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General News of Wednesday, 17 June 2015

Source: myjoyonline

Fiscal indiscipline must be prosecuted - Osafo Maafo, others

Participants at an Institute of Economic Affairs (IEA) roundtable discussion on public financial management have called for a strict sanction regime that will keep governments' finances in check.

They are convinced the discretionary powers given to the country's Finance Ministers in terms of fiscal policy decisions have led to the huge budget deficits in the country.

One of the participants and former Finance Minister Yaw Osafo Maafo says the current financial regime gives too much power to the Finance Minister and called for the strengthening of Parliament to be able to produce its own budget and be able to scrutinize the one presented by the Minister of Finance.

"In our environment, the Minister of Finance is too powerful. Who in Ghana takes the Minister of Finance's budget and tears it into pieces?” he asked.

"I see as a first major problem the lack of capacity of our Parliament to analyze the budget. In US Congress, their budget support unit is as powerful as that of the treasury. You have a situation where Parliament can look at the budget and have the alternative. In our situation, we have a Parliament that relies on the Minister of Finance to make a presentation and invariably approve it.

"Parliament must do its own budget and do a comparison with that coming from the Minister of Finance," he said.

He was speaking on the proposal by the IEA for fiscal policy rules to be put in place to effectively check fiscal indiscipline in the country.

Dr John Kwakye, a Senior Economist with the IEA said weak fiscal management has undermined the country's economy for decades. Except for 2004, the Economist noted every election year has come with a huge fiscal indiscipline

He said 2012 election year recorded the highest fiscal deficit with its attendant repercussions including debt crisis..

Though regrettable, Dr Kwakye said it was also true that the country only becomes financially disciplined only when it is under an IMF programme

To address these teething fiscal challenges, Dr Kwakye called for a setting up of a fiscal policy council; similar to a Parliament Budget Office that is required to monitor, evaluate and advise government on fiscal issues.

Dr Kwakye said a law has to be promulgated to give the Council the needed legislative backing and the power to regulate revenue and expenditure activities in the country.

While agreeing in part with the call for fiscal rules to be set, participants at the discussion believed the country's major headache is not the absence of rules or laws but the authority's lack of commitment to implement those laws.

"If we want to run the system by discretion, knowing our nature we will be in trouble. If we have rules like these there should be sanctions", Yaw Osafo Maafo said.

The former minister said the country must begin to adopt the Fiscal Responsibility Act in Brazil which makes it a punishable offence for public officers to exceed expenditure targets, adding, for the country to be left at the discretionary whims of a powerful Finance Minister is almost suicidal.

An official with the Bank of Ghana Dr Johnson Asiamah who was also part of the discussion denied the bank's culpability in breaching financial rules and regulations.

The theme for the discussion was "Improving fiscal management in Ghana: The Role of Fiscal Policy Rules."