Dr. John Kwabena Kwakye, Senior Economist and Director of Research at IEA
The Institute of Economic Affairs (IEA) Director of Research has asked President Akufo-Addo to reduce the number of ministers from 84 to 40.
According to Dr. John Kwakye, the current number of ministers has had no positive impact on governance and has instead burdened the taxpayer.
Speaking at a pre-budget media engagement in Accra, he stated that the number of Ministries should be reduced to 12, with Sector and Regional Ministers reduced to 40.
To foster fiscal and debt sustainability, the IEA proposed lowering the fiscal deficit ceiling from 5% to 3% beginning in 2024, amending the Fiscal Responsibility Act (FRA) to require that borrowing be used exclusively to fund CAPEX, borrowing and debt ceilings in the FRA to foster debt sustainability, and establishing a Parliamentary Budget Office (PBO) to assist Parliament in exercising its budget oversight mandate.
Other suggestions include reviewing mining tax regimes in order to increase benefits to Ghana, lowering petroleum taxes/levies in order to lower pump prices, and indicating a plan to review and rationalize flagship programs in order to make them fit-for-purpose and reduce budgetary costs.
The IEA also proposed the allocation of adequate resources to capital expenditure (at least 5-7% of Gross Domestic Product in 2023) to spur growth, and increase resource allocation to the important agriculture, industry, energy and infrastructure sectors to boost growth and job creation.
To the IEA, the financial solution must involve prudent monetary and fiscal policies that prevent destabilising demand pressures.
The IEA called for fiscal discipline and proposed that there should be a 5% ceiling on Bank of Ghana lending to the government and gradually reducing the ceiling on the fiduciary currency issue, that is, the portion not backed by forex but backed by government debt, from 60% to 20% by 2024.
This will raise the current 40% floor for forex cover to 80% over the course of the period, it added.
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