IEA applauds govt for establishing Fiscal Council
Institute of Economic Affairs (IEA) has commended the Finance Minister, Mr Ken Ofori-Atta, and the Government of Ghana for their intention to establish a Fiscal Policy Council.
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The IEA noted that it had recommended in one of its researches that in order to improve fiscal management in the country, there was the need for a council to be set up to administer proper fiscal activities.
A statement signed by the Director of IEA, Mrs Jean Mensah, read that as part of the institute's efforts to "promote sound public financial management in Ghana, the Institute of Economic Affairs (IEA) in 2014 undertook research on the theme: "Improving Fiscal Management in Ghana: The Role of Fiscal Policy Rules."
The paper proposed among other policy recommendations the establishment of an Independent Fiscal Policy Council to promote fiscal discipline, enhance the quality of budget discussions and faster greater transparency in Ghana."
"Mr Speaker, the Government will strictly enforce the PFM Act, 2016 (Act 921) to promote fiscal discipline, establish a fiscal council to promote sound fiscal policies, strengthen the PFM system to eliminate unauthorised commitments, and adopt global standards in treasury and risk management to ensure timely identification of risks and implementation of risk-mitigation measures," the finance minister stated.
The institute said it was, therefore, gratified that the Nana Akufo-Addo government has adopted its recommendations.
In the view of the IEA, such a council would play roles including assessing the reliability of the macroeconomic and revenue assumptions underpinning the budget and estimate the fiscal impact of proposed measures.
It will also decide on deficits and the evolution of public debt, enhance the quality of budget discussions and foster greater transparency, improve monitoring and compliance with fiscal rules and offer technical inputs in the preparation of the budget such as macroeconomic and budgetary forecasts.
To be effective, the Fiscal Policy Council needs to be given a clear mandate, debt sustainability, so that it is freed from the time inconsistency problem that leads to deficit bias, the statement added.
The institute is of the firm belief that should such a council be established, equipped and allowed to operate independently, it would lead to the promotion of sound public financial management in Ghana.
