Parliament has approved the request from the Finance Minister for the suspension of the Fiscal Responsibility due to the dire effects of Covid-19 on the economy.
Finance Minister Ken Ofori-Atta in his mid-year budget presentation to Parliament requested that the Act which requires the country’s fiscal deficit to be kept at a maximum of 5 percent, be suspended because the target is not attainable die to the pandemic.
“From developments thus far, it is clear that the fiscal rules of a deficit not exceeding 5 percent of GDP and a positive primary balance enshrined in the Fiscal Responsibility Act, 2018 (Act 982) are neither feasible nor attainable targets in this emergency period of the COVID-19 Pandemic.
The scale of damage and macroeconomic distortions caused by the pandemic is unprecedented in our country’s history. It may take a while to return to the pre- COVID-19 fiscal path. According to our revised fiscal framework, the economy is not likely to return to the 5 percent fiscal deficit threshold set in the Fiscal Responsibility Law sooner than 2024.
Consequently, as required by section 3(3) of the Fiscal Responsibility Law, the government will within 30 days present before this august House the necessary documentation that supports the suspension of the fiscal rules and targets for this year 2020,” the minister added.
Last week, Member of Parliament for New Juaben South and Chairman of the Finance Committee in Parliament, Mark Assibey-Yeboah in his submission during the debate on the mid-year budget, defended the decision to suspect the Act, adding that but for the for the pandemic which hit global economies including Ghana’s, the government was on course to achieve its fiscal target of 4.7 percent.
“The pandemic has shaken the whole world. It has fundamentally damaged the world’s economy, and so forecasts have been lowered everywhere. That is why the Finance Minister indicated he is going to suspend the Fiscal Responsibility rules, and it is within the minister’s power to come to the House to ask for suspension of the fiscal law,” Dr. Assibey-Yeboah said, referring to Act 982 Section (3) which allows suspension of the law due to certain circumstances, including a public health pandemic.