Cabinet approves Fiscal Responsibility Law

Cabinet has given its approval for the submission of the appropriate legislation to Parliament to place a cap on Ghana’s fiscal deficit.

The proposed amendment to the Public Financial Management Act is expected to limit the fiscal deficit to between 3% and 5% of GDP from the year 2018, to ensure greater fiscal discipline.

Fiscal deficit is the difference between the government’s expenditures and its revenues, excluding the money it borrowed. A country’s fiscal deficit is usually communicated as a percentage of its gross domestic product (GDP).

The decision to cap the deficit was taken after a Cabinet meeting on Thursday July 20, 2017.

Already Government, through the 2017 budget, has put a cap of 25% on its budgetary allocation to statutory funds.

Ghana’s budget deficit has been increasing steadily over the last few years, hitting 9.3% in 2016.

Faced with a high debt-to-GDP ratio, and a generally unfavourable economic outlook from its predecessor government, the Nana Akufo-Addo government has begun introducing a mix of measures designed to ensure fiscal consolidation while stimulating growth.

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