Midyear budget will be too late to address economic impact of COVID-19 outbreak- ACEP
Executive Director for ACEP, Benjamin Boakye
The mid-year budget which is normally in July will be too late for the country to accommodate the full effect of oil price drop and the impacts of COVID-19 outbreak on the national budget, the Africa Centre for Energy Policy (ACEP) has noted.
The centre has therefore called on the government to immediately review the 2020 budget in the wake of the outbreak.
This might however require some amendments to the Public Financial Administration Act, which requires the Finance Minister to present a Mid-Year Review to parliament six months after the presentation of the main budget for that fiscal year.
According to ACEP, in its analysis of the implications of the COVID-19 on oil price, a new budget that accounts for the extraordinary drop in oil prices was required for oil producing countries in Africa.
It is encouraging to see that Algeria has already recognised this fact and is preparing a supplementary budget that will help manage the effects of low oil prices.
This also recognises that a mid-term budget will be too late for many countries to accommodate the full effect of oil price drop and the impacts of COVID-19 outbreak on the national budget.
It added that in the future, governments must implement significant countercyclical mechanisms.
“An option will be for governments to have stabilisation funds with adequate buffer that is capable of smoothening significant shortfalls in the budget. Also, hedging portions of oil outputs will minimise the impacts of oil price volatility on national budgets”, it added.