On Tuesday June 16 2015, the Civil Society Platform on IMF Bailout organized the Second National Civil Society Forum on Ghana’s International Monetary Fund (IMF) Programme on the theme ”National Conversation on the Implementation and Monitoring of the Ghana-IMF Programme” at Mensvic Hotel, Accra.
The full communique is as follows;
The forum brought together about 100 participants from Civil Society, Government Agencies, Professional Associations, Political Parties, Media, Academia and other identifiable groups in Ghana. The key note address was delivered by Mr. Joseph Winful, Chairman of the Civil Society Platform on IMF Bailout and a former Senior Partner and CEO of KPMG, Ghana. The main presentations and recommendations to ensure effective implementation and monitoring of key areas of reform contained in the agreement are as follows:
Assessment of the Ghana-IMF programme - Mr. Godson Aloryito (Coordinator and Economist-Civil Society Platform on IMF Bailout)
Public Financial Management and Public Service Reform - Dr. Samuel Simpson (University of Ghana Business School)
Debt Management, Monetary Policy and Financial Sector - Dr. Godfred Bokpin (University of Ghana Business School)
Pro-poor Interventions and Arears Worth Advocating for During Programme Reviews - Mrs. Linda Ofori-Kwafo (Executive Secretary, Ghana Anti-Corruption Coalition) and Mr. Sydney Casely-Hayford (Financial Consultant).
The keynote address observed that fiscal indiscipline and bad management of the Ghanaian economy over the years has led the country to seek another support from the IMF. It was noted that good governance and democracy for that matter goes beyond human rights, voting during elections to include prudent economic management, accountability and transparency. Citizens at all levels as well as the political leadership should do the right things to turn the country’s fortunes around. Noting that Ghanaians should not stay aloof but speak out, share ideas and engage government.
Assessment of the Ghana-IMF Programme
The forum noted that effective implementation of the programme should instill the needed discipline in our country’s public financial management so that the country does not return to the Fund for another program going forward.
Public Financial Management and Public Service Reform
Participants noted that there should be a conscious effort to rope in the informal sector into the tax net. Completion of the national identification system and improvement in the local and urban address systems will be good steps in this regard.
The discretionary granting of tax incentives by some state agencies such as the Ghana Investment Promotion Centre (GIPC), the Free zones Board, and some MMDAs/MDAs should be stopped so as to deal with revenue leakages in the system. The tax exemption policy in the country should be reviewed as soon as possible to curb the loss of revenues needed for national development in addition to excluding multinational companies in the free zones enclave from getting tax reliefs.
The forum stressed that measures contained in the agreement aimed at ensuring fiscal discipline should be seriously monitored; duty bearers and institutions who go contrary should be punished.
For a country where our tax effort is very low about 17 percent relative to the about 25 percent for lower middle income countries, the Ghana Revenue Authority (GRA) cannot be taken seriously if revenue targets are often exceeded by 15 to 20 percent even with the many inherent leakages in our tax system. Hence the GRA will have to re-examine its revenue forecasting based on empirical studies to reflect the economic status of the economy.
The Programme-Based Budgeting approach should be thoroughly integrated in the country’s budgeting process where expenditure items included in the budget should align with programme objectives and there should be justification for every expenditure item in addition to well defined measurable deliverables to ensure value for money.
The need for a Parliamentary Budget Office to support analysis, allocation and implementation of budget priority areas.
The need for a sanction regime (Fiscal Responsibility Act) to rein in the perennial budget overruns by the MMDAs/MDAs.
The government should fast track the process to wean off sub-vented agencies that are able to generate enough Internally Generated Funds (IGFs) to sustain their operations.
The government should link productivity with pay in the civil service and also introduce fixed-term working contracts to both middle and high level civil service workers to promote performance management.
Debt Management, Monetary Policy and Financial Sector
The country’s current debt to GDP ratio and servicing costs limit borrowing space and in fact constrain further debt build up. Hence government should ensure that the limited borrowing space is judiciously utilized by channeling new debt to projects which are purely viable and able to generate cash flow to retard the debt. Capital budgeting decisions should precede financing decisions.
The government should conduct a public debt-stock analysis that reveals how borrowed funds were used in the past to identify which part of the debt were invested in self-financing projects and social projects to ascertain the net debt burden on the public. Also, we should be able to assess the value for money in all these projects. Our past should guide the future.
Government should seek to service the country’s debt by growing the economy at a faster rate relative to the rate at which loans are being contracted.
Reduction in budget deficits is a sure way to reduce domestic borrowing because the deficits reflect the borrowing requirements of government. This is necessary to free up funds for the private sector and also bring down domestic interest rates.
There should be a monthly publication on financing of budget deficits by the Bank of Ghana.
The new Bank of Ghana Act should ensure that the appointment of the Governor of the Bank of Ghana should not be done by the President but rather opened up to a national competitive process where interested persons would apply and vetted publicly in a bid to strengthen the autonomy of the Central Bank just as it is done with the African Development Bank.
The new Bank of Ghana Act should clearly stipulate punitive measures to the Governor should the Bank of Ghana violate the financing limits to the government.
Participants called on government to safe-guard allocations to pro-poor interventions such as LEAP, Fertilizer subsidy, National Health Fund, among others as contained in the agreement.
Areas Worth Advocating For During Programme Reviews
Clear time bound action plan from government to deal with the electricity shortages in the medium to long term as the current crisis poses serious threat to achieving programme objectives.
The country needs a Fiscal Responsibility Act because reviewing the Public Financial Management legal framework is not adequate to deal with the persistent fiscal overruns over the programme duration and beyond.
Early passage of the Right to Information Bill to Law currently before Parliament, a critical tool for citizens to request for timely information on how public resources are being managed which is a hallmark of functional democracies.
Government should deepen accountability and transparency by publishing the financial data and statistics it has committed to share with the IMF on page 85 of the programme document to enable civil society and citizens for that matter to follow and monitor the programme implementation process.
Review of the PRMA should look at putting together an economic benchmark around which the cap is set hence our proposal that the cap on the stabilization fund is set as percent of the projected ABFA (50 percent) for the coming year. Giving too much discretionary power to the Finance Minister may not be prudent.