Date: August 28, 2012, 12:40 pm


After taking a careful look at the GHC2.6 billion Supplementary Budget, the Institute for Fiscal Policy (IFP) of the Integrated Social Development Centre (ISODEC) has concluded that the fiscal policy fails to address issues that are fundamental to the survival of poor people.
\\\"The exclusion of the social sector of the 2012 supplementary budget statement does not make it pro-poor. Education, health and water are sectors that cater abundantly for the needs of the poor,\\\" said the IFP in an analysis of the Mid-Year Review of the 2012 Budget Statement and Economic Policy and Supplementary Estimates for the 2012 Financial Year.
The Institute added: \\\"Not only does the budget refuse to track performance and policy interventions for the first six months of 2012, it also does not capture the progress made with policy initiatives to support these sectors for the period June-December.\\\"
The criticisms confirm preliminary comments submitted on the Supplementary Budget by Dennis Nchor, Policy Analyst at the IFP and Hon Osei Kyei Mensah Bonsu, Minority Leader of Parliament.
Mr Nchor told Public Agenda on Thursday that the rationale for the additional requests goes \\\"to prove poor planning of the national budget.\\\"
On his part, the Minority Leader said the substance of the fiscal policy suggested a lack of planning by government.

Duffuor in Parliament

Dr Kwabena Duffuor, Minister for Finance and Economic Planning was in Parliament on Wednesday in accordance with the 1992 Constitution to seek the approval of the legislature for a total of GHC2,613,407,346.00 additional budgetary support to fund deferred wages, fuel and utility subsidies, floats and commitments, debt and transfers to District Assemblies.
The Minister informed Parliament that \\\"an analysis of developments in both the domestic and global environment since the beginning of this year has necessitated some revision in the assumptions which underlied the 2012 Budget and Economic Policy. These developments have resulted in additional revenues as well as additional expenditures.\\\"
Specifically, savings on expenditure that Government would make from measures undertaken to clean \\\"ghost-names\\\" from the government payroll and receipt of two major inflows from the World Bank (WB) and African Development Bank (AfDB) that were programmed for 2011 but were received in 2012 had contributed to additional revenues.
On the other hand, there had been an increase in recurrent expenditures arising from: 18 percent salary adjustment for 2012 and payment of deferred salary liabilities arising from the implementation of the Single Spine Pay Policy (SSPP); interest cost arising from the recent cedi depreciation; fuel subsidies due to the unstable crude oil prices; utility subsidies arising from non-adjustment of utility prices; and additional election related expenditures, especially the procurement of verification equipment, barely five months to the 2012 Presidential and Parliamentary elections, Dr Duffuor explained.

IFP verdict

The IFP concludes that the supplementary budget only outlined the macroeconomic performance but could have given a brief progress report on the essential social services sectors - education, health, water and sanitation. \\\"These areas are pivotal in national development but are often plagued by allocation irregularities and ill performance. A brief presentation on the performance of these sectors was therefore necessary.\\\"
It expressed worry that fiscal management was at a risk due to the ever increasing size of the public sector wage bill as a result of the Single Spine Salary Structure. \\\"The issue of prudent financial management within the public sector thus still remains problematic,\\\" it said, recommending that \\\"government must introduce stricter measures as well as make efforts to control the rising wage bill which has negative repercussions for government debt.\\\"
Further, \\\"Government\\\'s introduction of measures to support expenditure monitoring and control to avoid excess spending is imperative giving the fact that 2012 is an election year and unintended projects will be undertaken to score political points.\\\"
To this end, it commended the directive by President John Evans to Metropolitan, Municipal and District Assemblies (MMDAs) not to commit funds to projects not included in the annual budget, describing it as \\\"a step in the right direction.\\\"
But \\\"It must,\\\" he said, \\\"be enforced to ensure compliance.\\\"
On the other hand, \\\"The Bank of Ghana should undertake a study to address the root cause of the exchange rate depreciation in the shortest possible time since it has the tendency to disrupt the gains in macroeconomic stability achieved over the last few years,\\\" the Institute further recommended.

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