Ken Ofori-Atta, the Finance Minister, has revealed that government intends to lower the cap on the Ghana Stabilization Fund (GSF) from the current US$300 million to US$100 million in accordance with Section 23(3) of the Petroleum Revenue Management Act (PRMA).
According to Finance Minister, the measure would enable the excess amount in the GSF account over the US$100 million cap to be transferred into the Contingency Fund (CF) consistent with Section 23(4) of the PRMA.
The amount, moreover, transferred into the Contingency Fund would be used to fund the Coronavirus Alleviation Programme (CAP). Through this process, an estimated GHC 1.250 billion would be transferred into the Contingency Fund to fund the CAP.
Finance Minister Ofori-Atta announced this when he briefed Parliament on measures being taken by government to mitigate the impact of the Coronavirus disease on the Ghanaian economy.
Many governments, in the wake of the Coronavirus pandemic, around the world including; Ghana have come out with many fiscal stimulus packages to mitigate the impact of the pandemic against their economies.
These global responses have been a mixture of monetary and fiscal responses including; cut in interest rates, making more funds available to both private and public sectors.
The Finance Minister also announced that as part of measures to mitigate the impact of the coronavirus on the economy government was arranging with the Bank of Ghana (BoG) to defer payments on non-marketable instruments estimated at GHC1.222 billion to 2022 and beyond.
Some of the alleviating measures included; adjusting expenditures on goods and services as well as Capex downwards by GHC1.248 billion, secure both World Bank and IMF credit facility of GHC1.716 billion and GHC3.145 billion respectively, and also reduce the proportion of Net Carried and Participating Interest due GNPC from 30 percent to 15 percent.
Government’s plan to amend the PRMA to allow a withdrawal from the Ghana Heritage Fund (GHF) to undertake urgent expenditures in relation to the Coronavirus pandemic was further revealed by Mr Ofori-Atta. The Ghana Heritage Fund is estimated to be US$591.1 million.
He explained that the fiscal measures being undertaken by government to mitigate pandemic would result in a fiscal deficit of 6.6 percent of revised GDP with a corresponding primary balance deficit of 1.1 percent of revised 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). In addition, the primary balance is a deficit equivalent to 1.1percent of GDP contrary to the positive balance prescribed by the Fiscal Responsibility Act”, the Finance Minister said.
The Member of parliament for Yapei Kasaugu , Mr John Jinapor, in his remark on the Finance Minister’s briefing stated that in such difficult times of COVID-19, government must show commitment and lead by example by cutting down on its expenditures.
“This is why we made the call that this is the time for the executive and the entire leadership including; the legislature to lead by example by cutting back on expenditures”
He said in this difficult times, government should commit to expenditure on essential items that had to do with life situations.
Mr Jinapor also stated that though the minority side had no problem supporting government to cap the GSF to US$100 million, they would however resist any attempt by government to touch the Ghana Heritage Fund, which was set aside for future generation.
Chairman of the Finance Committee, Dr Mark Assibey–Yeboah, in his remark stated that the outbreak of the coronavirus pandemic had put enormous strain on their Ghanaian economy and the world as whole, saying “these are trying times for the country and the world”.
He, therefore, urged the minority not to play partisan politics with the issue, adding “these are not times for anybody to be partitioned, this are serious times”.
He noted that world economies were likely to experience a global recession, where no country would be left out, saying that the recovery would be slow.
The Minority Leader, Mr Haruna Iddrisu, in his remark raised procedural issues with the Finance Minister appearing before the House to make a statement and not come under Section 23 of the PRMA or Article 178 of the 1992 Constitution, adding that Parliament could not take a decision merely on statement made by the Finance Minister to the House.
He said with China’s contribution to global trade, the outbreak of COVID-19 was likely to impact on the Ghanaian economy at several levels.
He said President Nana Akufo-Addo had declared Ghana Beyond Aid and with just a threat of Coronavirus, the country was running back to the IMF again support, saying that “we have not built a strong structural economy”.
The Minister for Planning, Professor Gyan Baffour , in his remarks expressed shock at the minority side for making the debate a partisan political issue, which was not good for the country in this difficult moment.
He said the country was in serious and difficult times and so people should not bring their parochial partisan matter into the debate, saying “We have no such experience in modern times”.