Eric Osei-Assibey, an associate professor of economics and the dean of international programmes at the University of Ghana, has described the government’s decision to suspend roughly 20% of budgeted expenditure for the year as a smart move.
The Finance Minister, Ken Ofori-Atta, has said the move will make the government’s fiscal consolidation agenda not only revenue-led, but also expenditure-focused.
Speaking to Kofi Abotsi on Town Hall Talk on Asaase Radio (21 January), Professor Osei-Assibey said: “I honestly thought that is a smart move. I thought that is the way to go because the market is watching the government’s ability to meet its fiscal targets.
“And so one good thing: the signal that the recent pronouncement of the Finance Minister gives to the market is that of the government’s willingness to fiscally consolidate even if it doesn’t realise the expected revenue.”
He added: “It then impacts on Budget execution and credibility. Given the timing, given the environment in which we are, the noise that is in the market, you need to assure the market. The market is sceptical; the market is concerned that the government will not be able to meet its fiscal targets, one of [the doubts] being that the fiscal projection is too high.”
Background
Beginning the first quarter of 2022, the government will suspend roughly 20% of budgeted expenditure for the year, Ken Ofori-Atta, the Minister for Finance, has said.
The minister said the move will make the government’s fiscal consolidation agenda both expenditure-focused and revenue-led.
Taking his turn at the regular press briefing at the Ministry of Information on Wednesday (19 January 2022), Ofori-Atta said: “We are also strengthening expenditure management in 2022 and beyond.
“To ensure that we match all expenditures to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection.
“Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across the board for all covered entities benefiting from the 2022 Budget, subject to revenue performance.”
Fred Dzakpata
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