Terkper unveils 2015 budget today
The Finance Minister, Mr Seth Terkper, is expected to announce some hard-hitting reforms to correct the fiscal imbalances in the economy when he presents the 2015 budget statement to Parliament today.
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The imbalances are caused by high expenditure management, largely caused by spending on wages, salaries and allowances, as well as goods and services, including debt servicing and investment in capital expenditure.
The government is, therefore, expected to introduce some fiscal measures, including tax raise on some products and additional levies on some commodities and services.
It is also expected to raise some levies on petroleum products and introduce a new accounting software to plug the areas of revenue leakage.
The 2015 budget will also announce measures of blocking the payment of workers, especially teachers, who are not registered.
Mr Terkper, who declined to mention the areas that the government was expected to raise additional revenue to contain the twin fiscal deficit, said the 2015 budget would introduce some reforms.
“We had expenditure overruns arising from borrowing to pay off large arrears and major capital projects, notably road projects,” he said.
He said anti-corruption measures would also be strengthened to deter public officials from dipping their hands into public funds.
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He said the economic prospects were high and that the economy could not be described as ailing when its prospects were boosted by inflows of foreign capital, including the cocoa syndication loan and the Eurobond.
“We now face the challenge of ensuring that the effect of public sector pay reforms does not constitute an unsustainable burden on public finances and on macroeconomic stability,” he said.
The Finance Minister added that government agencies would be requested to curtail spending beyond their budgetary allocations, while new mechanisms of strict monitoring would be announced.
Analysts
Analysts blame the immediate economic challenges on the delay in announcing reforms which is making it harder for the government to meet its 2014 economic targets and has increased the chance that the International Monetary Fund (IMF) and other development partners will continue to withhold the much needed support.
It is now, however, paying a steep price for not coming through with a new set of fiscal reforms. The public is dismayed by rising costs and the dream of new wealth is on hold.
But government sources say the reforms that will be introduced in the 2015 budget will include spending cuts, steps for increasing revenue and an answer to costly public sector wages.
Inflation targets
Ghana expects inflation to ease to 9.5 per cent, plus or minus two percentage points, by the second half of 2015, from a four-year high of 15.9 per cent.
Inflation is expected to fall as the Bank of Ghana maintains its tight monetary policy stance, aided by government stabilisation efforts and a boost in foreign exchange liquidity.
The government, in July, raised its end-of-year inflation target to 13 per cent, plus or minus two percentage points, from its initial target of 9.5 per cent, with the same cushion.
Ghana has started talks with the IMF for an assistance programme to help fix its fiscal imbalances, which include a high budget deficit, rising inflation and a currency that has fallen sharply this year.