The Institute of Economic Affairs (IEA) has called for the enactment of laws that will ensure fiscal discipline and transparency in Ghana’s economy.

According to the institute, the enactment of fiscal policy rules, as well as the existence of independent fiscal policy councils could go a long way to improve the fiscal performance of the country’s financial management system.

A senior economist at the IEA, Dr John Kwakye, made this known at a roundtable discussion in Accra yesterday.

Dr Kwakye said such rules should be embedded in a manner that would ensure that every government that came into power would obey them fully.
The roundtable discussion was on the theme “Improving fiscal management in Ghana: the role of fiscal policy rules”.

The event brought together economists, politicians, bankers, civil society organisations (CSOs) and some Members of Parliament (MPs) to deliberate on public financial management in Ghana.

Dr Kwakye’s presentation formed part of a series of papers that would be presented by the institute on fiscal policies in the coming months to influence national dialogue.

Sanction regimes

Under the current Ghana-IMF programme, the debt-to-gross domestic product (GDP) ratio is forecast to peak at 72 per cent in 2015 and fall to 58 per cent by 2019 and further to 39 per cent by 2034.

The senior economist admitted that there were some rules that were already in place to guide the country’s financial management, but there was still the need for strict enforcement and sanctions against governments that might disobey.

“Many of the existing Ghanaian public finance legislations are weakened by lack of sanction provisions,” he observed.

He cited countries such as Chile who had successfully implemented fiscal policies and “was a blueprint for Ghana to follow suit”.

Chile adopted a fiscal rule after reducing its debts from 165 per cent in 1985 to 20 per cent of GDP in 2000.

Building capacity of Parliament

In a presentation, a former Minister of Finance in the Kufuor administration, Mr Yaw Osafo Marfo, said it was important for the capacity of Parliament to be built in order to properly analyse annual budgets that were submitted to the House.

He said he believed that would go a long way to put government and the Ministry of Finance on the right footing to do due diligence to any budget they might submit to Parliament.
“As it stands now, nobody in the country is able to interrogate and question the budget whenever it is read in Parliament,” the former minister stressed.

Credit: GraphicOnline (Charles Andoh)