By Ernest KISSIEDU
Spending more than what was generated and borrowing to finance various expenditures have led to the challenges the economy is faced with says Finance Minister, Mr. Ken Ofori-Atta.
The only way to resolve this is for the government to ensure macro-economic stability through sound and prudent fiscal policy management.
Speaking at the opening ceremony of last week’s two-day National Policy Summit in Accra, Mr. Ofori-Atta indicated that his ministry would be guided by the Public Financial Management Act (PFMA) 2016 (Act 921), which provides for the right framework for macro-fiscal policy formulation, control and management of all public funds.
According to the finance minister, the PFMA will help to regulate the financial management of the public sector by defining the responsibilities of persons entrusted with the management and control of public funds, assets, liabilities and resources to ensure that public funds are sustainable and consistent with the level of public debt.
“My team and I are committed to delivering that. We believe that if we achieve macro-economic stability and direct economic policy through allocated efficiency, we will create the necessary environment and opportunities for the private sector to take advantage and work,” Mr. Ofori-Atta noted.
He added that the 2017 budget was aimed at sowing the seeds for growth and jobs, ensuring fiscal discipline, creating fiscal space, reprioritizing government expenditure, promoting prudent use and care of the public resources, as well as ensuring improved service delivery.
To this end, Mr. Ofori-Atta observed that the Finance Ministry was focusing on five pillars, namely: focus on reforms, including revenue, expenditure, debt and wage management and earmarking of revenue.
“Over the years, revenue generation has become stagnant due to many factors. In the meantime, we earmarked a significant portion of the revenues. Added to that is an increasing expenditure, especially in wages and salaries and interest payment,” the minister explained.
Mr. Ofori-Atta stressed that spending beyond the budget led to very limited investment in the critical sectors of the economy, provision of needed infrastructure and investment in the real sector to generate and facilitate economic activity and create opportunities for people.
“What we saw was a persistent and consistent decline in economic activity and increased unemployment. The impact was high inflation, high and unstable exchange rates, high interest rate and short, scarce and expensive credit for private sector to invest.”
“This situation was compounded by poor service delivery and complex and unfriendly regulatory requirement with regard to business licensing and granting of permits. This led to a loss of confidence by investors and the private sector,” he stated.
Mr. Ofori-Atta said the government was determined to change that narrative by working around five key pillars to increase revenue, reduce exemptions, stop leakages, simplify tax process to ensure compliance, control expenditure, implement the PFMA, as well as strengthen commitment to control, among other initiatives.
