Finance Minister Ken Ofori Atta would next Monday, July 29 seek parliament’s approval to spend additional revenue realized.
This would be in addition to Mid-Year Review that the minister is required to present to parliament under the Public Financial Management Act.
Deputy Minister of Finance Kweku Kwarteng who disclosed this to JoyBusiness, however, maintains that this would not result in the budget deficit being compromised or open the “flood gates” and spend outside what has been in the 2019 budget.
He told JoyBusiness government would want to use this additional revenue that has come in to finance some crucial initiatives in some sectors of the economy.
Prudent expenditure and containing the Budget Deficit
There are fears that seeking approval for additional expenditure would result in the budget deficit getting out of hand.
But the Deputy Minister argued that government has learnt its lessons and would not go about spending in any way that would trouble the economy.
“We are seeking approval to spend in very important sectors that would rather put the economy on a strong footing” and would not in any way affect or impact negatively on the budget deficit.“
You saw 2012 over expenditure and its impact on the economy and how today we are still feeling the impact”, the Deputy Finance Minister added.
He noted that government would not do anything that would hurt the economy for the sake of elections.
Mr Kwarteng said the additional spending is very strategic and would not in any way be targeted at spending to win next year’s elections.
“There is no need for us to spend out of budget because of elections because we don’t want to go back to what happened in 2012,” he said.
Possible expenditure cuts?
The Deputy Minister also disclosed that there would indeed be some cuts in expenditure or what can be described as “re-alignment” expenditure or moving funds to some very important sectors.
He added that we may also see some movement in allocations that are aimed at promoting growth and creating jobs as outlined in the 2019 Budget.
This is not necessarily to say that we just want to manage the deficit but rather aimed at achieving some strategic objective of government.
“It’s our commitment to live within our means as government,” he said.
Energy Sector debts and expensive power contracts
He also revealed that the Mid-Year Review and Supplement Budget would help deal with the expensive power contracts that are putting a lot of pressure on government’s finances.
The Governor of the Bank of Ghana Dr Ernest Addison recently noted that paying these contracts which were “structured in dollars” is pushing a lot of pressure on the Bank of Ghana’s reserves.
But Mr Kwarteng maintained the Finance Minister would come up with some policy measures to help contain this challenge.
He added that there are some legacy issues that Mr Ofori-Atta would want to take some tough measures to correct.
“As a government, we are putting in place measures to deal with some of these things and we are committed to solving and never again would we procure stuff we don’t need,” he said.
He, however, noted there would be some intervention in the sector as well.
Focus of Mid-Year Review and Supplementary Estimates
Mr. Kwarteng added that the presentation by Ken Ofori Atta would help put the economy on a strong foot and achieve government’s plan to firmly stabilize the economy and create the required jobs. He also gave the assurance that they are hoping to use this review to give businesses and investors the needed confidence to help grow the economy.
Why the Mid-Year Review?
The Public Financial Management Act actually requires the Finance Minister to appear before Parliament by July 31, to update the house on how the economy has performed.
The Presentation would afford the minister an opportunity to brief the house on how the economy has fared over the last six months and tell Parliament what should be expected for the next half of the year.
The presentation would also offer the Minister an opportunity to review some of the Macro-Economic targets that were outlined in the 2019 budget.
Reviewing Macro-Economic targets
Finance Minister Ken Ofori-Atta also told JoyBusiness that he would use the presentation to review some of the Macro-Economic targets that were set out in the 2019 budget that was presented to parliament in November last year.
These are some of the Macro-Economic Targets set last year by governments that are likely to be reviewed in the minister’s presentation to parliament.
– Overall Real GDP growth of 7.6 per cent;
– Non-Oil Real GDP growth of 6.2 per cent;
– End-period inflation of 8.0 per cent;
– Fiscal deficit of 4.2 per cent of GDP;
– Primary surplus of 1.2 per cent of GDP; and
– Gross International Reserves to cover not less than 3.5 months of imports of goods and services