fiscal responsibility law

Gov’t considers ‘fiscal responsibility law’ to curb spending limits

Ghana is considering passing a law that will restrict government’s fiscal deficit to not more than 5% of GDP, the country’s senior minister Yaw Osafo-Maafo said on Monday.

The proposed “fiscal responsibility law” will have provisions to punish government officials who exceed spending limits, Osafo-Maafo told a meeting of business leaders in the capital Accra.

Ghana, which exports cocoa, gold and oil, is following a three-year programme with the International Monetary Fund to restore fiscal balance to an economy dogged by a high fiscal deficit and large public debt, after a period of exuberance during the oil boom years.

“We are proposing a fiscal responsibility law that will restrict government spending within a band of 3% to 5% fiscal deficit — anything above 5% should be considered an infringement,” he said.

The government of President Nana Akufo-Addo, which assumed office in January, plans to lower fiscal deficit to 6.3% in 2017, from 9.3% in 2016, saying: “The essence of the law is to get the economy back on track and make it impossible for any government to reverse the motion … so people who break the limit would be made to suffer for it.”