Business News of 2014-05-15

Government to trim wage bill

The government has planned to trim the wage bill to 35 per cent of tax revenue ratio by 2017 in a bid to ensure fiscal prudence.
The plan is part of a string of reforms to restructure the economy rolled out by the Finance Minister, Mr Seth Terkper, for consideration by discussants at the ongoing National Economic Forum at Senchi in the Eastern Region.
Other measures include a continuation of the net freeze on employment in sectors of the public service for consideration and the restructuring of the District Assemblies Common Fund (DACF) and other statutory funds to reduce rigidities in the budget and align them to priority programmes.
The measures will also move to shift the focus of expenditure from low priority public spending for all metropolitan, municipal and district assemblies.
In 2013, the country experienced volatile prices for its major export commodities such as cocoa and gold, a development which resulted in a high deficit.
The fiscal performance also recorded an overall budget deficit estimated at 10.8 per cent, against a budget target of 9.0 per cent, following a deficit of 11.8 per cent in 2012.
The fiscal slippage was underpinned by shortfalls in revenue and grants, higher spending on wages and salaries, as well as interest costs.
The government had, in 2013, imposed new taxes, limited the award of new contracts, the contraction of new loans and the regular adjustment of petroleum and utility prices.
Domestic mobilisation
But in bid to correct the economic imbalances, Mr Terkper announced plans to enhance domestic revenue mobilisation, implement tax reforms and improve revenue administration to increase revenue in relation to GDP to levels consistent with peers in the lower middle-income country category.
He proposed that there would be a change in the upfront exemptions regime to a credit and refund system to minimise abuse, tax evasion and tax avoidance.
The government also intended to review the Ghana Investment Promotion Centre (GIPC) Act to ensure that exemptions granted by the GIPC were consistent with the government exemption policy, he said.
On the public sector, the minister said reforms were underway to right-size the public service by upgrading the payroll and installing a new Human Resource Management Systems (HRMS) programme for the Office of the Head of the Civil Service (OHCS) and the Public Services Commission (PSC).
Payroll management measures, such as payroll audits and Electronic System Payment Voucher (E-SPV), were to reduce the incidence of ‘ghost’ workers on government payroll and empower managers with ready and timely information to manage more efficiently their payroll costs, he said.
He said among the series of measures to put the economy into the higher bracket of the middle-income status were the reclassification of the public debt and improvement in the public debt.
Mr Terkper said the government would encourage the private sector to participate in the accelerated growth agenda through public-private partnerships (PPPs).