Business News of Wednesday, 30 December 2015
The Minister of Finance, Mr Seth Terkper, has warned that contractors, suppliers and other state agencies that spend outside the budgetary allocations for 2016 will not benefit from any government intervention.
He, consequently, warned municipal, metropolitan and district assemblies (MMDAs) to take note and stay within the cash ceiling.
In an interview with the Daily Graphic, Mr Terkper said the government was committed to staying religiously with the budgetary allocations and would, therefore, not countenance any extraneous expenditure.
He explained that quite often MMDAs, as well as ministries, departments and agencies (MDAs), undertook projects that fell outside their budgetary allocations, thereby placing undue financial pressure on the central government.
In the same vein, he advised contractors and suppliers to desist from the tendency to give an undertaking to prefinance projects in 2016.
He said a good number of contractors and suppliers who promised to prefinance state projects always fell short of their promises, a situation that compelled the government to find alternative financing.
In those circumstances, he said, the government had no option but to resort to borrowing outside budgetary projections.
Mr Terkper said such situations led to the government overspending its budget projections, leading to the accruement of debt that had not been planned for.
That, he said, also had adverse implications in terms of development expectations, since there might not be enough funds to effect payment for the timely completion of projects.
Beyond that, he said, over-spending also led to serious challenges between the contractors and suppliers and their banks, since the former had to borrow from the banks with collateral.
Those who made false claims of prefinancing, he said, left the projects uncompleted, thereby causing serious discomfort and disappointment to beneficiaries of the projects.
Mr Terkper explained that since the projects were time-bound, and especially so when some contractors and suppliers had to import some materials using foreign currency, the unstable parity rate between the cedi and the major international trading currencies tended to put the state at a disadvantage.
He, therefore, warned that 2016, being an election year, the government would abide by the principle of staying within budgetary allocations and would not be compelled to stray off, saying, “These measures are to ensure that the economy stays on the path of transformation.”