Finance Minister, Ken Ofori-Atta

Beginning in the first quarter of 2022, the government will suspend roughly 20% of budgeted expenditure for the year, Ken Ofori-Atta, the Minister for Finance, has said.

The minister said the move will make the government’s fiscal consolidation agenda not only revenue-led, but also expenditure-focused.

Taking his turn at the Information Minister’s regular press briefing on Wednesday (19 January 2022), Ofori-Atta said, “We are also strengthening expenditure management in 2022 and beyond.

“To ensure that we match all expenditures to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection.

“Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across board for all covered entities benefiting from the 2022 Budget, subject to revenue performance.”

He added, “This means that our fiscal consolidation agenda is not going to be only revenue-led, but also expenditure-focused.”

The government’s projected expenditure for 2022, which has already been approved by Parliament, was GHC135.6 billion (US$22.34 billion).

Investment in infrastructure

Ofori-Atta observed that an inability to share the national financial burden and generate enough revenue had affected Ghana’s growth negatively compared to that of its neighbours within the sub-region.

“We intend to communicate clearly on the proposed mechanics of the E-Levy [and] its potential benefits to the people of Ghana within the spirit of burden-sharing that must guide us in our development efforts as we move to Ghana Beyond Aid,” Ofori-Atta said.

He added, “We have invested less in infrastructure. Between 1961 to 2020, Ghana’s average gross fixed capital formation ratio was 17%, compared to 25% in sub-Saharan Africa. Moreover, between 2017 and now, our tax-to-GDP has hovered between 11% and 13%, compared to our peers who are between 16% and 20%.”

Ofori-Atta reiterated the government’s commitment to implementing a coherent strategy that will give opportunities to all Ghanaians by increasing resource mobilisation, managing expenditure prudently, creating jobs and offering skills training.