President Akufo-Addo has directed that the fiscal stability achieved over the last three years must not be compromised in the 2020 budget.
The Minister of Information, Kojo Oppong Nkrumah, who announced the President’s directive after a three-day Cabinet Retreat at Peduase in the Eastern Region, indicated that the Fiscal Responsibility Law, which was the new anchor of discipline for the government, prohibited any government from incurring a deficit beyond five per cent of Gross Domestic Product (GDP).
“President Akufo-Addo has particularly mentioned that election-year pressures should not and will not cause the treasury to throw away fiscal discipline,” Mr Oppong Nkrumah emphasised, adding that “the need to meet revenue projections is critical in ensuring that our desires as a nation are met.”
Parliament passed the Fiscal Responsibility Bill into law in December last year to stem the cyclical fiscal slippages associated with the country’s budgets every four to 10 years.
The country has suffered from large fiscal volatility around election cycles for the past two decades. This volatility has been identified as one of the key challenges for the country’s future development path in the 2018 World Bank Systematic Country Diagnostic.
Fiscal deficits increased sharply and above five per cent of GDP in all but the 2004 election year, since 2000.
At 11.5 per cent of GDP, 2012 had the largest ever recorded fiscal deficit in the country. And the level of overshooting in fiscal election cycles has increased over the past decade with the discovery of offshore oil fields in 2017.
