Parl approves suspension of Fiscal Responsibility Act
Parliament has backed the request for the suspension of the Fiscal Responsibility Act for the 2020 financial year to enable the finance minister to spend Gh¢11,896,477,566.00.
Section 3 of the Fiscal Responsibility Act provides for the suspension of the rules.
The Minister is also permitted by law to suspend the rules — which are maintaining a positive primary balance and keeping the debt to GDP ratio at five percent.
He is required by law to present his reasons before the House and seek for approval.
The request was laid in the house on Wednesday, 29th July, 2020 by the minister responsible for parliamentary affairs on behalf of finance minister.
The purpose of the request was to seek parliamentary approval for the suspension of the fiscal responsibility rules contained in the fiscal responsibility act 2018 following the outbreak of the coronavirus.
The Act places a ceiling on the annual fiscal deficit at five per cent of Gross Domestic Product.
It, however, grants exceptions under which the deficit may be more than the five per cent. The exceptions include health pandemics, amongst others.
The Minister had argued that the fiscal responsibility rules cannot be met due to the impact of the virus and the measures put in place to manage it.
Mr. Ken Ofori-Atta had also explained for the government to meet the alleviation programmes being rolled out for Ghanaians to mitigate their woes, the rules must be suspended.
Presenting the Finance Committee’s report, its chairperson, Mr. Mark Assibey-Yeboah emphatically stated that the COVID-19 pandemic has affected virtually all countries of the world and every aspect of the Ghanaian economy.
He said it has also wreck havoc on economic activities, created uncertainty and weakened growth.
He said remittances had reduced significantly with the hospitality industry, educational institutions and others being badly affected.
Government’s income generation he added had declined whereas its spending had increased hence the need for the house to approve the request.
The Minority had earlier threatened to trigger censure processes to remove the Finance Minister, Ken Ofori-Atta from office for allegedly breaching the Fiscal Responsibility Act.
Contributing on the request of fiscal responsibility rules, the Minority Leader Haruna Iddrisu accused the finance minister of not adopting proper measures to reduce the fiscal deficit from 11. 4% of GDP in 2020 to 9.6% in 2021, 7.1% in 2022, 5.2 in 2023 and 3.8% in 2024 but rather giving blueprint of where the government aspires to be.
He insisted there was no indication of how the government intends to reduce expenditure and improve primary balance.