Mrs Mona Quartey, a Deputy Minister of Finance (MOF), has observed that, following government’s engagements with the International Monetary Fund (IMF), using home grown programme and the consensus reached at Senchi, a three-year IMF programme is set to be rolled out in January 2015.
She said the programme would enable Ghana benefit from technical assistance, as well as balance of payments support, to stabilize the macro economy, while implementing interventions to address the structural challenges of the economy.
“In connection with Ghana’s engagement with the IMF, a mission was fielded to Ghana to collect data and engage government in a wide range of issues related to the economy,” she said.
Mrs Quartey made these disclosures when she addressed stakeholders at the 2015-2017 Stakeholders Consultative Meeting on the budget statement and economic policy by MOF in Accra on Wednesday.
She explained that the meeting formed part of MOF’s goals of soliciting inputs from stakeholders, and discussing those inputs together, to reach a consensus towards formulating, implementing, monitoring and evaluating possible consensus for the national budget.
She said, because budget management was a cycle, while putting in place necessary process to prepare the 2015 budget, the 2014 budget was at the same time being implemented, hence lessons learnt during the implementation of the 2014 budget being fed into the 2015 budget.
Mrs Quartey, however pointed out that the implementation of the 2014 budget during the first half of the year came with challenges, and cited shortfalls in revenue particularly from grants and concessional financing, high wage bill, depreciation of the Ghana Cedi, coupled with higher than anticipated interest payments, subsidies on utilities and petroleum, decline in gold and cocoa prices as well as energy supply shortfalls, as some of those challenges.
She added that, although cocoa prices had recovered, the continuous decline in gold prices and volumes still posed a risk to the country’s external position and domestic revenue mobilization, amongst others.
The Deputy Minister further stated that a front loaded fiscal consolidation to help place public debt on a sustainable path to allow monetary policy to be more effective in bringing down inflation and strictly limiting budget deficit financing by the Bank of Ghana included some recommendations that MOF had made to sustain the economy.
On the revenue side, she called for the reduction of tax exemptions and the strengthening of revenue administration through a better targeting of larger taxpayers.
“In the medium-term, structural reforms and institutional changes will be key to sustainable fiscal consolidation and lasting expenditure discipline”, she added.
Mrs Philomena Johnson, Coordinator, Institute for Fiscal Policy, stressed the need for an increase in the capitation grant from GHC 4.5 to 7.5.
This, she explained, would ensure regular and timely policies for educational programmes.
She added that optimization of tax collection, particularly on property tax, should also be fused into the 2015 budget, as it would help make tremendous progress in the country’s economy.
She called for the implementation of health nutrition policies, saying they would help address the health needs of children under five years.
Mr John Defor, Policy Research Officer, Association of Ghana Industries, said 2014 had been a year where businesses had been under financial stress as a result of property rate.
He said property rate revision had gone high to 800 per cent impacting on businesses, and therefore called for a single revision in relation to property rate for a differential rate.
Other stakeholders called for the prioritization of social issues, introduction of functional classification, in addition to economic classifications, since it would help organize government’s activities.
They also advised MOF to anchor home grown policies and in the medium-term, concentrate on fuel levy.
The day’s meeting which was an annual event, brought together both current and past ministers of state, officials of ministries, departments and agencies, representatives of academic institutions, think tanks, civil society partners, as well as other private business owners, to discuss and reach a consensus towards the country’s economic development.