Economist calls for fiscal rule

A senior economist at the Institute of Economic Affairs (IEA) Dr. John Kwakye has called for the passage of a Fiscal Responsible Law to entrench fiscal discipline in the country.

According to him, the law has become necessary due to the country’s bad record of meeting fiscal deficit target.

Dr. Kwakye, who made this known at IEA press conference on the 2015 Budget in Accra, said the law should define strict rules for fiscal policy.

“There is also the need to strengthen parliamentary oversight of the budget by establishing an independent and statutorily-resourced Parliamentary Resourced Office and making the Parliamentary Appropriations Bill enforceable and sanctionable,” he said.

Dr. Kwakye said election years were particularly notable for budget overruns, stressing the need to hold the fiscal authorities accountable for the proposed fiscal path through election 2016.

“We cannot afford further bouts of fiscal profligacy only to be followed by stabilization that derails the move to a higher growth trajectory capable of generating employment and alleviating poverty,” he said.

Dr. Kwakye said government’s decision to retain the 5 percent National Fiscal Stabilization Fund on financial and telecommunication companies was ill-advised.

He said, “This is a levy that is difficult to justify. Not only is it disincentive to business but it can be easily passed on and overburden consumers given the oligopolistic nature of these industries.”

Dr. Kwakye said, “in trying to increase revenue, we should look for innovative ways that do not further overburden the Ghanaian taxpayer.”

He said government must have an initiative to rope in the informal sector into the tax net.

Dr. Kwakye emphasized the need for government to plug the massive leakages through misappropriation and judgment debts, among others.