Parliament last Friday narrowly adopted the motion on the 2021 Budget Statement and the Economic Policy of the government that includes major spending and some tax increases intended to revitalize the economy from the output slump of 2020, largely attributed to the COVID-19 pandemic.
The government got the motion adopted with a majority of only three votes (137 to 134) after the minority backbench rebellion that forced their leaders to call for a headcount, known in parliamentary parlance as a division, in accordance with Order 113(2) of the Standing Orders of Parliament, having challenged the opinion of the Speaker on the voice vote.
There was endless controversy over efforts to rule out the budget of the government following notice served earlier by the NDC MPs that they would not be part of the approval process because of some tax components and alleged misclassification of debts in the budget.
The motion was adopted after a gruelling concluding debate between the Deputy Majority Leader, Alexander Afenyo-Markin, and the Minority Leader, Haruna Iddrisu.
The caretaker Minister of Finance, Osei Kyei-Mensah-Bonsu presented the Budget Statement and Financial Policy to Parliament on March 12, 2021 and the debate on it began on 16 March, with Majority and Minority Members of Parliament (MPs) slugging it out in all sectors.
Even though the government’s election victory has silenced its critics, hardcore Mahama supporters, who won their seats, were shrill in their voice during the debate, offering the most trenchant criticism.
The next move by Parliament is to consider and approve the Annual Budget Estimates of the various ministries, departments and agencies (MDAs), and the motions and presentation of papers and committee sittings are down on the Business Statement and will be on Order Paper for today (Monday); which means the committees should be able to hold meetings to start agreeing what they want to look at and who they want to talk to on the estimates.
Government is seeking approval from Parliament to spend GH¢113.75 billion, which is an equivalent of 26.2% of 2020 Gross Domestic Product (GDP), and added that a sharp recovery from the output slump of 2020 was expected.
The Majority Leader said the overall real GDP was expected to record an average growth rate of 5.0 per cent from 2021 to 2024, with projected growth of 5.0 per cent, 5.0 per cent, 5.1 per cent and 4.9 per cent in 2021, 2022, 2023 and 2024 respectively.
According to him, the GDP, excluding oil (Non-oil GDP), is expected to record an average growth rate of 4.9 per cent from 2021 to 2024, growing by 6.7 per cent in 2021, 4.7 per cent in 2022, 3.5 per cent in 2023 and 4.7 per cent in 2024 respectively.
He disclosed that the fiscal deficit was expected to moderate in the medium-term as the government implements its revitalization and transformation agenda within the context of debt sustainability.
Consequently, the fiscal balance had been projected to reduce from the provisional 11.7 per cent in 2020 to 9.5 per cent in 2021 and reduce further to 4.5 per cent by 2024, he indicated.
“We, thus, expect a return to the Fiscal Responsibility Act threshold of a deficit of 5% and a positive primary balance by 2024. The primary balance is expected to stabilise the growth of debt and promote debt sustainability.
“Total Revenue and Grants for 2021 is projected to rise to GH¢72,452 million (16.7% of GDP), up from an outturn of GH¢54,922 million (14.3% of GDP) for 2020. Domestic Revenue is estimated at GH¢70,987 million and represents an annual growth of 32.2 per cent over the recorded outturn for 2020.”
Of the total Domestic Revenue amount of GH¢70,987 million, Mr. Kyei-Mensah-Bonsu said non-oil tax revenue constituted 75.6 per cent and amounts to GH¢53,632 million (12.4 per cent of GDP), representing an increase of 26 per cent from the 2020 outturn.
By Ernest Kofi Adu, Parliament House