Graphic Business/Stanbic Bank Breakfast: Independent body needed to instill fiscal discipline — Oteng
AN international economic consultant, Dr Emmanuel Oteng Kumah, has called for an independent body of experts to help instill fiscal discipline by ensuring that the government strictly complied with its economic programme.
The former Resident Representative of the International Monetary Fund (IMF) said the new body must be given legal powers to whip finances in line, as part of efforts to stop the recurrent fiscal slippages and the resulting resort to the Bretton Woods institution for bailouts.
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Dr Kumah, who led the fund to execute bailout programmes for Djibouti, said at the Graphic Business/Stanbic Bank Breakfast Meeting in Accra yesterday, that evidence showed that the economy performed better whenever there was an IMF programme but deteriorated after the support had ended.
That, he said meant that the country lacked self discipline and will-power to adopt and implement prudent fiscal policies, which are necessary to keep spending in line and grow revenues.
“Whenever we have a programme with the IMF, we always behave but when we go outside the programme, our fiscal situation misbehaves. So, clearly, there is something that we need to institutionalise.
“I do not know where you will put this organisation but we need something, may be extra Presidential, that says that after a programme, it will have the authority to look at every budget and programme to make sure that all targets are met.
“That to me, is our major problem.
“Many Ghanaians may say it is not right to have a body that is not elected to be supervising our finances but I am afraid to say that the 17 times at the IMF suggests that we need to think seriously about how to resolve this permanently,” he said.
Central bank financing
At the forum that discussed the country’s continuous resort to the IMF and how to avoid a repeat, Dr Kumah also called for stricter rules on central bank financing of the deficit, explaining that the current system lend itself to abuse, leading to the perennial fiscal slippages.
The event, which is the fourth in the year, was on the theme: 17 Times too many! What do we need to stop doing and start doing as a people?
It featured a panel discussion by a professor of finance, Prof. Godfred Alufar Bokpin, the Greater Accra Regional Chairman of the Association of Ghana Industries (AGI), Tsonam Cleanse Akpeloo, and a chartered accountant and Board Member of the Graphic Communications Group Limited, Dr Valentine Kwasi Mensah.
It was chaired by an economist and Senior Lecturer, Economics Department of the University of Ghana, Legon, Dr Priscilla Twumasi Baffour.
Given that the frequent resorts to the IMF were costly, the international economist said an independent body with the power to keep public finances in check was needed to supervise budgeting, policy and programme formulation, and general economic management.
Dr Kumah said the body could act as a ‘local IMF’ with the ability to call the shots on spending, revenue mobilisation and policies.
He said while he was aware of the Fiscal and Financial Stability Councils established in 2019 to help ensure fiscal discipline, those institutions lacked the legal power to ensure strict adherence to prudent fiscal management.
Belt tightening
Dr Kumah said the economy was suffering the consequences of a country living beyond its means, resulting in the recurrence of fiscal and monetary challenges.
He also explained that a programme with the IMF would earn the country credibility and stabilise the exchange rate for sustained growth to resume.
He advised the citizens and businesses to prepare for belt tightening in the coming days as efforts to stabilise the economy could come with some trade offs.
Imports
Dr Twumasi-Baffour said it was not surprising that the country was on its 17th programme since 1966.
She said it was obvious that the country needed to build a resilient import-substitution economy to be able to wean itself off IMF programmes.
She said it was interesting that not much in that regard was being done, leading to increased imports of almost everything, including animal intestines.
“I believe the buck stops with leadership,” Dr Baffour said, noting that the country could use policy to curtail imports and encourage domestic production.