A former Deputy Minister of Finance in the Kufuor administration, Professor George Gyan-Baffour, has hit hard at the government, saying it has, over the past few years, failed to align budgetary allocations with the development objectives of the nation.
He explained that although the government had between 2006 and 2009 expended the national resources in line with the nation’s development objectives, the trend changed in 2010 as the government engaged in non-targeted spending, which continued up into 2012.
This phenomenon, he said, was costing the country some hard-earned money, given that it often led to the duplication of efforts and wastage of national resources in the subsequent years.
Prof. Gyan-Baffour, who was once the Director General of the National Development Planning Commission (NDPC), made the observation at the inaugural Kwadwo Baah-Wiredu Memorial lecture in Accra on March 5.
Delivering the lecture on the theme: ‘Fiscal policy accountability and transparency as instruments for effective national development,’ Prof. Gyan-Baffour said analysis had shown that the disconnection between the national development objectives and the budget allocations between 2010 and 2012 was an indication of the lack of coordination between the authorities in-charge of budget preparations and those responsible for national development.
“The lack of alignment between the budget releases and recurring annual shifts in priority is indicative of the lack of proper coordination between the budget and authorities in charge of national development. It suggests the likelihood of waste in the implementation of government programmes and project since projects funded in one year could easily be abandoned and new ones started,” the former Deputy Minister observed.
But the Minister of Finance and Economic planning (MoFEP), Seth Terkper, who was also at the lecture disagrees. He told the GRAPHIC BUSINESS in an interview that the non-alignment of the budget releases and national development objectives was due to a change in the coding system used in monitoring items budgeted for by the various ministries, departments and agencies (MDAs).
“I said at the lecture that if Kwadwo Baah-Wiredu was to be alive and his budget releases also assessed, it would have shown some shifts too. The non-alignments he (Prof Gyan-Baffour) identified has nothing to do with national development but the coding,” Mr Terkper, who was one-time Deputy MoFEP said.
“With the GIFMIS (the Ghana Integrated Financial Management Information System (GIFMIS), if an assembly budgeted for, say item A, and later changes it to item B, although we will take note of that change, the coding system will not adjust accordingly,” he added.
Implications on national development
The issue of government expenditure vis-a-vis national development objectives is of priority to the nation, given that the various administrations have, over the years, overstepped their budgeted amounts, leading to recurring deficits.
The country’s deficit to GDP dropped to 10.09 per cent in 2013 after rising to 11.8 per cent of GDP in 2012.
GDP is a measure of the total value of goods and services produced in a country and a 10.09 per cent deficit, as recorded last year, means that 10.09 per cent of the provisional GHȻ32,332 million GDP reported for 2013 was in arrears.
Such deficits, together with other fiscal instabilities such as rising inflation and the ongoing pressure on the cedi, mostly act to retard growth while pushing cost of living up.
A recent statement by the International Monetary Fund (IMF) warned the weakening growth in the economy could continue deep into the year should government fail to gain control of the main causes, including the rising government expenditure.
“Structural reforms to ensure lasting expenditure discipline are key to sustainable fiscal consolidation,” the statement, which was issued after an IMF Mission, led by the fund’s Managing Director, Ms Christine Daseking, concluded its review.
Although Mr Terkper disagreed with the assertion that government failed to link its budget releases to the national development objectives, Prof. Gyan-Baffour presented some solutions to the phenomenon in his 26-paged lecture.
He said it was necessary for government to be clear in its mind “as to what its priorities are.”
Once that is achieved, he said “the national development agenda should then reflect those priorities.”
“Government should also prepare the budget in a coordinated manner to ensure that at least the investment expenditure component of the budget reflects the priorities identified in the national plan,” he added.