World Bank cautions Ghana government not to over-spend during 2012 electioneering year
Ghana experiences what has been described as over-spending of public funds during any electioneering year since 1992.
It is believed that incumbent governments spend excessively just to woo electorates for votes.
Already Ghana has been cited as one of the culprits of such act of over-spending during presidential and parliamentary elections.
The International Monetary Fund (IMF) revealed early in April 2011, that in 2009, Ghana had to borrow an amount of $1 billion from the Fund after it overspent during the 2008 election year, according to a VOA News report.
The report cited Mr. Roger Nord, a senior advisor in the African Department of the IMF who was cautioning African countries on election costs during the Nigerian polls early April, as saying “one example of election over-spending is Ghana in 2009 when the government there reportedly had to turn to the IMF for a $1 billion loan.”
The World Bank is therefore, cautioning the government of Ghana led by President John Atta Mills to manage public expenditure during the period.
In a feature article written by the Bank titled “Ghana Looks to Retool Its Economy as it Reaches Middle-Income Status,” and published on its website July 18, 2011, it says the country’s first challenge is to rein in public expenditure.”
“The first challenge is to rein in public expenditure. Ghana’s highly competitive political environment has made large fiscal deficits a common occurrence, even as the current government is trying to repay domestic arrears that have built up over the years. A high-stakes presidential election scheduled for next year is likely to make matters worse, as various constituencies, buoyed by the expected oil revenue, are likely to step up demands for public expenditure,” writes the Bank.
The feature quotes World Bank Vice President Obiageli Ezekwesili telling Ghana’s Vice President John Mahama in Washington mid-June 2011 that “A major priority for us is to ensure the fiscal and macroeconomic stability of Ghana.”
Ms Ezekwesili told Mr. Mahama that as Ghana transitions into middle income status, authorities should recalibrate the institutions of public service delivery to take into account rising household incomes and lower foreign aid which will ease the pressure on public finances by prioritizing, putting more emphasis on public-private partnerships to fund major transportation, energy, and water supply projects, and by improving tax administration.
The World Bank even proposed to Ghana, a law that will guide public spending.
Such law, if enacted, would guide public expenditure management and complement reforms envisaged by the formation of the Ghana Revenue Authority, which aims to make revenue collection more efficient.
Acknowledging the remarks, Vice President Dramani Mahama said he took good note of the various proposals, including the suggestion that Ghana should consider the possibility of a fiscal responsibility law, according to the article.
The government on July 14, 2011 presented a supplementary budget to parliament seeking for an approval an amount of GH¢1.5 billion to finance government expenditure.
The meeting between the World Bank and Ghana was an opportunity to highlight areas of high potential but also to raise red flags on some of the most pressing challenges facing the country, it said.
By Ekow Quandzie