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Senior Minister at the Presidency, Mr Yaw Osafo Maafo (standing), speaking at the forum
Senior Minister at the Presidency, Mr Yaw Osafo Maafo (standing), speaking at the forum

Fiscal Stability Council in the offing

A Fiscal Stability Council will be set up this year to check the high levels of government expenditure so as to deal with the country’s spiralling fiscal deficit, the Senior Minister, Mr Yaw Osafo Maafo, has said.

He said the end of year figures for 2016 were disturbing, citing, for instance, that although the International Monetary Fund (IMF) had projected a deficit of 5.3 per cent end year, on cash basis, the deficit was about 8.6 per cent, while on commitment or total basis, it was about 10.2 per cent.

Speaking as a guest at the fifth edition of the Graphic Business/Stanbic Bank Business Breakfast Meeting series in Accra yesterday, Mr Maafo called for fiscal discipline, which, he said, a Fiscal Stability Council would help to ensure.

The main speakers at the meeting were the immediate past Vice Chancellor of the University of Ghana, Professor Ernest Aryeetey; the Director of Research of the Institute for Fiscal Studies (IFS) and Chief Executive Officer of the Private Enterprise Foundation (PEF), Nana Osei Bonsu. Both of them spoke on the theme: “A public private dialogue on stability, growth and jobs.”

New policies needed

Mr Maafo said in view of the increasing deficit, there was no fiscal space for the government to carry out a lot of activities. He, therefore, stated that there was the need for new policies, and that a critical look would be taken at all government funds.

“The government gave money to so many institutions, they put them in private banks and even if they buy treasury bills with this money that will be stopped by the next budget.

If the government funds it, it must be in a single account at the Bank of Ghana, but we have a situation where we are borrowing our own money because money taken from the government is put in a private bank, the bank buys treasury bills and if you buy treasury bills, the government is borrowing from you,” he explained.

According to the Senior Minister, if all the money was put in one account, the country’s deficit would not increase and its primary surplus would be different; “therefore we have to discipline the system along these lines,” he asserted.

He said the government would introduce a number of policies when the budget was presented to Parliament on March 1, 2017, to address some of the fiscal problems.

Low deficit

Mr Maafo said the deficit in 2004 was below five per cent because he was very strict when he was the Minister of Finance.

“I was the Minister of Finance and there was no way any ministry would be allowed to spend above the budget,” he said, explaining that a budget was a legal document which was passed together with an Appropriations Act that gave every ministry a certain amount of money to spend.

“You don’t come to the ministry because it is an election year to go above your budget. Forget it. Osafo Maafo will tell you, you can’t. Defer your expenditure to the following budget. We just have to discipline the system because we have an approved budget,” he stated.

He said there was going to be a Fiscal Stability Council just as the Bank of Ghana’s Monetary Stability Council because the country needed that to look at expenditure levels to ensure it worked closely around the figure of inflation.

“We are going to make sure that all leakages are sealed. Revenue due government is revenue due government and not for individuals. We will make sure that we spend within our means,” he pledged.

Mr Maafo said also that the government would go through with the IMF programme which it inherited till it ended in March, 2018.

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