Use budget to plug revenue leakages
Tomorrow, the Finance Minister will present the budget statement on behalf of the President to detail the government’s financial operations in 2015.
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Since Ghana was the fastest-growing economy in sub-Saharan Africa in 2011, it is regrettable that it is heading for a third successive year of slow growth, as large current account and budget deficits expose the economy to risks.
According to the International Monetary Fund (IMF), economic growth at the end of this year would slide from the 7.1 per cent recorded last year to 4.5 per cent, the lowest GDP growth in more than a decade.
This is because Ghana continues to face significant domestic and external vulnerabilities on the back of a large fiscal deficit, a slowdown in economic growth and rising inflation.
The fiscal deficit is expected to remain elevated at around nine per cent of GDP, driven by weak revenue performance, a large wage bill and substantially rising cost of debt servicing.
The external current account deficit is projected to narrow to 10 per cent of GDP, as imports decline substantially due to slower growth and a large depreciation of the currency, while export performance remains weak.
It is for this reason that the Daily Graphic expects the government to use the 2015 budget to restore macroeconomic stability by addressing short-term vulnerabilities that put Ghana’s transformation agenda at risk.
We again expect it to announce some major austerity measures for 2015 following discussions with the IMF to support Ghana to come out of the woods.
Since some of the major economic challenges the country has had involve revenue loopholes, the Daily Graphic expects the introduction of new accounting software that will help seal some of the loopholes in revenue generation.
The new software is also expected to enforce and put a cap on spending levels of the various ministries, departments and agencies (MDAs).
According to the Finance Ministry's guidelines for the preparation of the budget, the government has the hope to mobilise GH¢43 billion in revenue for next year, up from the GH¢28 billion it budgeted for this year.
This is because in the 2014 budget statement, the government announced that it was going to spend about GH¢26 billion but ended up spending about GH¢34 billion, resulting in a budget deficit of almost GH¢8 billion.
Though we are fully aware that ongoing discussions with the IMF, which are nearing completion, will influence the focus of the budget, we should be mindful of our home-grown strategies.
At the moment, the biggest challenge that the government faces next year will be how to control rising expenditure, in the face of labour agitation for higher wages, as well as calls for complete infrastructural overhaul.
The Daily Graphic appeals to the government to focus more on public sector reforms, including rationalisation of the public service, weaning off subvented (public service) agencies from the payroll, restructuring of statutory funds to reduce budget rigidities and revenue administration reform to increase effectiveness and improve tax compliance.
We also expect Ghanaians to buy into the government’s development agenda by policing the public purse for the good of all.