The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, has stated that the government will not overspend its budget to avoid plunging the economy back into difficulty.
Dr Duffuor told the Daily Graphic shortly after the Multi-Budget Donor Support (MBDS) review meetings in Accra that the government had come far to lose the grips on the economy.
“It will not happen,” he added.
According to him, the 1999/2000 economic challenge which confronted the country, after a long period of stability and sterling performance, was due to uncontrollable external factors, which had now been well taken care of.
The assurance comes in the wake of concerns expressed by development partners that as the elections approach next year, there is the temptation for the government to over-spend its budget, an act which can destabilise the macroeconomic gains chalked up over the last two-and-a-half years.
Dr Duffuor said although crude oil prices on the international market continued to pose a risk to Ghana’s economy, far-reaching mitigating measures taken by the government, such as the hedge arrangement, investments in productive sectors of the economy and the deliberate government induced performance of the agricultural sector, would help protect gains made by the economy and the people of Ghana.
Eleven development partners, including bilateral and multilateral partners, met with the government, public sector organisations and civil society to track progress made by Ghana so far in the implementation of the country’s medium-term development blueprint, the Ghana Shared Growth and Development Agenda (GSGDA), amid development challenges facing the country.
The three-day meeting was on the theme: “A Joint Response for Better Development Results.”
Although some of the participants were of the view that the government had met most of the targets and triggers set under the GSGDA for which resources for the year would be released, areas such as transparency and resistance of temptations to over-spend in an election year needed to be upheld.
The World Bank Country Director, Mr Ishac Diwan, told the Daily Graphic after the review meetings that: “The current government has had to stabilise the economy over a number of years, and they know how painful it is to inherit a difficult economy. They have been assuring us that the next election will not see the fiscal spending go up to levels we saw in 2007, but at the same time we all have to be vigilant to ensure that the government works hard and not overspend.”
But Dr Duffuor wants the development partners to trust the ability of the government to hold the economy together, saying “the fiscal challenges of 1999/2000, were not because we were indisciplined”.
He explained that the price of cocoa at the time dropped to about $800 per tonne, that of gold to about $250 per ounce and donor inflows of about $200 million were withheld, while the price of petroleum jumped about three times.
“All these led to the difficulties we had, and it was not because we were irresponsible. They should look at the fiscal challenges between the latter part of 1999 and 2000,” he urged all concerned.
The finance minister said currently the risks associated with petroleum prices had been minimised and that the government would not slip off its path of fiscal discipline.
The development partners duly acknowledged the country’s satisfactory progress with the GSGDA, but warned that “new-risks, new development challenges, more complicated, are also emerging – for instance, quality of education, which will require a new set of policy responses”.
At the closing session of the meeting, Mr Diwan, who made the concluding remarks on behalf of the development partners, said it was crucial to strengthen monitoring and evaluation of public sector spending to learn from experience and eventually reinforce the contribution of public policies and expenditure to development outcomes set under the GSGDA.
Beginning next year, direct budget support from development partners are expected to begin drying up because of budget difficulties for development partners and the fact that the global economy has begun recovering.
Direct budget support would not be high also because of Ghana’s new status as a middle-income country.
The World Bank Country Director, therefore, suggested that such drying up of resources could be partially offset with a parallel rise in sector specific budget support.
“It would be important to develop other broad instruments that would appeal to DPs, such as the Savannah Accelerated Development Authority (SADA), which focuses on the poor part of the country,” he advised.
On the scorecard, Ghana met 28 out of 39 performance targets agreed between the government and the development partners under the medium-term development agenda, and 11 out of 12 triggers, a sub-set of the list of targets whose achievements directly influence donors to disburse.
With such a creditable performance, the donors have promised to take immediate steps to make good their pledges for this year, which covers a resource envelope of about $500 million.
Source: Daily Graphic
Source: Daily Graphic
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