In addition to fulfilling its pledges to the citizenry, the move is also intended to stimulate the economy, create more jobs, among other things.
Addressing a cross-section of financial journalists in Accra on Monday, the Minister of Finance, Mr Ken Ofori-Atta, gave some insights into the performance of the economy and the commitments made by the government to stimulate economic activity.
Of the total amount disbursed, GH¢91.5 million has been released to support the construction of factories under a plan dubbed: “Industrialising Ghana from the ground up”, as part of the One-district, One-factory (1D1F) initiative; GH¢2.5 million for the free senior high school (SHS) programme and GH¢105 million to support the Planting for Food and Jobs programme.
An amount of GH¢126 million has also been released for the national identification (ID) programme.
In terms of contracts, GH¢400 has been released under the Infrastructure for Poverty Eradication Programme (IPEP); GH¢100 million for the Ghana National School Feeding Programme and another GH¢100 million for the Scholarship Secretariat.
In the area of reducing the government’s liabilities, Mr Ofori-Atta said as of the end of 2017, the government had managed to clear about GH¢3 billion in arrears, as against the budgeted GH¢3.7 billion.
He said as of the end of February this year, an additional GH¢600 million of the arrears had been cleared.
Explaining further, he said the Ministry of Finance had taken a serious view of the report of the Auditor-General that raised red flags over some of the claims made by contractors.
“We are being extremely cautious about what we pay to save the state money which could have ended up in the wrongs hands,” he said.
Last January, the Auditor-General cancelled more than GH¢5 billion in claims from contractors, a phenomenon which had raised eyebrows and forced the government to ensure that payments were properly staggered to prevent either non-existent payments or over-payment to contractors.
Meanwhile, Mr Ken Ofori-Atta gave an assurance that the claims of those contractors would be sorted out as the months rolled by, adding: “Our strategy, going forward, is to clear the validated stock of arrears in accordance with our 2018 budget programme.”
On macroeconomic updates, the government managed to reduce the rate of price increases (inflation) from 15.4 per cent in 2016 to 11.8 per cent at the end of 2017 and further to 10.3 per cent as of the end of January this year.
“This puts the projection to have single-digit inflation by the end of the year on course,” he said.
Explaining how that happened, he attributed the success to the government’s fiscal consolidation and tight monetary policy, noting that the projection of 8.9 per cent end-year inflation was feasible.
On interest rate, he said there were signs of it dropping drastically to hover below 20 per cent.
“The government is also shifting focus to reduce the annual budget gap and rely more on domestic revenue mobilisation as part of efforts to actualise the President’s dream of having a ‘Ghana Beyond Aid’,” he said.
Mr Ofori-Atta said the government had worked hard to ensure that debt accumulation had seen a significant decline from 47.7 per cent in 2013 to 13.5 per cent as of November last year, “due to the prudent management of the economy”.
He said the government had also changed the debt mix from short term to medium and term long, adding that “the cost of debt has reduced to create fiscal space”.
He also noted that the market risk, roll-over risk, among other things, were also improving “our ability to meet our debt service obligations”.
Mr Ofori-Atta said the level of success achieved so far was hinged on a number of factors, including shifting the focus of economic management from taxation to production, streamlining exemptions and automating the ports.
Others are enhanced tax audits, improvement in tax compliance and promulgation of the Earmarked Funds Capping and Realignment Act to cap transfers to earmarked funds to 25 per cent of tax revenues to free fiscal space for development and reduce rigidities in budget.
The rest are the implementation of the Single Treasury Account (TSA) which improved cash flow, enforcement of the Public Procurement Act which significantly reduced sole sourcing, resulting in substantial savings, execution of the zero central bank financing through a memorandum of understanding with the Bank of Ghana and the expansion of the role of the Auditor-General to cover the metropolitan, municipal and districts assemblies (MMDAs).
Mr Ofori-Atta gave an assurance that with the performance so far, in spite of the challenges, the government was poised to ensure that the achievements trickled down to the people to feel them even more strongly in due course.