PFM Network Wants Wider Consultation on Ghana’s Fiscal Council

Salifu Freeman Kanton

PFM Network Ghana is of the view that the establishment of Ghana’s Fiscal Council to oversee fiscal responsibility presents a fine opportunity to reform public financial management.

Parliament has recently passed the Fiscal Discipline Law to give impetus to the Ghana’s Fiscal Council.

In a statement signed by the Policy Analyst of the Network, Salifu Freeman Kanton, Government must engage key stakeholders on a wider scale in the process leading to the formation of the Council.

He noted that key stakeholders, research and finance institutions like political parties and academia must be consulted in the process.

Mr Freeman was emphatic that his outfit, which is a civil society organizations working around public financial management circles must also be engaged.

According to him, these engagements not only will ensure that the key stakeholders are consulted but also promote inclusion and participatory governance.

“It is our hope that when these consultations are properly done, holistic, objective and achievable fiscal rules would emanate from the Fiscal Council which will go long way to boost confidence of investors and set the pace for a strong economy to provide jobs and prosperity to the people. The bottom line for the ordinary Ghanaian is to be able to afford the basic necessities of life, have belief in government’s ability to manage the public resources and optimistic that the social contract signed would be fulfilled. To this, government cannot and must not fail,” he stated.

Read Full Statement Below:
A CALL FOR WIDER CONSULTATION TO SET-UP GHANA’S FISCAL COUNCIL

One of the objectives of PFM Network Ghana is to see a responsible and efficient use of public funds, safeguard and ensure transparency. Against this background, the Network is pleased with the noble and serious course of actions reflected in the 2019 Budget Statement and Economic Policy of the government.

We would like to comment briefly on the fiscal deficit of the Budget and government decision to set up a Fiscal Council to oversee fiscal management in the country.

The 2019 Budget
The budget which is under the theme: “A Stronger Economy for Jobs and Prosperity” is expected to build on the macroeconomic gains in the last two budgets to create job opportunities for the people and for that matter the citizenry.

The government of Ghana is targeting to attain a fiscal deficit of 4.2% of Gross Domestic Product (GDP) in 2019. The Finance Minister, Ken Ofori-Atta announced this when he presented the 2019 Budget and Economic Policy of the government to the parliament of Ghana. This has become necessary since restoring fiscal discipline has become a priority for Ghana. The Natural Resource Governance Institute (NRGI) has noted that, since 2010, the deficit has widened rapidly driven partly by rapid increases in spending, especially on salaries increases and fuel subsidies.

In government’s attempt to maintain fiscal discipline in the coming year, the Finance Minister emphasized that a bill will be submitted to parliament with the objective of ensuring that fiscal deficit remains within 5% of GDP. Additionally, government will institute a Fiscal Council to further strengthen fiscal management. These measures are consistent with global best practices in some countries of South America and Asia. We urge government to stay the course and be steady.

Fiscal Deficit
According to the 2019 Budget Statement and Economic Policy, fiscal deficit was reduced from 9.3 percent of GDP in 2016 to 5.9 percent of GDP in 2017 (the first time since 2006 that a government has met the deficit target). At the end of September 2018, the fiscal deficit was 3.0 percent of GDP compared to a target of 2.7 percent, it is expected that given the current prudent spending, government is likely to meet its end of year target of 3.7%.

However, what is worrying is that, the 2019 revenue target which is pegged at GH₵58,904,864,627 (17.1% of GDP) against an expenditure of GH₵72,710,768,495 (21.1% of GDP), already creates a deficit of GH₵13,805,903,869 (4.0% of GDP, almost close to 2019 end of year target of 4.2%). Again, since 2016, the government has struggled to meet revenue targets which is likely to repeat in 2019. If this status quo of over spending and inability to meet the year’s revenue target repeats, the 2019 fiscal deficit may not be met and throw out of gear the good gains made post-IMF program when we should be consolidating gains.

The need for Wider Consultations
Ghana’s upcoming Fiscal Council to oversee fiscal responsibility presents a fine opportunity to reform public financial management. However, it will be critical for government to engage key stakeholders on a wider scale in the process leading to the formation of the Council.

Key stakeholders, research and finance institutions like political parties and academia must be consulted in the process. Again, civil society organizations working around public financial management circles such as PFM Network Ghana must also be engaged.

These engagements not only ensure that the key stakeholders are consulted but also it promotes inclusion and participatory governance.

It is our hope that when these consultations are properly done, holistic, objective and achievable fiscal rules would emanate from the Fiscal Council which will go long way to boost confidence of investors and set the pace for a strong economy to provide jobs and prosperity to the people. The bottom line for the ordinary Ghanaian is to be able to afford the basic necessities of life, have belief in government’s ability to manage the public resources and optimistic that the social contract signed would be fulfilled. To this, government cannot and must not fail.

Salifu Freeman Kanton
(SIGNED)
Policy Analyst
054784 0902