Chairman of the Finance Committee in Parliament, Kwaku Kwarteng, has indicated that government will through the just-presented 2022 Budget address the country’s rising debt situation, which he described as ‘chronic’ and requiring urgent measures.
According to him, interest payments on loans continue to burden the economy; hence the country’s recurring debt situation.
“How much we are spending on interest payments is a direct reflection of how we are spending money we do not have and how we are borrowing to finance that gap. This budget is seeking boldly to deal with a chronic problem that has affected Ghana’s economy for a long time,” Mr. Kwarteng stated in his contribution to the debate on the budget statement in Parliament.
Highlighting the widening gap between the country’s revenues and its expenditures, he made reference to revenues collected and interests that the country has had to pay on loans since 2006.
Narrowing down to 2020, Mr. Kwarteng noted that the Coronavirus pandemic played a major role to worsen the situation as government was forced to cater for unplanned expenditures to help fight the pandemic.
“Not only did we have to borrow to finance expenditures that we had not planned for, but because of the pandemic revenues that we had programmed into our budget just did not come because the global economy had been shut down. Every country was badly hit by that, and so was Ghana. As we can all clearly see, our debt to GDP ratio has risen – and that takes us to what we are using to service our debt in 2020 and in 2021.
“In 2020, for every GH¢100 we collected as revenue we now use GH¢45 to service our loans and pay interest on the monies we have borrowed. I am looking at the 2021 projected outturn, and this is likely to climb to GH¢47 being used to pay interest for every GH¢100 that we collect as revenue,” he noted, stressing that this is not sustainable.
He called on the House to support initiatives outlined in the budget, and approve same to enable government reverse the trend and improve the country’s economic situation.
He further noted: “I do agree that to deal with the widening gap between our revenues and our expenditures, the adverse gap should not just be on the revenue side. We also need to take steps to deal with our expenditures.
“It is the trend we have seen under previous governments, and the trend we are seeing now. Is this sustainable? Of course, it is not. And this is the reason government has taken the bold step under this budget to deal with what has been a chronic difficulty for this economy.
“That is why I invite this House to support not just the policies of this budget, but also to support the interventions within it to deal with a problem that has been bedevilling our economy in the past and present.”
The finance minister, in the 2022 budget statement, outlined some measures to be implemented to deal with rising expenditure against the country’s revenues.
According to the budget statement, to contain expenditure and further enhance fiscal sustainability, a number of expenditure measures will be implemented in the 2022 fiscal year and the medium-term. Government will continue to safeguard integrity of the payroll system to ensure that only public sector employees properly engaged through approved channels are placed on government’s payroll.
In furtherance of this, regular payroll audits will be carried out to identify ghost and unapproved workers and then expunge their names from the payroll. Those found culpable and implicated in this unpatriotic behaviour will be brought to book and face the full rigours of applicable PFM laws. The Principal Spending Officers in charge of payroll will also be held liable for any payroll infractions.
Government has, with immediate effect, suspended the granting of approval for post-retirement contract appointments – except in cases where the skills of the retiring officer are in short supply and unavoidably needed.
Additionally, as part of the measures to preserve the credibility, integrity, and relevance of the Multi-Year Fiscal Strategy, all MDAs and MMDAs are mandated to strictly commit to their respective appropriated expenditure ceilings for obligations relating to each individual year specified in multi-year contracts.
Also, among other measures to further contain expenditures in 2022 and the medium-term, government will reinforce the policy to suspend purchases of vehicles by MDAs and MMDAs except with the express approval of the Chief of Staff based on a preapproved budget provision; and MDAs are required to use competitive methods of procurement and minimise the use of their Single Source processes to ensure value for money.