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Business News of Friday, 31 January 2020

Source: Business & Financial Times

B&FT Editorial: Assurance from Bawumia to forestall budgetry over-runs laudable

Dr Mahamudu Bawumia, Vice President of Ghana Dr Mahamudu Bawumia, Vice President of Ghana

Vice-President Dr. Mahamudu Bawumia, has reiterated that government will not be tempted by election-year fever to embark on projects outside its approved budget for the year, to forestall budget over-runs.

This is quite a relief, considering the fact that we are in an election year and the temptation to overspend is real.

Government's determination to maintain fiscal discipline is remarkable, but not surprising since it is under this present government's watch that the Fiscal Responsibility Act was enacted and passed into law.

Dr. Bawumiah made the disclosure during the Ghana-European Union (EU) Political Dialogue this week. The Vice-President conceded that though government has not completed everything that it had initially wanted to do, a significant amount has been achieved.

In essence, however, government will not embark on a flurry of activities this year just to be seen trying to fulfill campaign promises, and in the process cause budgetary over-runs. We believe this is a mature posture to adopt, even though government wants to be retained in the up-coming December elections and would like to achieve a 100% campaign-promise delivery.

To be candid, government has performed creditably in fulfilling campaign promises since it has proved to the overwhelming mass of Ghanaians that campaign promises can be kept; and if a few are not rolled out, it should not be perceived as an indictment or a failure to keep promises.

Ghana has suffered from large fiscal volatility around election cycles for the past two decades. This volatility has been identified as one of the key challenges for Ghana's future development path in the 2018 World Bank Systematic Country Diagnostic.

In an attempt to overcome fiscal overruns in election cycles, the country introduced a fiscal responsibility law and the Fiscal Council in December 2018. The law establishes a de-facto 5% cap on fiscal deficits in any given year.

The medium-term fiscal outlook is still positive; and with the fiscal responsibility law and the fiscal council now in place, the 2020 election provides a unique opportunity to break the ever-increasing fiscal over-runs in election cycles