The government has established the Fiscal Council and the Financial Stability Council as part of measures to avoid fiscal slippages that have bedevilled the economy in recent times.
The councils are part of the Fiscal Responsibility Act, which is aimed at anchoring fiscal discipline and ensuring prudent economic management.
A statement from the Office of the Vice-President said the Fiscal Council would develop and recommend policies for the maintenance of prudent and sustainable levels of public debt, ensuring that the fiscal balance was maintained at a sustainable level and fiscal risks managed in a prudent manner.
The council’s work is expected to achieve efficiency, effectiveness and value for money in public expenditure.
The Fiscal Council will also monitor the performance of the government budget with regard to compliance with fiscal rules and targets.
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The Fiscal Responsibility Act limits politicians not to incur budget deficits of more than five per cent of Gross Domestic Product (GDP) in any given year, must always maintain a positive primary balance and keep debt-to-GDP ratio at 65 per cent of GDP or below.
Ghana becomes the only country in sub-Saharan Africa to establish a Fiscal Council, which is chaired by a former Governor of the Bank of Ghana, Dr Paul Acquah, who once served as Deputy Director of the Africa Department of the International Monetary Fund (IMF).
The council has Prof. Eugenia Amporfu, Dr Nii Noi Ashong, Prof. Augustine Fosu, Dr Nii Kwaku Sowa, Prof. Robert Osei and Mr Ali Nakyea as members.
Financial Stability Council
The statement added that President Nana Addo Dankwa Akufo-Addo had established the Financial Stability Council by Executive Instrument to enhance the stability and soundness of the financial system.
“The role of the Financial Stability Council (FSC) is to, among others, strengthen and reinforce the stability of the financial sector, act as an inter-institutional consultative coordination body and coordinate regulation and supervision at the micro-level by focusing on matters of common concern for the various financial regulators involved in the regulation and supervision of financial entities in Ghana,” it said.
The regulators are the BoG, the Securities and Exchange Commission (SEC), the National Insurance Commission (NIC) and the National Pensions Regulatory Authority (NPRA).
The FSC would also evaluate and mitigate financial stability risks by focusing on the timely detection and mitigation of risks to the stability of Ghana’s financial system, it said.
It will have the Governor of the BoG as Chairman, with a Deputy Governor of the bank, a Deputy Minister of Finance and the Chief Executive Officer (CEO) of the NIC as members.
The other members are the Director-General of the SEC, the CEO of the NPRA and the CEO of the Ghana Deposit Protection Corporation.
The setting up of the FSC makes Ghana the second country in sub-Saharan Africa to establish such a council, after Mauritius.
The statement said the councils were a demonstration of the government’s commitment and determination to avoid the ‘sins’ of the past in the management of the economy.
Historically, Ghana has persistently had a problem with politicians pursuing fiscal policy that is inconsistent with macroeconomic stability (especially during election years).
The establishment of the Fiscal Council and the Financial Stability Council is, therefore, to help tie the hands of politicians to ensure prudent macroeconomic management.
In 2015, the government ran to the IMF for fiscal support and policy credibility under the Extended Credit Facility (ECF) after it recorded budget overruns of nine per cent and more than 13 per cent consistently.