Why Ghana's economy needs an independent and competent Fiscal Council - Dr Kwakye explains

The Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, has stated that Ghana needs a fiscal advisory council that is independent and free from government interference.

Defining what a fiscal council (FC) means, the economist described the FC as an independent body usually set up by governments to evaluate fiscal policy.

He noted that fiscal councils can significantly contribute to good fiscal policy, provided they are established in a form that guarantees their independence.

"This is very critical, and that's why we are saying that the fiscal advisory council established by the president is not a true fiscal council because it is under the president and is not an independent body," he told journalists at a press conference in Accra on Wednesday, June 12, 2024.

He added, "To be an effective agency of fiscal restraint, the FC should be able to exercise an independent watchdog role over the executive's formulation and implementation of fiscal policy. FC independence is especially important for Ghana and other developing countries where institutional checks and balances over policy tend to be weak."

Dr. Kwakye, however, pointed out that although Parliament is mandated to ensure proper fiscal policy, the legislative arm of government is not so effective in that regard. He, therefore, reiterated the need for another body to assist them in carrying out that mandate.

The IEA director recommended that the FC be appointed through a competitive Parliament-cum-Public Services Commission recruitment process.

He gave examples of three countries Ghana can learn, especially regarding the common functionalities that work for them. These include the US Congressional Budget Office (CBO), the UK Office for Budget Responsibility (OBR), and the Swedish Fiscal Policy Council (FPC).

He outlined, "They engage mostly in economic and fiscal forecasting, evaluation of fiscal performance against targets, evaluation of fiscal risks, assessment of the consistency of fiscal policy with long-term fiscal and debt sustainability and sustainable growth, and publication of briefing materials to inform the public about their work."

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