CSO Budget Forum urges government to strengthen fiscal discipline ahead of 2025 Budget Presentation

The Civil Society Organisation (CSO) Budget Forum has called on the government to adopt a more transparent and structured approach to fiscal management ahead of the 2025 Budget presentation on March 11. 

The forum has outlined key revenue and expenditure measures aimed at mitigating expected shortfalls following the planned abolition of the E-Levy, betting tax, and COVID-19 levy.

Speaking at an event in Accra last Friday, Abdul Karim Mohammed, Coordinator of the Economic Governance Platform and a member of the Civil Society Budget Forum, highlighted poor debt accounting practices as a significant factor contributing to Ghana’s recurring economic crises. 

He argued that debt mismanagement has been central to the country’s financial instability, often necessitating bailouts from the International Monetary Fund.

"If you take a look at the number of times we have had economic crises and had to resort to IMF bailouts, debt has been at the centre of it," he said.

Mohammed stressed the need for the government to adopt internationally recognised accounting standards to ensure greater transparency in debt reporting. 

He warned that past governments have manipulated debt classification to create a false sense of fiscal space, leading to unsustainable borrowing.

"We are advocating that this shouldn’t be allowed going forward. We must use the International Public Sector Accounting Standards for reporting our national debt so that at any point in time, we know exactly how much we owe," he stated.

He cited instances where major liabilities, such as the Sinohydro facility, financial sector clean-up costs, and energy sector debt, were excluded from Ghana’s national debt stock. This practice, he argued, distorts the real debt burden and encourages further borrowing under the illusion of available fiscal space.

"When you take these huge amounts out of your national debt stock, it gives a false impression of having the fiscal space to borrow more. By the time we realise, we will have hit the iceberg of debt," he warned.

The CSO Budget Forum estimates that the repeal of certain levies, including the COVID-19 levy and E-Levy, will result in a revenue shortfall of approximately GHS 7.7 billion. To address this, the forum is urging the government to explore alternative revenue sources. These include taxing high-net-worth individuals and professional bodies, expanding property taxation, intensifying e-commerce taxation, and increasing Ghana’s equity stake in natural resources through the Mineral Income Investment Fund. The forum also suggests raising the personal income tax allowance from GHS 402 to GHS 900 and ensuring that capital gains tax is paid at the point of asset realisation to prevent revenue leakages.

In addition to revenue generation, the forum is also calling for fiscal consolidation through expenditure cuts and greater efficiency in public spending. Mohammed acknowledged the government's recent decision to scale down Independence Day celebrations as a commendable step but insisted that further measures are needed to reduce wasteful spending.

"We are encouraging the government to look hard at the expenditure side of the budget as well. The President mentioned the scaling down of Independence Day celebrations, which is commendable, but a lot more can be done," he said.

He also welcomed the reduction in the number of ministers but expressed concern over the bloated public sector wage bill. According to him, state-owned enterprises remain overstaffed, and excessive government spending in these areas continues to drain public resources.

"We have been hammering on the size of government. We still have a number of state-owned enterprises that are overstaffed. If you look at how much is being spent on these organisations, some of them are just recording debt for us. I think we need to take a second look at this so that the bloated public sector wage bill can be managed properly," he stated.

Beyond expenditure cuts, the CSO Budget Forum is also advocating for stronger economic governance frameworks. It has proposed the establishment of an Independent Fiscal Council to oversee economic policies and ensure prudent fiscal management. Additionally, it is calling for the adoption of a National Debt Accounting Standardisation framework, the rationalisation of flagship government programmes, the strengthening of corporate governance in state-owned enterprises, and the enhancement of import substitution measures to mitigate the rising cost of living.

The Minister of Finance, Dr Cassiel Ato Forson, has acknowledged that recommendations from the 2025 Economic Dialogue, which included inputs from the private sector, academia, and civil society groups, will be incorporated into the 2025 Budget. 

However, he indicated that some proposals would be phased into Ghana’s medium- and long-term economic frameworks.