Finance Minister under the John Mahama government, Seth Terkper, has said he is disappointed that the 2020 Mid-Year Budget Review presented to Parliament on Thursday falsely quoted 4.7% as the budget deficit.
He said the current Finance Minister, Ken Ofori-Atta, has failed to heed the advice of the Minority in Parliament and himself to quote the true budget deficit of 7.1% but went ahead with its hidden figures accounting during Thursday’s presentation.
Mr Terkper told GhanaWeb in an exclusive interview on Friday, July 24, 2020, that the 4.7% that Mr Ofori-Atta quoted excludes the bailout cost for the banking sector clean up and the energy sector levy – two key items that the International Monetary Fund (IMF), Fitch and others have added to arrive at the true figure of 7.1%.
“We were expecting the government to reconcile those two positions because that is what we were calling the parallel numbers. The Minister’s statement suggests that they have just been going with the traditional numbers because he mentioned the same 4.7 when he was reading his script,” he said.
Mr Ofori-Atta told Parliament that Ghana’s budget deficit will be more than twice the initial forecast because of a fall in crude oil prices and the coronavirus pandemic.
He said on Thursday that the deficit is now seen at 11.4% of GDP compared with a projection of 4.7% at the end of last year.
But speaking to GhanaWeb, Mr Terkper said the revised deficit should be higher than the projected 11.4% had the true figure of 7.1% been quoted.
“I think we have created sufficient awareness for Ghanaians to know that the deficit is not 4.7%. You can put bailout cost and you can put the energy arrears in footnote, but you are going to be financing more than 4.7; because the arrears have to be paid from wherever source [including through loans]. So if you pay anything above the deficit, it will increase your debt because it is the financing of your deficit that increases the debt annually," Mr Terkper fears.
Earlier this month, the former Minister alleged that in a bid to secure some $1bn bailout under the IMF's Rapid Credit Facility as a result of the COVID-19 pandemic, the government presented a deficit position which fails to tally with what it had earlier told Parliament.
“The Minister went to Parliament and gave us the estimated cost of COVID-19 – which was about GH¢9.5bn. The financing which we secured purposely for COVID-19 – the IMF’s $1bn, which should be about GH¢5.5bn, the World Bank’s support, Stabilisation Fund and other reliefs amount to about GH¢10bn.
“At the point the Bank of Ghana’s financing, for example, was being considered, we had secured enough for COVID. So why were we getting those additional borrowings and the rest? The only explanation one can give is that the deficit being showed at 3.5 per cent [of GDP], 4.7 per cent [of GDP] was actually higher,” he said at the time.
He stated that the IMF has been adjusting Ghana’s deficit numbers for some time now, meaning that the government had been borrowing to finance the deficit.
He told GhanaWeb in the exclusive interview that on Friday that “if you pay anything above the deficit, it will increase your debt because it is the financing of your deficit that increases the debt annually. Otherwise, you are doing things outside what the Constitution requires because the Constitution says all budget expenditures, irrespective of source, or application must be approved by Parliament and must be in the Appropriation Act.”