The Finance Minister, Mr Seth Terkper, has repeated the government’s commitment to stay within its budgeted expenditure in order to avoid the habitual fiscal indiscipline registered in past election years.
This is a heart-warming pledge, given that the country has since 1992 gained notoriety for recording large budget deficits in every election year.
Apart from 2004, when the budget deficit in that election year dropped to 3.2 per cent from 3.4 per cent in 2003, large budget deficits have virtually become synonymous with election years, with the 2012 figure of 11.5 per cent, a jump from the 2011 close of four per cent, being the worst so far recorded.
The overspending is always the outcome of a combination of push and pull factors mostly boosted by the incumbent government’s desire to impress the electorate to help them retain power.
Among the causes include the excessive demands from public sector workers for improved conditions of service, an urge to please the electorate with new projects and subsidies on utilities and the intermittent slump in commodity prices and their resultant impact on budgeted revenues.
With these factors already rearing their heads, many wonder if Mr Terkper’s pledge to restrain himself and the government from non-budgeted projects will be followed to the letter.
Although many believe that the current three-year extended credit facility (ECF) would deter the government from overrunning the budget, it must be stated that the country has a record of defying such International Monetary Fund (IMF) targets in an election year.
Based on this, Mr Terkper and the government need to stick to their word and ensure that only budgeted and approved expenditures are undertaken.
While we hold the finance minister to his word, there are some disturbing developments for which he must provide answers.
For instance, the latest fiscal numbers show that the deficit for January and July was five per cent of Gross Domestic Product (GDP), against a target of three per cent. Additionally, this seven-month deficit is already equal to the full-year target of five per cent of GDP. This seems to suggest that we are likely to exceed the target for the year. We want to know what has occasioned this and what will be done about it?
Secondly, the numbers reveal a huge revenue shortfall of about GH¢2.3 billion during the period and overruns on goods and services, and capital expenditure. We want to know what explains the revenue shortfall and these specific overruns.
There is also this large discrepancy figure of GH¢2.5 billion in the data which analysts in the past have raised issues on, and it will be helpful if Mr Terkper throws some light on what the discrepancy stands for; and whether it is accumulated arrears or unbudgeted spending.
The government is also paying more wage arrears when, according to the 2016 budget tables, no wage arrears are expected to be paid from 2016 onwards. Why do we have payment for wage arrears from January-July, and why do these arrears keep recurring and in large amounts?