The Finance Minister, Ken Ofori-Atta has announced that government will not seek additional funding and supplementary budget for the next half of the year to contain the country’s debt stock and avoid fiscal slippages.
Mr. Ofori-Atta explained that even though the COVID-19 pandemic has ravaged many economies around the world, the responsible, innovative, decisive and bold actions taken by government has placed the country in a good position to continue to pursue its recovery plans without requesting for extra money.
This is the first time in memorable years where a government has not sought the permission of parliament to ask for additional budget to cater to the year’s expenditure, especially, at a time where the pressure is high to overspend.
Presenting the Mid-Year Budget review in parliament on Thursday July 29, 2021, the finance minister assured that despite the negative impact of the COVID-19 pandemic, the economy is strongly rooted on recovery path.
“The recovery process from the Covid-19 pandemic is gaining some momentum and the targets for most of the macroeconomic indicators are largely on track”.
Reiterating government’s commitment to achieving economic stability in the medium term, Mr. Ofori-Atta stressed that government remains fully committed to attaining the fiscal deficit target of 9.5 percent of GDP for the year in order not to derail from the objective of returning to the Fiscal Responsibility Act (FRA).
Growing Public debt stock
In recent times, the growing public debt has been a concern to many financial observers as the minority group in parliament has warned that Ghana may return to the International Monetary Fund (IMF) if the situation is not reversed.
But speaking on the country’s debt stock, Mr. Ofori-Atta said the negative impact of the COVID-19 pandemic, coupled with other factors contributed to the increase in debt to GDP ratio from 76.1 percent at the end of December 2020 to 77.1 percent of GDP at the end of June 2021.
“The increase in the debt stock was mainly because of the Eurobond issuance in April 2021, COVID-19 pandemic effect, contingent liabilities, and front-loading of financing to meet cash flow requirements for the first half of the year”.
Status of Ghana CARES
Providing some details on the audacious GH¢100 billion Ghana COVID-19 Alleviation and Revitalisation of Enterprises Support (Ghana CARES) ‘Obaatanpa’ Programme, Mr. Ofori-Atta disclosed that the first phase of the programme also known as the “Stabilisation Phase” was implemented between July – December 2020.
According to him, the programme alleviated the immediate impact of COVID-19 on the economy and restored normalcy in the lives and livelihoods of Ghanaians.
“Since the turn of this year, we have been purposefully pursuing the second phase of the Ghana CARES programme to revitalise the economy and set it on track for transformation”.
2021 macroeconomic targets
Mr. Ofori maintained that government will work hard to achieve the macroeconomic targets of overall real GDP growth of at least 5 percent in addition to a non-oil real GDP growth of at least 6.7 percent.
He added that government is still looking at an end-period inflation of 8 percent, as well as a fiscal deficit of 9.5 percent of GDP; and Gross International Reserves to cover not less than 4 months of imports of goods and services.
Hope for next 6 months
To stimulate economic growth for the rest of the year, Mr. Ofori-Atta said government’s aim is to contain COVID-19 by increasing the rate of vaccination.
He added that government will diversify productivity and high-value services by implementing bold reforms to increase revenue mobilisation and the efficiency of public expenditures.