PRESS STATEMENT ON THE 2009 POLICY AND BUDGET STATEMENT BY THE CENTRE FOR BUDGET ADVOCACY (CBA) OF THE INTEGRATED SOCIAL DEVELOPMENT CENTRE (ISODEC)
Madam Chairperson, members of the panel, members of the press, invited guests, ladies and gentlemen,
Over the years the Centre for Budget Advocacy (CBA) of the Integrated Social Development Centre (ISODEC) has been issuing press statements on the national budget after it has been read. This year we continue the tradition in the hope of contributing to a better understanding of the budget for informed public discussion towards the improvement of the quality of life of Ghanaians.
Our comments will examine the presentation of the budget, its format, participation in the budget and a casual glance at the performance of the 2008 budget and proposals for 2009.
also wish to serve notice that this is only our initial observations. We and our networks and coalitions will
examine this budget thoroughly using the lenses of the economic, social
cultural rights framework (ESCR) to see the extent to which the state of
Madam chair, an effective and efficient economy requires a stock of goodwill, trust and acceptance and obedience to the law as well and the presence of institutions that provide social stability and security. Any permutations of policy that threatens this core of society will land the country into irreversible and irreparable damage as we have witnessed in other countries.
Madam chair first let me pause here to commend the government for seeking to run a transparent, lean, efficient and effective government. We observe that the number of ministries has been reduced. We however see that the number of ministers is growing. Maybe the proposed constitutional review will look at capping the number of ministries. Any changes should require parliamentary approval We also observe that the President has promised to allow the freedom of information Bill to see the day of light. His Excellency has also promised that Contracts and agreements on natural resources like solid minerals, petroleum, forests and marine will be transparently disclosed. We however recommend that all these natural resources management be brought under the discipline of the extractives industry transparency initiative (EITI). Immediate steps should be taken to review and adjust the fiscal regime for the extraction of these resources to ensure that government take, in times of high prices, especially solid minerals sector increases as prices increase. This will help generate revenues to reduce our dependence on external loans and provide resources to invest in the productive and social sectors
to the International Labour Organisation about 50 million jobs would be
this year. In the
As most of you are aware the response to the above varies from country-to-country but there is no doubt that this is a very serious matter and thus bigger than any one country to handle by itself. It also means that those required assistance to exercise their basic rights and entitlements to enable them contribute positively to economic growth and benefit from growth now need more and not less protection.
2.The basis for the 2009 budget
basis for the 2009 budget of the NDC government can be looked at from
fronts. The first is an initial attempt to translate ideas spelt out in
manifesto into reality. The second is an attempted response to the three
that is the global financial, fuel and food crisis. Thirdly and more
the budget seeks to tackle current socio-economic challenges facing the
- Transparent and accountable governance
- Strong economy for real jobs
- Investing in people
- Expanding infrastructure for growth
Economic policy seeks to pursue three key targets: economic growth, stability, and equity. In the short run these three are contradictory but in the long run they are complementary. The task of economic policy and thus the challenge of a government is therefore to weave these into a coherent policy package. In the case of the NDC government, it has stated that it will pursue a social democracy agenda and therefore how it balances this challenge is informed by this orientation. This is so given the global challenges of the “triple crisis of food, fuel and finance�? referred to above and the high expectations of Ghanaians.
The above could have been transparently articulated in an annual Fiscal Strategy Paper outlining the fiscal assumptions, targets and spending priorities for the fiscal year to guide government expenditure policy. This would have enabled us to interrogate the social democracy agenda, especially how trade-offs and choices were made on our behalf in the budget.
3.Budget Process and participation of citizens and their elected representatives
Madam Chairperson, in the past citizens input into the budget process, even though limited, had become established. Adverts were placed in the newspapers requesting for inputs from the general public into the annual budgets. Unfortunately, this process was truncated this year during the preparation of the 2009 budget. We assume that the short nature of the transition might have led to this situation. We call on the government to formalize the public input into the budget process. The budget process should even go beyond request for input from the public to the situation where:
- The public is involved in MDAs policy reviews and budget hearings and debates in parliament on the budget.
