Government plans to initiate moves that will ensure that statutory funds do not exceed 25 per cent of the country’s total revenue in a year.
This means that statutory payments into the National Health Insurance Fund, Ghana Education Trust Fund, the District Assembly Common Fund, Road Fund, Energy Fund, transfer into the Ghana National Petroleum Company, retention of internally-generated funds by Ministries, Departments and Agencies (MDAs) and other earmarked funds have been constrained to a ceiling of 25 per cent of tax revenues.
This is expected to create some fiscal space for the government to fund some of its flagship projects which include the free senior high school, the one district one factory, and the one million one constituency projects.
In 2016, transfers into the statutory funds constituted 33.5 per cent of national revenue, up from 28.2 per cent in 2015.
The Minister of Finance, Mr Ken Ofori-Atta, while presenting the 2017 budget to Parliament, said these rigidities in the statutory funds hindered government’s ability to shift public spending from one expenditure line to another.
Consequently, he said it had become more difficult to use public spending as an instrument to respond adequately to changing public needs.
He said the increasing statutory rigidities had limited the flexibility and impeded government’s ability to meet its commitments, especially capital expenditure.
As such, he said government continued to miss its obligatory disbursements to the statutory funds due to wishes to fulfil other commitments.
“In sum, we have been unable as a nation to comply with our statutory and budget requirements in respect of earmarked funds because they impose unhelpful rigidities in our public expenditure and development strategies,” he stated.
For this reason, he said the government was proposing to cap the statutory funds at 25 per cent of the total national revenue.
Some Minority members of Parliament, however, stated their disappointments in what they termed as “robbing Peter to pay Paul”.
They accused the government of failing to provide innovative ways of mobilising resources to fund its campaign promises but rather moving resources from one place to another.
The Member of Parliament for Bolga Central, Mr Isaac Adongo, in an interview with the GRAPHIC BUSINESS, said the cap would deny the district assemblies their annual funding.
“The districts and statutory agencies are going to be denied of their funds, and these same funds that they will be denied due to the cap is being repackaged in the form of one constituency one million dollars,” he said.
“We thought they were going to keep their original funding in addition to the one million because the essence was to make sure that the resource envelope to the districts had increased. So if you cut their funding and give it back to them in another form, you have basically done nothing,” he added.
He said the provision of one constituency one million dollars was going to lead to the establishment of administrative bodies that would further put pressure on government’s expenditure.
“Government was talking about rigidities in the budgets, but it is creating further rigidities. You are setting up additional administrative projects that will commit the country to additional administrative cost and in the end create a further expansion of the public sector, and the cost associated with those development authority’s will become permanent and create further rigidities,” he explained.