The Institute of Economic Affairs (IEA) has applauded the government for its decision to establish a Fiscal Council which will spearhead the adoption and implementation of the country’s fiscal policy.
Finance Minister Ken Ofori-Attah announced Thursday in his budget presentation to parliament that the government will initiate processes towards the establishment of the Council that will be responsible for ensuring accountability in implementing optimal fiscal policies.
“Ghana has been faced with significant, long-term fiscal slippages and an escalating public debt stock leading to a high risk of debt distress, due to the fact that the implementation fiscal policy lacks a transparent institutional arrangement for providing quality fiscal information to the public,” Mr Ofori-Attah observed.
The IEA, which undertook a research on how to improve fiscal management in Ghana and proposed the establishment of such Council, said it is pleased that the government has adopted its recommendation.
The research, which was done by Dr Charles Amo-Yartey proposed among other things the establishment of Fiscal Policy Council to promote fiscal discipline, enhance the quality of budget discussions and foster greater transparency in Ghana.
It identified weak fiscal governance as one of the most important factors that could derail Ghana’s ability to advance to high middle income status.
Additionally, the research paper highlighted that breaking the cycle of inconsistent fiscal management requires a balance between market pressure and fiscal rules in order to keep public finances on a sustainable path.
“It is gratifying to note that Mr. Ken Ofori-Atta, the Finance Minister, in his budget statement read on, Thursday, 2nd March, 2017, noted his government’s intention to adopt the IEA’s policy recommendation of establishing a Fiscal Council,” it said in a statement.
The IEA wants the Council to be given a clear mandate, debt sustainability to ensure that it is freed from time inconsistency problem that leads to deficit bias.
“The institute is of the firm belief that should a Council be established, equipped and allowed to operate independently; it would lead to the promotion of sound public financial management in Ghana,” the statement said.