the Ghana Heritage Fund.”
Mr. Ofori-Atta said the measures in the fiscal framework would result in a fiscal deficit of 6.6 percent of revised GDP, and added that the corresponding primary balance will be a deficit of 1.1 percent of rebased Gross Domestic Product (GDP).
“Mr. Speaker, it is clear that even after reflecting the proposed measures, the resulting fiscal deficit as a percentage of GDP is in excess of the 5 percent threshold stipulated by the Fiscal Responsibility Act, 2018 (Act 982),” he noted.
He added that the primary balance is a deficit equivalent to 1.1 percent of GDP contrary to the positive balance prescribed by the Fiscal Responsibility Act.
The Finance Minister asserted that the extraordinary circumstances posed by the novel coronavirus pandemic with significant impact on the macro-fiscal operations of Government certainly has implications on the fiscal rules as outlined in the Fiscal Responsibility law.
“Mr. Speaker we will continue to monitor the fiscal situation and take responsible and appropriate decision in due course,” he hinted.
By Ernest Kofi Adu, Parliament House