World Bank cautions Ghana over fiscal overruns

• Posted on October 7, 2015
• by Nana Kwesi Coomson
• Comment

The World Bank Group has asked government to take bold steps to enhance efficiency in its public expenditure and improve revenue mobilisation.

The bank, in its second Africa Pulse report for 2015, said the current economic situation underscored the need for Ghana and other African countries to check their expenditure overruns and focus more on reducing the imbalances.

Commenting on excerpts of the report via video conferencing linking 12 African countries, the acting Chief Economist with the World Bank Africa, Ms Punam Chuhan-Pole maintained that improvements in the transparency and disclosure of budget expenditures that are legally binding in the long term is crucial, along with a reduction of earmarked expenditure.

The report stated that the reprioritisation of government expenditures will help reduce unproductive expenditure, noting that resource allocation towards investment programmes should come along with an upgrading of the quality of spending.

“What is needed is a coherent accounting framework to monitor expenditures and to make fiscal policymakers accountable. Transparency can be boosted through the provision of timely and regular reporting of fiscal outcomes,” she said.

The report further stressed the need to establish internal checks and balances within the framework to track the execution of government expenditure along the lines of the approved budget.

On revenues, the World Bank asked government to implement policies to strengthen tax administration, including technical capacity building among revenue authorities, as well as transparent and efficient operating procedures.

The bank said reforms to raise domestic resource mobilisation should be high on the agenda of policymakers in the region, adding that “these policies need to strike a balance between maintaining policy space to fund social and public investment programmes, and stimulating aggregate demand through short-term policy responses.”

Ghana was missing in the number of countries the report named as posting robust growth in spite of the weakening regional trend.

According to the report, after rising by 4.6% in 201, economic expansion in sub-Saharan Africa (SSA) will decline markedly this year, reflecting the combined effects of difficult global conditions and domestic challenges.