Controls, independent monitoring needed to curb govt overspending
An economic lecturer at the University of Ghana Business School (UGBS), Dr Patrick Asuming, has proposed that an independent agency is needed to guide government expenditure to prevent overspending during an election period.
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He said such an independent monitoring entity will also gauge and inform Ghanaians on the government’s expenditure each year to ensure compliance with budget estimates and other expenditures.
“We must ensure that no spending happens outside the Ghana Integrated Financial Management Information System (GIFMIS) and ensure sufficient controls to break the political cycle of government overspending in each election year,” he noted.
Participating in a panel discussion at the Graphic Business/Stanbic Bank Breakfast Meeting yesterday at the Labadi Beach Hotel in Accra, he urged the government to ensure that the country does not return to the Bretton Woods Institution any time soon.
“There seems to be an incentive and an enabling component each time we are in an election, which drives government to overspend. That must stop. The citizenry must also be keen on economic matters to make the government aware that it can’t act alone,” he stated.
GIFMIS
The Ghana Integrated Financial Management Information System (GIFMIS) is a charter for public financial management that will help achieve key objectives such as capturing all public finances currently scattered at different units, at the centre and across all local governments, producing a single unified chart of accounts and budget classification for budgeting, accounting and reporting that is compliant with IMF standards and developing and implementing re-engineered business processes that are best practices worldwide.
Fiscal Responsibility Act
Dr Asuming stated that the Fiscal Responsibility Act, 2018 (Act 982) charges the government to ensure that the overall fiscal balance on a cash basis for a particular year does not exceed a deficit of five per cent of the Gross Domestic Product (GDP) for that year is moot and can’t stop the government from overspending.
According to him, the act which was suspended in 2020 due to the emergence of COVID-19 is similar to the economic advisory council that couldn’t exert control over government spending.
“At the moment, the person you are preventing from overspending is the one who is implementing the measures not to overspend, and that is the problem. We need a fiscal council that is truly independent and has more powers to exert control,” he stated.
He called for the setting up of an institution that can actually bite and exert power and influence on the government to stop overspending.
Costly IMF
The lecturer in finance and economics also expressed worry over the sacrifices the IMF programme imposed on Ghanaians, saying it is unbearable and problematic.
He revealed that conditions like the Domestic Debt Exchange Programme (DDEP) have brought significant hardships to businesses and households.
"This is the costliest IMF programme for the ordinary Ghanaian by way of the nature and the level of sacrifices that we have been asked to make for the programme to come into being, for both ordinary Ghanaian households and businesses. A big part of the domestic DDEP and the challenges and problems it has brought to us is our senior citizens," he stated.
Ghana is presently seeking a $3 billion balance of payment support from the International Monetary Fund (IMF).
The government is actively involved in discussions with its external creditors to ensure confirmation and receipt of the second tranche of the bailout, amounting to $600 million.
The Graphic Business/Stanbic Bank Breakfast Meeting was on the theme “Fiscal Discipline: Breaking the Political Business Cycle in 2024." It aimed at tackling Ghana's regular election year.
