Minister of Finance Ken Ofori-Atta doctored some figures he presented to parliament in the 2017 mid-year budget statement, Cassiel Ato Forson, a former Deputy Minister of Finance has alleged.
He described the action as “shameful”.
Mr Ofori-Atta delivered the mid-year budget review statement on Monday, 31 July on the floor of parliament. He stated, among other things that the fiscal deficit on cash basis was GHC5.6 billion (2.7 per cent of Gross Domestic Product) compared to GHC6.7 billion (4.0 per cent of GDP) recorded in the same period in 2016.
He said primary balance recorded a surplus of 0.6 per cent of GDP, against a target deficit of 0.01 per cent.
Mr Ofori-Atta also said petroleum receipts in the first half of 2017 amounted to US$277.79 million compared to the end-year projection of US$515.57.
He indicated that the gross public debt stock stood at a provisional figure of GHC138.5 billion (US$31.7 billion as at June 2017).
But reacting to the mid-year budget at a press conference, Mr Forson said: “The attention of the minority in Parliament has been drawn to the reversal of interest payment of a colossal amount of GH?758.5 million and review of GDP (without a formal GSS Statement) at the end of Financial Year 2016 (Par 14 and 15). It is quite clear that the Minister made this reversal, which violates long-standing ‘cut-off’ fiscal rules for the sole purpose of making the government’s dismal performance for the first half of Financial Year 2017 ‘look good’. The action also purports to make the performance for FY 2016 worse.
“This ‘doctoring’ of figures is very shameful. This to say the least is very regrettable and cosmetic. From appendix Table 5A: Page 53 of the Mid-Year Fiscal Policy Review of the 2017 Budget Statement and Economic Policy, Summary of Revised Central Government Operations-2017, the Minister of Finance has reduced domestic interest payment by an amount of ¢657,005,271 Ghana Cedis to create the impression that expenditure on domestic interest payment is being reduced. This is clearly artificially compressed and contrived. This is a blatant disregard for cut off fiscal rules in accordance to the Financial Administration Regulations (FAR), Regulations 193.”
Read Full statement below
STATEMENT BY THE MINORITY IN PARLIAMENT ON THE CLANDESTINE REVERSAL OF INTEREST PAYMENTS BY THE MINISTER OF FINANCE IN PARLIAMENT ON AUGUST 1 2017.
The attention of the minority in Parliament has been drawn to the reversal of interest payment of a colossal amount of GH?758.5 million and review of GDP (without a formal GSS Statement) at the end of Financial Year 2016 (Par 14 and 15). It is quite clear that the Minister made this reversal, which violates long-standing ‘‘cut-off’’ fiscal rules for the sole purpose of making the government’s dismal performance for the first half of Financial Year 2017 “look good’’. The action also purports to make the performance for FY 2016 worse.
This ‘’doctoring’’ of figures is very shameful. This to say the least is very regrettable and cosmetic. From appendix Table 5A: Page 53 of the Mid-Year Fiscal Policy Review of the 2017 Budget Statement and Economic Policy, Summary of Revised Central Government Operations-2017, the Minister of Finance has reduced domestic interest payment by an amount of ¢657,005,271 Ghana Cedis to create the impression that expenditure on domestic interest payment is being reduced. This is clearly artificially compressed and contrived. This is a blatant disregard for cut off fiscal rules in accordance to the Financial Administration Regulations (FAR), Regulations 193.
It must be noted that Financial Year 2016 ended on a weekend (December 31 was a Saturday). The long-standing “cut-off” fiscal rule is that Expenditures and REVENUES that fall due on the last day of the month or year during a weekend, accrue to the next working day Jan 2, 2017. Indeed, this rule also applies to situations where the last working day falls on public or statutory holidays. For this reason, when the last working day of the month or year falls on a weekend or holiday, BOG also closes the books on the prior working day.
Therefore, Ghanaians must be alarmed that the Minister will unilaterally change a long-standing fiscal rule (and indeed business rule) with respect to only one particular EXPENDITURE (interest payment) for the misplaced and selfish purpose of making the performance of the First half of 2017 “look good”. Ghanaians must be even more alarmed that BoG will ostensibly reopen its books to allow this to happen.
Furthermore, we note with concern that the Budget did not state that MOF and BOG applied the same rule to revenues that accrued on Saturday 31st December 2016 but were paid on the next working day on Jan 4, 2017. To be consistent, the Minister and Governor should have reversed all cash buffers that were carried over to Financial Year 2017.
We call on the Auditor-General and Parliament to immediately conduct an investigation into this violation of long-standing, “cut-off’’ fiscal rule by the Finance Minister. Clearly, the Minister lacks the authority to make the adjustment he made under the Financial Administration Regulations (FAR) Regulation 193 on Closure of accounts. It reads;
(1): “At the close of business of the LAST WORKING DAY of each month or FINANCIAL YEAR, whichever is applicable, the accounts shall be balanced off.
(2): “The RECEIPTS and PAYMENTS that belong to a period of a financial year OTHER THAN The reporting period of financial year, shall be shown in the accounts and the details shall be given in the NOTES in accordance with regulations 187 and 188’’.
Checks on some Loan Agreement provisions indicate that where the last working day falls on a weekend, the “next working day” rule applies to interest and principal (debt service) payments.
Given these rules, the NDC did not go back to adjust the 2008 Financial Year records with ARREARS arising out of policies and actions such as SINGLE SPINE, “GANG OF SIX” ROADS, SUBSIDIES, etc.
As we aim to be law abiding and responsible citizens but not spectators, we all will be better served as a nation if these issues raised are treated with a sense of urgency, fairness and despatch by the Ministry of Finance for the development and in the supreme interest of our dear country, Ghana.
Signed:
Hon Casiel Ato Forson
Minority Ranking Member on Finance.
