Independent fiscal responsibility council key — Bokpin
ECONOMIST and Professor of Finance at the University of Ghana Business School (UGBS), Prof. Godfred Bokpin, has called on the government to prioritise the setting up of an independent fiscal responsibility council to help enforce discipline in public expenditure.
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He observed that the “operationally and theoretically independent” fiscal council must be clothed with constitutional powers to impose some kind of fiscal restraints on the government.
Again, the council would provide reliable services to Parliament in terms of fiscal impact analysis of bills that were put before the house.
“Whether we like it or not, the 275 Members of Parliament (MPs) do not have the capacity to analyse the accumulated budget. Some of the things we expect the MPs to do are quite technical and highly specialised; so, the idea is that if you have an independent fiscal council, they can do all of these things,” he said.
The economist stated this in an interview with the Graphic Business after delivering a lecture titled: “Ghana’s debt restructuring programme thus far and the way forward” in Accra on March 26.
The lecture was organised by Tax Justice Coalition — Ghana (TJC), a coalition of civil society organisations (CSOs) and institutions in the tax and financial sector.
Policy reforms
Prof. Bokpin said although the country was going through economic challenges because of the impacts of some external shocks, the current situation was largely because of internal policy failures.
For instance, he said the lack of good leadership to implement sound economic policies also accounted for the country’s situation.
“In fact, it will be unique to think that Ghana is going to have the future that we will all be proud of if we continue doing what we are doing right now. We have to be a bit radical in our reforms so that we can create space that we can use in growth-enhancing spending,” he said.
Since 1964, Ghana has gone to the International Monetary Fund (IMF) 17 times to seek support for economic recovery, the latest being the $3 billion 36-month arrangement with the fund.
Unsustainable debt
Touching on that development, Prof. Bokpin said public debt unsustainability was the main reason the country had been to the IMF all the time.
He further explained that exchange rate depreciation and fiscal deficit were the main drivers of the country’s rising public debts.
“What this tells us as a country is that we need to maintain stable exchange rate if we want to achieve stable public debt. All the time, we are in fiscal deficit because the government records low revenues and high expenditure; and this need to be reversed,” he said.
Prof. Bokpin also said going forward, there was the need for administrative reforms and stringent enforcement regimes in the management of public revenues.
Again, he underscored the need for the government to move away from what he described as procurement economy by ensuring that procurement was used as an enabler and not an end in itself.
“The general size of government must also be reduced to reflect the country’s economic reality. It should be possible to rule this country with 40 ministers, so we should begin to merge some of the ministries,” he stressed.
Financial discipline
A research fellow at the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Dr Richmond Atta Ankomah, observed that to help deal with the country's public finances and debt situation, there was a need to look for a more cheaper financing option or alternative so that the interest and the service of the debt that comes with the financing would not be too constraining and massive in the medium to long term.
"What we are trying to do is to explore what we call Special Joint Rights (SGR) with the facility from the IMF; whether and how we will be able to assess more SGRs in the form of loans or facilities at a very cheap, concessional rate, so that it will limit the amount of borrowing we will have to do on international capital market should our credits even improve," he said.
He added that even as the SGR options were being explored, it was also important for the government to manage the economic situation better to improve the economy's resilience to external and global shocks.
"We need to make sure that there is increased efficiency in spending, dealing with irregularities in public procurement systems, and addressing issues such as huge tax exemptions so that we can come out of the economic woes," he said.
