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Government begins expenditure rationalization to reduce debt stock

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The Minister of Finance is to begin what he called an expenditure rationalization and prioritization programme to bring down stock of Government debt at the Central Bank.

The Minister, Ken Ofori-Atta in parliamentary memorandum on the ‘report on the limit of borrowing of government under sub-section (6) of Section 30 of the Bank of Ghana Act 2002 (Act 612) in the novel Coronavirus emergency’, said Government is committed to paying down its debt to the Bank of Ghana.

According to him, this will be achieved through a number of remedial measures which includes:
i. Revenue mobilisation enhancement measures;

ii. An expenditure rationalization and prioritization programme;

iii. A strategy to broaden the investor base to access cheaper sources of financing; and

iv. A policy to revise the Primary Dealer guidelines and introduce a Bond Market Specialist as a basis for developing the domestic market.

Speaking about the challenges to the 2020 budget, Mr. Ofori-Atta stated that, “the COVID-19 pandemic is posing significant challenges to the fiscal operations of Government and more generally on the implementation of the 2020 Budget through shortfalls in revenues, additional emergency spending, and tight financing conditions”.

He added that, the revenue shortfalls emanate mainly from petroleum revenue shortfalls through plunging crude oil prices; shortfalls in import duties and other taxes; and shortfalls in non-tax revenues, “which has significantly affected the cash flows for the year and at the same time posing a threat to containing the pandemic”.

The Finance Minister discloses… “preliminary assessments, taking into consideration the revenue shortfall impact, direct health-related spending, additional expenditures including programmed expenditures for the Coronavirus Alleviation Programme, the payment of outstanding government claims to health-related sectors of the economy (National Insurance Trust Fund), and identified government intervention programmes, puts the fiscal gap at about GH¢ 21.42 billion (i.e. Revenue Shortfall Impact GH¢ 15.85 billion and COVID-19 related expenses of GH¢ 5.57 billion)”.

He promised in his conclusion statement to, come back to Parliament with a Mid-Year Review of the 2020 Budget on behalf of the President of the Republic based on updated information on the Pandemic and the macro-economy.

Story filed by Edzorna Francis Mensah

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