Parliament has granted the request of the Finance Minister for the suspension of the Fiscal Responsibility Rule for the 2020 financial year.
Section Two of the Fiscal Responsibility Act, 2018, enjoins government to ensure that "the overall fiscal balance on cash basis for a particular year shall not exceed a deficit of five per cent of Gross Domestic Product for that year."
The Act also requests of the government to ensure that "an annual positive primary balance [are] maintained."
It, however, provided that when there is the need for the suspension of the rule, the minister shall, within 30 days, present to Parliament for approval facts and circumstances for the suspension, plans for restoring public finances within a reasonable period after a force majeure or unforeseen economic circumstances have elapsed.
The approval of the request comes on the back of a threat by the Minority Caucus to initiate censure procedures against the Finance Minister, Ken Ofori-Atta, when he announced during the presentation of the mid-year budget review that the deficit was expected to hit 11.4 per cent of GDP.
The Finance Committee's report on the request, tabled in Parliament in Accra yesterday, justified the request citing the coronavirus pandemic.
"The pandemic has wreaked havoc on economic activities, created uncertainty and weakened growth," the report said, adding that whilst government expenditures continue to rise, its revenues were declining.
Per the report, the fiscal deficit of 11.4 per cent of GDP this year would drop to 9.6 in 2021, 7.1 in 2022, 5.2 in 2023 and 3.8 in 2024 and estimated that growth would inch up from the 0.9 per cent of GDP projection this year to 5.4 in 2024.
The Minority members who have since supported the request said the deficit figures for 2019 were inconsistent with what the International Monetary Fund had reported on the country because, while the minister reported 4.7 per cent of GDP, the fund reported 7.1 adding the banking sector clean-up.
Minority Leader, Haruna Iddrisu, said the projections till 2024 were not measures but a blueprint of where government aspires to be because "when we say measures, we expect to see what you are going to do to stimulate the economy."
The Tamale South MP said the argument by government that its budget was pushed out of fear because of the falling prices of commodities could not be justified saying "this is not the first time commodity prices have pummeled."
In the view of Mr Iddrisu, the Finance and Employment Ministers must consider, as a matter of urgency, to appraise the House on the impact of COVID-19 on employment, adding that a labour market was critical if government was to respond adequately to the coronavirus induced unemployment.
A Deputy Finance Minister, Kwaku Kwarteng, expressing gratitude to the House for approving the request said the impression must not be created that all was lost because there was a recovery plan.
"There are positives to be learnt from the pandemic," he said and assured that in containing the virus, the foundation of the economy was robust to make the recovery easy.
The Ghana Coronavirus Alleviation and Restoration of Enterprises Support (CARES) programme clearly outlines strategies to reverse the effect of the pandemic.