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Govt cuts fuel allocations for appointees by 50%

BY: Zadok Kwame Gyesi

Government will cut fuel allocation coupons for all government appointees by 50 per cent, starting April 1, 2022. 

The Finance Minister, Ken Ofori-Atta who announced this at a press conference in Accra on Thursday, March 24, 2022, said the measure is part of government's efforts to cut down on cost in the management of the country's economy. 

The Minister said the fuel cut will also affect heads of government institutions, including State Owned Enterprises (SOEs). 

He said the 50 per cent cut will ensure efficient use of energy resources in the country.

Touching on other measures to help restore the country's economy to pre-COVID-19 era, Mr Ofori-Atta said "with immediate effect, Government has imposed a complete moratorium on the purchase of imported vehicles for the rest of the year," adding that "This will affect all new orders, especially 4-wheel drives."

For him, the moratorium on the purchase of imported vehicles will ensure  a reduction in the total vehicle purchases by the public sector by at least 50 percent for the stipulated period.

Similarly, he added, with immediate effect, the government has also imposed a moratorium on all foreign travels, except pre-approved critical or statutory travels.

He noted further that  the government has imposed a moratorium on establishment of new public sector institutions by end April, 2022, adding that government intends to "reduce expenditure on all meetings and conferences by 50%, effective immediately."  

Expenditure Cutting Measures

  1. Discretionary spending is to be further cut by an additional 10%. The Ministry of Finance is currently meeting with MDAs to review their spending plans for the rest of the three (3) quarters to achieve the discretionary expenditure cuts;
  2. these times call for very efficient use of energy resources. In line with this, there will be a 50% cut in fuel coupon allocations for all political appointees and Heads of government institutions, including SOEs, effective 1 st April 2022;
  3. with immediate effect, Government has imposed a complete moratorium on the purchase of imported vehicles for the rest of the year. This will affect all new orders, especually 4-wheel drives. We will ensure that the overall effect is to reduce total vehicle purchases by the public sector by at least 50 percent for the period;
  4. again, with immediate effect Government has imposed a moratorium on all foreign travels, except pre-approved critical/statutory travels; 12
  5. Government will conclude on-going measures to eliminate “ghost” workers from the Government payroll by end December 2022;
  6. Government will conclude the renegotiation of the Energy Sector IPPs capacity charges by end of Q3-2022 to further reduce excess capacity payments by 20% to generate a total savings of GHS1.5 billion;
  7. impose a moratorium on establishment of new public sector institutions by end April, 2022;
  8. prioritise ongoing public projects over new projects. This is to enhance the efficient use of limited public funds over the period by finishing ongoing or stalled but approved projects;
  9. reduce expenditure on all meetings and conferences by 50%, effective immediately;
  10. Finally, Cabinet approved that Ministers and the Heads of SOEs to contribute 30 percent of their salaries from April to December 2022 to the Consolidated Fund; We would like to thank the Council of State in their leadership in complimenting the Government on this policy.
  11. pursue a comprehensive re-profiling strategies to reduce the interest expense burden on the fiscal; and
  12. liaise with Organised Labour and Employers Association to implement with immediate effect, the measures captured in the Kwahu Declaration of the 2022 National Labour 13 Conference, including reforms towards addressing salary inequities / inequalities (e.g. Article 71 Office Holders), the weak link between pay to productivity and the sustainability of the payroll.
  13. Let me say this, President Nana Addo Dankwa Akufo-Addo has absolutely no intention to roll back on a major policy like Free SHS. We see education as the best enabler for sustainable economic growth and transformation and will do more to improve on it for it to serve more and better our children.

Revenue Measures

The Minister said cutting down on expenditures alone will not be enough and that the government's focus is two-fold: to control expenditure and to raise more revenues domestically. 

  1. Begin the implementation and collection of the revised Property Rate by end of April 2022;
  2. implement the E-VAT/E-Commerce/E-Gaming initiatives by end of April 2022;
  3. roll out the simplified tax filing mobile application for all eligible taxpayers by July 2022;
  4. impress upon Parliament to fast track the passage of the E-Levy Bill, Tax Exemptions Bill, and Fees and Charges Bill;
  5. prioritise the Revenue Assurance, Compliance, and Enforcement (RACE) Programme to plug revenue leakages especially at the ports and the infamous fuelbunkering and small scale mining exporters cabal;
  6. government will partner the private sector to introduce digital systems to monitor quarrying, sand winning and salt winning to get more revenues from our naturalresources; and
  7. immediately enforce the “No Duty – No Exit” policy at the MPS Terminal at the Tema Port to improve revenue collection.

Financing and Currency Measures

  1. GoG to conclude external financing arrangement of up to US$2 billion in the next 2-6 weeks in line with approved external financing for 2022 and for liability management;
  2. ii. MoF will work with the Central Bank to review the foreign exchange retention policy to ensure multinational companies in the extractive sectors retain foreign exchange earnings, from the sale of our resources, in the country.

Additionally, the following measures will be implemented over the medium-term:

  1. Wean-off public tertiary institutions from government payroll and provide them with a fixed amount “block grant” instead.
  2. Pursue reforms to address structural challenges in public financial management including procurement and commitment control, payroll management and human resource management.