Use coronavirus to review and suspend some govt programmes – Dr. Acheampong

Economist and Political Risk Analyst with IMANI Africa, Dr. Theo Acheampong, has advised government to take advantage of the adverse economic challenges being faced due to the impact of COVID-19 and suspend some of its programmes to make room for fiscal space – not only to fight the pandemic but also to run the economy.

According to him, the current challenges calls for an impact assessment of all government programmes to ascertain whether they need to be suspended or continued, depending on the quantum of investment required to keep them operational.

Speaking during a webinar on how Ghana and Africa’s COVID-19-impaired Mid-Year Budgets can benefit from sound Public Financial Management (PFM) systems, Dr. Acheampong said the tight fiscal regime that Ghana is expected to run on can be made a bit more flexible if government relieves itself of programmes whose impact on the general economy will not be felt soon.

“A programme like NABCO can and should be reviewed. In a situation of significant budgetary gaps, there should be an assessment of, for example, the impact of skills training and all the things that young students have gotten in enhancing their livelihood. What I have seen historically is that in Ghana – and this is not any criticism of NABCO – we tend to run these programmes without any proper monitoring and evaluation mechanism or tracking mechanism attached to it,” Dr. Acheampong said.

He added that if this is done diligently, and with the attitude to ensure prudent spending of revenue, it will provide government with an opportunity to identify how to scale back on funding pushed into the sustenance of its programmes. “We need to spend our monies much more wisely; it has to be outcome-driven rather than input-driven,” Dr. Acheampong noted.

The Nation Builders Corps (NABCO), Planting for Food and Jobs, Free SHS, and Planting for Export and Rural Development (PERD) are among the many interventions government has introduced to better the fortunes of Ghanaians – but the outbreak of COVID-19 has led to a strain on government’s budget.

Government has projected an overall budget deficit to hit, at least, 7.8 percent of GDP from a pre-corona target of 4.7 percent; but Dr. Acheampong is warning that if care is not taken, government’s budget deficit after the election may go way beyond projections.

Already, the Fiscal Development Report (May 2020) released by the Bank of Ghana shows that government’s operations in the first quarter of this year sent the budget deficit to GH¢13billion against a target of GH¢7.2billion. This means the budget deficit widened to 3.4 percent of GDP against a pre-pandemic target of 1.9 percent of GDP.

Revenue generation has also been hit strongly by the pandemic, especially with regard to oil proceeds due to falling prices. The same Fiscal Development Report shows that out of the GH¢1.9billion projected to be reaped from the oil sector in the first quarter, only GH¢331million was realised – indicating a more than 82 percent shortfall from the target. The IMF and World Bank have also expressed concern about the country’s rising debt situation, due to which they caution the economy is at risk of debt distress.