Restoring Fiscal Responsibility Act (GH0035)

Problem to be addressed ● In 2018 a Fiscal Responsibility Act was passed to Republic of Ghana - Open Government Partnership - NAP-4 18 restrain budgetary over-runs especially in election years by capping the fiscal deficit at not more than 5%. Of GDP. In the wake of COVID 19 the Ghana Parliament suspended the Act in July 2020 and is therefore not operational.

The commitment  Government to ensure that the Fiscal Responsibility Act which was suspended July 2020 is restored by June 2023

Contribution of commitment to solving problem ● Since the Act remains suspended, there is nothing to check the government from incurring high budgetary deficits. The restoration will provide the needed restraint.

Relevance of commitment to OGP values  The commitment will guarantee open, transparent and accountable management of public finances.

Additional information

Milestone Activity with a verifiable deliverable Start Date: End Date:  Government to announce at annual budget readings progress towards restoration of the Act. Nov. 2021 June. 2023  Announcement of full restoration of the Act before the end of December 2023. Nov. 2022 June 2023

Action Plan Review

Commitment 8. Restoring the Fiscal Responsibility Act

● Verifiable: Yes

● Does it have an open government lens? No

● Potential for results: Unclear

Results Report

Commitment 8. Restoring the Fiscal Responsibility Act

Ghana’s Fiscal Responsibility Act, 2018 (Act 982) serves as a legal framework geared toward maintaining macroeconomic stability and securing debt sustainability, capping fiscal deficits at a 5 percent ceiling annually. The Ghanaian Parliament authorized the suspension of the Fiscal Responsibility Rule for the 2020 fiscal year, stemming from the significant economic impact of the COVID-19 pandemic. This suspension permitted the government to escalate spending to bolster the economy and alleviate the pandemic’s repercussions. The commitment’s goal was to foster reinstatement of the Fiscal Responsibility Rule to curb discretionary expenditure. While this commitment addressed an issue of national importance, it did not promise to make government more transparent, participatory, or accountable to citizens. This commitment was therefore evaluated to have no open government lens and did not achieve open government results.

Implementation level of the milestones was limited. Whereas the 2022 and 2023 Budget Statements and Economic Policy [43] do not provide progress made in reinstating the fiscal rule, the 2023 Mid-Year Fiscal Policy Review [44] highlights the intention to gradually return to the Fiscal Responsibility Act thresholds of a fiscal deficit of no more than 5 percent of GDP and an annual positive Primary Balance at the close of 2024. The report further explains that the government’s fiscal policy faced significant setbacks due to various external and domestic shocks, and as a result, the fiscal deficits during the reviewed period remained notably above the prescribed ceiling.