- There is adequate time for parliament to engage (constituents) in process
- Parliament Amendment powers (ability of parliament to make amendments to budget) are secured in legislation. We hope the proposed constitutional review will consider increasing the powers of the legislature to have full amendment powers over the national budget. This however must go with enhanced capacity for the legislature and their staff, especially budget and planning, research, monitoring and evaluation. You cannot exercise oversight over an entity if you do not have superior mandate and superior information.
- The budget process should be publicized to enable stakeholders to participate effectively
- The right and access to information bill is passed into law to enable citizens make informed input into the budget and public finance including helping to reduce corruption and mismanagement of public resources.
Participation in the macroeconomic framework
Citizens’ inputs and access to information and participation in the macroeconomic arena, especially labour and business is critical. In the face of current environment, broad-based participation in economic policy is critical if the government is to be able to mobilize all of us behind the wheel of development and progress.
the macroeconomic framework is predetermined (Government has little to
targets since they’ve been already set in loan and grant facilities with
and money sellers). A Key weakness of this approach is the
lack of Parliamentary and CSOs involvement in
determining this framework (and hence its targets) before Ministry of
signing on to them. In times of crisis
like we currently face, the government needs to consult widely and
build synergy and or consensus for the macroeconomic framework and any
major reform so that we can all own and live or die by it.
The Ministry of Finance should therefore
consult CSOs, business, labour and parliament adequately to make those
4.Presentation of Budget
Generally the budget should be presented in a non-technical language and in a format that is reader-friendly and conveys all information to allow citizens to understand and use it as a guide to life decisions. Over the year, however, we observe that:
- There is limited analysis (budget document mainly descriptive and not analytical enough), it should show links, assumptions and risks. Maybe the fiscal strategy paper will help to lay these out upfront;
- The language is very technical and therefore needs to be a citizens budget, targeting Ghanaians;
- Budget should start with what quality and quantity of jobs will be created and how many and what quality infrastructure will be created for which the president is seeking mandate to raise and spend public resources.
5.Promoting Transparency and Accountability
of the four broad thematic areas mentioned in the budget targets
and accountability in governance. Though the Open Budget Index (OBI)
6.Content of the 2009 budget
Madam chair, a key purpose of macroeconomic policy is to ensure not just macro stability, but more importantly to ensure that the social framework of norms, rules and values are protected. This can be done by ensuring that fiscal and monetary and well as exchange rate and employment policies do not lead to too high a budget deficit or too low a budget deficit or too high or too low an inflationary target
2008 planned to grow the economy at 7% but this ended slightly below expectation at 6.2%. For 2009, the target is 5.9%.
though important, is not enough to ensure poverty reduction, especially
the distribution of assets, like land and credit, and others are
unequal. Both the source of growth and how this
distributed are critical for quality of life of the poor, marginalized
vulnerable in society. By IMF (2003)
calculations for every I % rise in real GDP growth poverty incidence
0.34 % and 0.28 for extreme poverty for the period 1991/92 to 1998/99
not as good as countries in similar circumstances as
Our expectation is that given the inequality of growth, especially over the structural adjustment period leading to some regions (three northern regions and central) gaining less from growth as well as food crop farmers and women, government will adopt a “distribution-with-growth and stability development strategy�?. This will bring these disadvantaged groups and regions back into production and allow them to also enjoy the benefits of growth
6.1.2.Inflation and budget deficit
In 2008 government planned to run a budget deficit of between 4 and 5.7% of GDP but ended with a deficit of 14% of GNP. Inflation was targeted at between 6 and 8% but ended at between 16.5 and 18.1%. Madam chair, we all know that too high inflation is not good and too large a deficit is not good. But what are the acceptable levels?
drives inflation in
analysis of the Ghanaian economy for the period between 1980 and 2000
that three factors drive inflation in
In terms of the macro side of things, the monetarists’ arguments are supported by the data while in terms of the real side; the structuralists arguments are supported by the data. See details in Egor (2004). It therefore requires policy interventions from both sides to credibly deal with inflation and the stability of the economy, especially given the fact that industry is demand-constrained and agriculture is supply-constrained. In the face of the current crisis, this approach is even more urgent.Our work, Egor (2004) also shows that government is the main spender in the economy. Given this role of government as
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