President John Dramani Mahama has stated that negotiations for an International Monetary Fund (IMF) programme are on track.
He said he was, therefore, optimistic that the final deal would soon be secured.
He said it was far from the truth that negotiations had derailed as reported by a section of the media, and views by some experts.
In an exclusive interview with the Daily Graphic at the Flagstaff House yesterday on a wide range of economic issues affecting the country, the President said the government’s commitment to the IMF programme remained unshaken.
“My commitment is even stronger, since, prior to the commencement of a formal programme with the IMF, most of the measures discussed with the fund had been adopted already in the 2015 budget,” he said.
He said the 2015 budget, as well as relevant tax and expenditure measures, had already received legislative approval and was being implemented.
Strengthening home-grown reforms
President Mahama said the IMF programme would strengthen the home-grown reform policies that were presented as part of the IMF’s Board review of Ghana’s Article IV Consultations and the Senchi National Economic Forum Consensus.
“The government has been implementing the former ( Article IV Consultations) since 2013 and in 2015 it is committed to taking all necessary actions to enhance foreign and domestic confidence in the country.
“We acknowledge that this is necessary for the country to address the setbacks it has suffered in recent years and resume its promising economic trajectory,” he said.
Ghana, he said, had very bright medium-term prospects — as clearly demonstrated by the signing of the Offshore Cape Three Points (OCTP)-Sankofa gas field production agreement, in addition to the TEN fields agreement.
“As noted in the 2015 budget, the government recognises that it is critical to continue addressing its short-term challenges to safeguard these bright medium-term prospects,” the President added.
Public sector wage bill
He also touched on the huge size of the public sector wage bill and restated the government’s commitment to reduce it to a more sustainable level.
“As a percentage of tax revenue, spending on public sector wages was expected to decrease from 57.6 per cent in 2013 to 49.3 per cent in 2014.
“It is expected to decrease further to 40.5 per cent in 2015 and bring the wage bill closer to the ECOWAS convergence criteria and generally accepted norm of 35-40 per cent of tax revenues,” the President said.
That, he explained, was important because of concerns that Ghana’s wage bill had taken an increasing share of the budget in recent years, primarily due to challenges of implementing the Single Spine Pay Policy (SSPP).
Mr Mahama stated that with the substantial completion of the migration to the new regime and clearance of outstanding arrears, Ghana was now focused on the task of ensuring that salary-related expenditures were at sustainable levels.
Linked to the initiatives, he said, was the intensification of adherence to performance contracts between the government and its workers to ensure high productivity as a dividend from the SSPP.
Cleaning the payroll
In addition to efforts to give the wage bill a clean health, the President said the government was taking concrete steps to clean up the public sector payroll.
The measures included implementing the findings of various audits of the payroll database, he said.
“This will certainly lead to the elimination of ghost workers from the payroll. The adoption of electronic payslip and voucher schemes for the payment and validation of salaries should help this payroll effort,” he said.
Furthermore, he said, the government was implementing a complementary Human Resource Management Information System (HRMIS) aimed at rationalising human resource management in the public sector.
“These structural initiatives form part of the implementation of an overall Ghana Integrated Financial Management Information System that is expected to generate savings on the payroll and, in general, improve overall public financial management across the public sector in the medium-to-long term,” he explained.
Debt management strategy
In tandem with seeking an IMF programme and reducing the fiscal deficit, the President said the government would continue to implement its new debt management strategy to optimise the debt profile and ensure that Ghana’s debt levels and debt service commitments returned to normal.
“The elements of this debt management strategy include debt re-financing to lengthen the maturity of existing debt instruments, setting up on-lending/escrow account regimes for commercial or non-concessional loans and establishing a sinking fund from the excess Stabilisation Fund in support of the amortisation of bullet loans,” he said.
President Mahama reiterated his unwavering commitment and that of his government to fiscal discipline and reforms, complemented by appropriate monetary measures.
“We are taking steps, and soon, within an IMF programme context to address our short-term challenges. In addition, we are also committed to implementing a wide range of structural reforms to improve public financial management,” he said.