Dr. Bawumia advocates for fiscal discipline; proposes stricter amendments to fiscal responsibility act
Dr. Mahamudu Bawumia, the Vice President and Flagbearer of the New Patriotic Party (NPP), has expressed his concerns about fiscal indiscipline, citing it as a significant factor contributing to macroeconomic instability.
Advertisement
During his address to the nation on Wednesday, February 7, 2024, where he outlined his policy priorities, Dr. Bawumia spoke about the importance of maintaining sustained macroeconomic stability through fiscal discipline if elected as President.
He outlined several measures he intends to implement, including amending the Fiscal Responsibility Act and partnering with the private sector to finance projects, to curb government spending.
"A primary objective of my government would be to achieve and uphold macroeconomic stability with low inflation, interest rates, exchange rate stability, and low budget deficits," Dr. Bawumia stated.
"To achieve a sustainable reduction in the budget deficit and interest rates, my government will strengthen fiscal discipline by establishing an independent Fiscal Responsibility Council as outlined in the Fiscal Responsibility Act, 2018 (Act 982)."
Dr. Bawumia also proposed amending the Fiscal Responsibility Act to include a fiscal rule stipulating that budgeted expenditure in any given year should not exceed 105% of the previous year's tax revenue. This measure aims to prevent budgetary expenditures based on overly optimistic revenue forecasts that often fail to materialize.
Furthermore, Dr. Bawumia announced plans to lessen the fiscal burden on the government by engaging the private sector to undertake major projects through special arrangements, thereby reducing government expenditure.
"In collaboration with the private sector, my administration will incentivize the provision of infrastructure and other services to reduce government spending and enhance maintenance," he explained. "This will include encouraging private sector involvement in road construction, school and hostel building, and housing projects for government."
Dr. Bawumia advocated for public-private partnership (PPP) concession arrangements for road construction and maintenance, as well as leasing, rather than outright purchasing, of government equipment. He believes these strategies will lead to significant annual savings in various government expenditures and stimulate job creation in the private sector.
Highlighting the importance of administrative efficiency, Dr. Bawumia suggested that streamlining governance and reducing the number of ministers would further enhance fiscal space and efficiency.
"This represents a significant shift in approach. Additionally, an efficient governance system will necessitate a smaller cabinet, with no more than 50 ministers and deputy ministers," he concluded.
