Ken Ofori Atta; Ministry of Finance

Civil Society Organizations, (CSOs’), have advocated the need for government to give legal backing to the newly established Fiscal Council to enable the Council to undertake its functions within the ambit of the law.

They suggested the amendment of the Fiscal Responsibility Act to provide legal backing for the Fiscal Council.

Government recently announced the establishment of a Fiscal Council to help guide government to religiously follow the dictates of the Fiscal responsibility law which was passed last year and assented to by the President in December 2018.

The law was a fulfillment of a pledge to legislate rules to limit excessive public spending and get budget deficits reduced.

The Fiscal Council, though not grounded in any law has Presidential mandate to develop, recommend policies to ensure sustainable debt levels, manage fiscal risks and ensuring fiscal balance.

Speaking at a technical session on the fiscal responsibility law in Accra, organized by Natural Resource Governance Institute and Ghana Oil and Gas for Inclusive Growth, an Africa Associate with the Natural Resource Governance Institute, Aisha Adam underscored the need for the Council to be made independent and selected members should be politically neutral.

“Concerns have been raised about the independence of the Fiscal Council and its ability to provide sound, unbiased economic advice and assessment as the law is being implemented.”

Madam Adam emphasized the need for the Council to be transparent, encourage frequent media and citizens interactions to make the Council’s activities citizens oriented. She also advised that the Council’s work must reflect local context.

A Technical Lead at the Ghana Oil and Gas for Inclusive Growth, Samuel Bekoe took participants through the provisions of the Fiscal responsibility law and some identified gaps in the law.

Quoting the provisions of the law, he said the Act seeks to correct distorted incentives; ensure fiscal discipline; prevent fiscal slippages and improve fiscal and debt sustainability.

The Act spells out certain numerical fiscal rules which should be followed in the management of public finances.

“(a) the overall fiscal balance on cash basis for a particular year shall not exceed a deficit of five percent of the Gross Domestic Product, GDP for that year and (b) an annual positive primary balance shall be maintained.”

Touching on the two fiscal responsibility rules Mr. Bekoe wondered why that overall fiscal balance on cash basis for a particular year is linked to GDP and not revenue.

He mentioned excessive expenditure relative to recurrent revenues especially in election years, increasing interest payments, high wages and salaries, stock of budget arrears and revenue generation challenges as factors undermining efforts to ensure low budget deficit over the years.

Mr. Bekoe hoped the story will change going forward with the new Fiscal responsibility Law and Fiscal Council in place. This he noted called for commitment from the managers of the country’s finances.

Mark Agyemang of the Public Interest and Accountability Committee, (PIAC), gave an overview of the level of indiscipline in the utilization of Petroleum revenues under the Petroleum Revenue Management Act and prayed that the Fiscal responsibility Law will help government to be responsible with its expenditures.

Participants at the session agreed to the suggestion for the Fiscal Council to be anchored in law and entreated government to adhere to the dictates of the Fiscal responsibility Law to ensure that the challenges with budget deficit are reduced gradually to an a appreciable level.

Story by Dominic Hlordzi

Leave a Reply