Some financial analysts have urged the Fiscal Council to start checking the expenditure of the government to prevent a budget overrun.
The Fiscal Council was formed after Ghana exited the IMF extended credit facility programme in April this year to advise the government to be financially disciplined.
Speaking to Citi Business News on the need for the council to start checking the government, Economist, Dr. Lord Mensah said even though its role is advisory, the council must make pronouncements to compel the Finance Minister to do the right.
“We told the IMF that we will stay financially disciplined by establishing the Fiscal Council and the Fiscal Responsibility Act. We hope that it will bite. If those structures don’t function then it is going to be another cost without getting the results,” he said.
Dr. Mensah maintained that it is important to encourage the Fiscal Council check spending to avert a budget deficit.
About the Fiscal Council
In order to avert the possibilities of getting back to the path of the fiscal slippages that caused the country to seek policy credibility from the IMF in 2015, President Akufo-Addo passed the Fiscal Responsibility Act this year, to anchor fiscal discipline and ensure prudence in the management of the economy.
The Act establishes both the Fiscal Council and the Financial Stability Council.
As part of its duties, the Fiscal Council will among other responsibilities develop and recommend policies for the maintenance of prudent and sustainable levels of public debt, ensuring that the fiscal balance is maintained at a sustainable level, and that the management of fiscal risks is done in a prudent manner, to achieve efficiency, effectiveness and value for money in public expenditure.
In addition, the Fiscal Council will also monitor the performance of the government budget with regards to compliance with fiscal rules and targets.
These include a budget deficit of not more than 5% of GDP, a positive primary balance and a debt to GDP ratio of not more than 65% of GDP.
Ghana is currently the only country in sub-Saharan Africa to establish a Fiscal Council.
The Fiscal Council is chaired by Dr. Paul Acquah, a former Governor of the Bank of Ghana.