Finance Minister, Ken Ofori-Atta, has hinted that government may present a new budget to Parliament by July this year due to the economic impact of the COVID-19 Pandemic that has hit government’s revenue target.
The 2020 financial budget was targeted at expanding infrastructure, particularly roads.
But the Finance Minister announced in Parliament on Monday that government will require some 9.5 billion cedis to fight the COVID-19 pandemic, a situation that may move the 2020 budget deficit to over 7 percent.
Speaking to Citi Business News, Mr. Ofori-Atta said with the 2020 budget out gear due to the COVID-19, there is the need to reassess government expenditure and realign events to meet revenue target.
“We have to re-look at all the fundamental assumptions of the budget, and I did signal to Parliament that come July, there would be a lot more information and analysis because what is the new normal and how do we address the thing that invariably is going to occur? You remember in the first budget we spoke about the preferential option for the poor, remove these taxes and let people do what they want and now we are just coming down to the bottom of the Maslow theory, and we are saying keep body and soul together. At the same time make sure infrastructure is being managed.”
The Finance Minister has said Ghana will record a significant drop in revenue target for 2020 due to the COVID-19 pandemic.
He warns that the country is recording a huge decline in revenue from the port, petroleum revenue receipts as well as tax revenue due to economic slowdown being witnessed as the world fights the spread of the COVID-19 pandemic.
Government is targeting total Revenue and Grants for 2020 to reach 67.0 billion cedis.
But addressing parliamentarians on government’s plans of containing the spread, Mr. Ofori-Atta announced that the situation will lead to an increase in Ghana’s fiscal deficit.
Coronavirus pandemic to cost Ghana GHS9.5bn – Finance Minister
On Monday, the Finance Minister also announced that government had raised an additional 9.5 billion cedis to fight the COVID-19 pandemic, a situation that may move the 2020 budget deficit to over 7 percent.
This will be 2.5 percent of Ghana’s revised GDP.
“Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHS9,505 billion,” the Minister said when he appeared in Parliament.
Ultimately, there will be a “fiscal gap of GHS11.4 billion,” the Minister added.
Import duties, for example, will fall short of target by GHS808 million for the 2020 fiscal year, the Minister indicated.