Finance Minister, Seth Terkper, is urging Parliament to re-examine the revised 2020 Budget and COVID-19 fiscal gaps that it approved to mitigate the effects of the pandemic.
In his final article in the “BoG MPC and Deficit Financing” series the former Minister called on Parliament to examine areas such as (a) the use of “offsets” to show a lower fiscal gap for the approval; (b) besides a lower GDP, extra costs that increase the budget deficit materially from Ghc18.89 billion to Ghc 25.1 billion; and (c) since the extra COVID-19 costs are funded, highlight the reasons for using the virus spread as an excuse for Bank of Ghana (BOG) to finance over 50 per cent of the disclosed 2020 budget deficit.
“It is not transparent to use COVID-19 to resurrect the proposed BOG deficit-financing which existed since the 1970s but was abolished. The IMF and other multilateral/bilateral loans and drawdown from the Stabilisation Fund now cover COVID costs,” Seth Terkper states.
In his previous articles, he stated, among other things that, since the government of Ghana uses about 98 per cent of tax revenues on interest payment and compensation only, it was creating financing problems, even without COVID-19.
His final article, published below, uses the IMF’s Article IV (December 2019) and Rapid Credit Facility (RCF)/COVID (April 2020) Reports to show the original 2020 Budget gap (above fiscal deficit) and the gap relating to COVID19. Table 1 is from the RCF/COVID-19 Report.
His second point is that the government has met the projected COVID-19 costs, therefore, it is not credible to use the virus as the entire excuse for BOG’s deficit-financing.
