The International Monetary Fund (IMF) has welcomed Ghana’s 2015 budget which was presented by Finance Minister, Seth Terkper, on the floor of parliament last week.
Government’s stance on additional taxes and employment freeze in the budget can be said to be recommendations from the IMF.
In a press statement released recently, the Institution stated that the budget outlined measures which would increase revenue thereby helping control the wage bill which was somewhat high.
The IMF team said it would continue to support the authorities, as they work in the coming weeks in several areas to take concrete steps in cleaning up the payroll, finalize the remaining details of their medium-term reforms and to seek external financing assurances from bilateral donors and international institutions.
Below are portions from the IMF statement
It continued that “with projected arrears repayments of 1.2 percent of GDP next year, the cash deficit will be equivalent to 6.5 percent of GDP in 2015, down from 9.5 percent in 2014. The budget includes some important measures to increase revenues to eliminate distortion and inefficient energy subsidies, and to contain growth in Ghana’s comparatively high public wage bill. At the same time, the budget allows for maintaining public investment above 5 percent of GDP, as well as increasing social protection spending targeted at the most vulnerable.”
“The mission also welcomes the government’s aim to implement structural reforms to underpin a sustained consolidation towards a fiscal deficit objective of 3.5 percent of GDP by 2017. Reforms will include strengthening public finance management, reducing tax exemptions, enhancing tax administration and reviewing the earmarking of revenues for statutory funds. Efforts to clean up the payroll and enhance its management have been initiated and should be pursued swiftly. These efforts, together with the implementation of appropriate pay and hiring policies, will help further control the wage bill, which has been a significant source of fiscal risk.
“Taken together, these fiscal measures, combined with sound debt management and actions to further boost the effectiveness of the Bank of Ghana’s inflation targeting framework should help restore macroeconomic stability.
“Once this work is completed, a financial arrangement to support Ghana’s economic programme would be agreed at staff level before being proposed for the IMF Executive Board’s consideration.”
Business World (with quotes from Daily Guide)