Finance Minister, Ken Ofori-Atta

The Finance Minister, Ken Ofori-Atta at a press conference on Monday, December 6 assured Ghanaians of government’s effort to address the concerns raised about the 2022 Budget.

It would be recalled that the Minority Caucus in Parliament stated five conditions under which they would approve the 2022 Budget. Other stakeholders also expressed concern especially the e-levy.

Well, the Finance Minister said some of the issues raised by the Minority have been addressed in a letter to the Speaker of Parliament announcing some amendments to the 2022 fiscal policy.

The Agyapa deal

The Minister said the government will amend some paragraphs of the deal to exclude references to mineral royalties’ collateralisation.

“With regards to Agyapa Royalties Ltd, we shall amend paragraphs 442 and 443 to take out references to mineral royalties collateralisation. It is important to note that, any reference to Agyapa was for informational purposes, and as such was not reflected in the fiscal framework,” Ken Ofori-Atta said.

The Keta Sea Defense Wall

An amount of GHS10 million will be allocated to complete Feasibility and Engineering studies for the coastal communities adversely affected, the Finance Minister disclosed.

“In respect of the unfortunate tidal waves which rendered about 3,000 people homeless in Keta, we shall make the necessary budgetary allocations of at least GHS10 million to complete the Feasibility and Engineering studies for the coastal communities adversely affected. We will broaden the scope of the study to consider a more comprehensive solution to protect Ghana’s 540 Km of coastline, including the 149 Km between Aflao and Prampram. Meanwhile, NADMO has responded to the humanitarian crisis created by the tidal waves on the Keta coastline,” Ofori-Atta disclosed.

This should definitely be good news to the indigenes of Keta and its environs, considering the toll the recent tidal waves disaster had on them.

Review of Aker Energy Transaction

With regard to concerns by the Minority on the Aker Energy Transaction the Finance Minister had this to say.

“Relating to the Aker Energy transaction, we shall amend paragraph 829 of the 2022 Budget on the acquisition of a stake from Aker Energy and AGM Petroleum by GNPC, to reflect the resolution of Parliament dated 6th July, 2021 that “the terms and conditions of the loan for the acquisition of the shares shall be brought to Parliament for consideration pursuant to article 181 of the Constitution.”

Benchmark Review Policy

Some clarity has also been given by the Finance Minister on the reversal of the 50% benchmark policy on some 32 categories of items at the ports.

“On the benchmark values, we shall avert any hardships to importers and consumers while safeguarding the interest of local manufacturing industries to secure and expand jobs for our people. This administrative exercise which reviewed 43 out of 81 line items, has the objective to promote local manufacturing and the 1D1F policy, including the assembling of vehicles. It is important to note that this adjustment affects only 11.4% of the total CIF value, of which 50% is for vehicles.

From our analysis, the potential increase in retail prices should be relatively insignificant and therefore inflation should be muted. The YouStart policy will also support our accomplished Traders with appropriate training and access to capital to become manufacturers in order to expand the industrial base of our society and our import substitution strategy, in line with our Ghana Beyond Aid agenda.”

1.75% E-Levy

Indeed, the most anticipated aspect of the press conference was the government’s response to concerns over the e-levy. The Finance Minister indicated government is in consultations with stakeholders to come to a consensus on the levy.

“On the matter of the E-levy, having regard to its serious fiscal implications, we will continue our consultations with the Minority Caucus in Parliament and other relevant stakeholders, with a view to achieving consensus and reverting to the House in the shortest possible time.

The E-levy is still 1.75% and we are in serious consultations, keeping clear our fiscal implication of what it will mean,” he told the media.

E-levy a greatest opportunity to broaden the tax net

While many Ghanaians have kicked against the levy, the government says the levy is an opportunity to widen its tax revenue.

“Permit me to emphasize that the E-Levy represents our greatest opportunity to, in the medium term, broaden the tax base and meet the Tax to GDP ratio of 20% as pertains among our peers. To lessen the impact of the E-Levy on consumers and subscribers, especially the more vulnerable, we shall work with all the stakeholders including the TELCO’s to ensure that the all-inclusive cost is reduced by 0.25 percentage point. We shall also ensure that administration measures will be taken to avoid attempts at evading the E-Levy taxes,” he noted.

Entire Government to shut down if budget is not approved

To those who may not be aware of the grave consequences if the budget is not approved, the Finance Minister gives an inkling.

“Ladies and Gentlemen, the full consequences of not passing a Budget are serious. This would imply that from 1st January, 2022, for Government to continue to work, we will need to obtain Parliamentary approval to spend in advance of appropriation. Other than that, the entire government would have to “Shut Down”. Which would mean, to name a few:

i. No salaries for the almost 700,000 public sector workers, including nurses, doctors, teachers, personnel of the security services;

ii. No government services and other expenditure including payment of contractors,

iii. Uncertainties in the business environment; and

iv. Pressure on the currency leading to currency depreciation.

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