Government has indicated that based on the estimates for revenue, grants and expenditure, the 2021 fiscal operations would result in an overall fiscal deficit of GH¢41.298 billion, equivalent to 9.5 per cent of GDP.
Majority Leader in Parliament Osei Kyei-Mensah-Bonsu who announced this when he presented the 2021 budget statement and economic policy of government to Parliament last week said financing of the fiscal deficit will come from both domestic and foreign sources.
He explained that net domestic financing would amount to GH¢25.42 billion (5.9 per cent of GDP), while net foreign financing would amount to GH¢15.87 billion (3.7 per cent of GDP), including a planned international capital market programme to raise to $5 billion, of which $1.5 billion would be used to support the implementation of the 2021 budget and the rest for liability management.
“A corresponding primary deficit equivalent to 1.3 per cent of GDP is also projected for the year,” he said.
Give and take
A Professor of Economics, Prof. Peter Quartey, said in an interview that the budget was a bold “give and take” tool by the government to weather the storm brought about by COVID-19.
He said new levies and taxes were needed to raise revenue to fund the reliefs and financial supports proposed for households and businesses relevant to the recovery agenda of the government.
He said while the revenue measures ran counter to the growth recovery pursued by the government, they were better than increased borrowing, which was the only available
Government has christened the 2021 Budget as “Completion, Consolidation and Continuation” budget.
This theme, government indicated, is underpinned by the fact that over the years every new budget invariably contains a host of new projects to be initiated at the expense of ongoing projects.
“Not only does this puts pressure on our finances but has historically resulted in arrears, with many contractors not being paid on time for work done and thereby escalating the overall cost of these projects”, Majority Leader, Osei Kyei Mensah-Bonsu disclosed whilst presenting the 2021 Budget and Economic Policy to Parliament today.
However, the fiscal situation the economy finds itself calls for a fiscal consolidation or a tight, low-spending budget which to a larger extent depict this year’s budget.
Mr Kyei-Mensah-Bonsu said government has therefore, decided to chart a new direction from 2021.
He said “a major concern of all Ghanaians across the political divide, is the usually wasteful spectre of uncompleted public projects scattered across the country. This must stop. Governments owe the people a duty to use limited public funds responsibly”.
Furthermore, “our goal is to bring to an end the culture of unfinished projects. The main focus of government for this year is the fulfilment of existing commitment and the completion of existing projects”, he pointed out.
