Gov’t restores macroeconomic stability and fiscal discipline

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The government has reechoed that, it has established a macroeconomic framework with policies that seek to restore fiscal discipline, growth and macroeconomic stability.

It believes that maintaining a stable macroeconomic environment in the context of a growing economy is fundamental to attracting private sector investment into the country.

“We have put in place measures to reduce the fiscal deficit bequeathed to us from 9% in 2016 to 6.5% this year. Government has created fiscal space by capping earmarked funds to 25% of government revenue, and realigning expenditures to government priorities. This is a policy that successive governments have tried over several years to implement, but were unable to do,” President Nana Addo Dankwa Akufo-Addo said when addressing the 2017 World Bank’s Development Finance Forum in Accra, last week.

He hinted that the programmes and policies that have been initiated by his government, some five months into office, will put the country on a path of fiscal consolidation, debt sustainability and growth.

On growth of the economy, the President stated that his government has re-oriented fiscal policy from a focus on taxation to a focus on production.

“In this regard, we undertook the following tax reforms: abolished the 1% Special Import Levy; abolished the 17.5% VAT/NHIL on domestic airline tickets; abolished the 17.5% VAT/NHIL on financial services; abolished the 17.5% VAT/NHIL on selected imported medicines, that are not produced locally; abolished the 5% VAT/NHIL on Real Estate sales; replaced the 17.5 VAT/NHIL rate with a flat rate of 3 % for traders; and granted Capital Gains Tax Exemption on stocks traded on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission,” he said.

In furtherance to this, effective September 1 this year, as announced by the Senior Minister, Yaw Osafo Marfo, clearance of goods from Ghana’s ports will be 100% paperless. Additionally, all internal customs barriers in the country will also be removed to facilitate the movement of goods.

Also, as part of the process of formalising the economy, the government is committed towards the implementation of a digital property addressing system for Ghana this year and also the issuance of biometric National Identification cards to residents this year, so that every resident will have a unique identification number.

Touching on the energy sector, he stated that his government is tackling the financial challenges of the sector, and will soon issue a $2.5 billion energy sector bond to retire the legacy debt of the energy sector, and create space for increased investment in the sector.

Similarly, the government have instituted a programme that we have dubbed ‘Planting for food and jobs’. It is to help provides farmers access to affordable inputs, extension services and improved irrigation infrastructure. This is part of the current administrations plans to ensure a private sector led industrialisation programme through a “one district, one factory initiative”.

An additional US$100 million stimulus package promised for the revival of distressed companies.”

President Akufo-Addo has indicated that his government, as a matter of policy, has decided to seek more private sector equity financing for infrastructure projects. This, he added, is a policy underpinned by his commitment to the private sector, and by the desire to maintain debt sustainability.

“We are implementing a policy of re-profiling our existing debts to extend the maturities, reduce the interest burden and create space for the private sector. About six weeks ago, Ghana issued, for the first time, a 15-Year local-currency bond, raising in that cycle more than US$2 billion.

“That is evidence of the returning private investor confidence in Ghana, because investors make decisions on the basis of their perception of risk and uncertainty, this transaction sends a clear message to the markets that this new government, my government, has started on a sound footing and that Ghana is on a path of fiscal consolidation, debt sustainability and growth”, he said.

In the same vein, the Vice-President, Dr Mahamudu Bawumia, has re-stated the government’s resolve to strictly adhere to public financial management and public procurement laws to ensure fiscal discipline.

He said lack of fiscal discipline had underpinned the economic woes of the country because in its absence, all other indicators of economic progress were lost, adding that the cornerstone of fiscal discipline had been captured in two acts — the Public Financial Management Act and the Public Procurement Act.

The two acts, he stressed, were key to improving economic fortunes.

Dr Bawumia explained that the President appointed a minister of state to work alongside the Public Procurement Authority (PPA) so that the Presidency would have an insight into what was going on in public procurement. He said, that decision by the government was against the backdrop that about 90 percent of corruption within the public sector was procurement-related.

“One can hazard a guess that maybe 90 per cent of corruption that we have is related to public procurement because of its very nature. This is why the President, in his wisdom, has recognised that we need to pay particular attention to this particular issue,” he stressed.

Vice-President Bawumia said this in Accra when he opened a six-day special training on the Financial Management Law, as well as the Procurement Law and processes for ministers of state, deputy ministers, chief directors, heads of key state agencies and other political appointees.

He told the participants that understanding and implementing them were critical to the government maintaining and sustaining fiscal discipline.

He said public procurement occupied a large percentage of government business and was one of the nerve centres in the process of translating national budgets into goods, works and services to meet national development outcomes.

Source: Adnan Adams Mohammed

Ghana News Online

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