The government is on course with its fiscal consolidation policy aimed at reducing excessive borrowing, raking in more funds and managing its expenditures more prudently, the Minister of Finance, Mr Seth Terkper, has said.
According to him, the government had learnt lessons from the past when, for instance, projects that had not been budgeted for were undertaken in various parts of the country, leaving thegovernment with no option than to borrow to pay for those projects.
The Finance Minister said this when he answered questions from the public at the Graphic Business/Fidelity Bank Breakfast meeting on July 2 in Accra.
The forum, on the theme “The economy and prospects for business confidence”, brought together a large number of experts on the economy, bankers, Civil Society Organisations (CSOs), business associations among others to deliberate on the matters affecting the economy.
Mr Terkper, who has come under pressure from many sources, including businesses, because of his economic management style, said, “Our economic management style may be hurting some businesses but we are on track to ensure that the weaknesses that have brought us to this level are better resolved to enable us all to benefit in the medium term.”
He said the government had budget overruns of about GH¢ 8 billion, a phenomenon he described as unacceptable, noting that these developments that threw the budget out of gear will not happen in the coming years.
“We have had instances where contractors come and tell us they will want to pre-finance some of the projects we have not even identified in the budget and they are allowed to do it with the intention of paying them later,” he said, but noted, “These are some of the reasons why we find the contractors knocking at our doors all the time wanting to be paid for the work done and when we do not pay, it becomes a huge matter.”
Mr Terkper added, “We will not do that again and we understand that it might hurt some of the contractors but we can simply not continue on that trajectory when we do not have money.”
He said the government would, and has asked ministries, departments and agencies to spend strictly according to the budget to avoid future budget overruns.
“As a ministry, we have started allocating the funds for the ministries on a quarterly basis and that is meant to ensure that they spend according to what they have projected and approved and thankfully, that is working well in our interest,” he said.
The first quarter report from the Monetary Policy Committee (MPC) of the Bank of Ghana released in May this year clearly gave credence to the pledges made by the Finance Minister as far as his measures to ensure fiscal consolidation were concerned.
According to the report, “Preliminary fiscal data for the first quarter indicate that the fiscal consolidation efforts are on track.”
For instance, the report pointed to the fact that revenue and grants were above target, on the back of strong growth in domestic revenue.
Critically, it also identified that expenditures were below target, as the major items, including the wage bill, were contained within target.
<<Print>>