Budget Responsibility Act not ideal for fiscal management–Terkper

The passage of the Budget Responsibility Act (BRA) does not augur well for fiscal management, at a time the country should be harnessing extra oil output and resources to improve public and private investment in the real sector of the economy to create more sustainable jobs, Mr. Seth Terkper, a former Finance Minister, has said. 
 
Speaking in an interview with the B&FT, Mr. Terkper said the Act lacked public consultations and debate.

“Since, compared to the PFMA, the passage of the BRA lacked public consultations and debate. The exceptions made in the latter do not serve fiscal management well, at a time we should be harnessing our extra oil output and resources to improve public and private investment in the real sector to create more sustainable jobs,” he said.

He said the requirement to pass the Public Financial Management Act (PFMA) Regulations (Section 101) to cover more comprehensive set of fiscal rules is a more credible alternative to enhancing the country’s budget, public accounts, audit, and macro-fiscal environment. 

He explained that among others, Section 101 covers rules for the public accounts, recording and controlling expenditure commitments, management of government assets and debt, audit committees, limits on borrowing by local governments, public corporations and SOEs, Treasury Single Accounts, evaluation of investment projects, and remittance of claims by the minister.

“Unless the stance of BRA is to fulfill a political promise or meet some other obligation, it would have been sufficient to amend the PFMA and focus on the Regulations since the entire fiscal responsibility rules in the BRA exist in the PFMA and in relatively good shape.

Further, the exclusion of, and exceptions to, important PFMA provisions appear to give a ‘pass’ to a government which, while in opposition, touted the need for stricter fiscal rules,” he stated.

The new Budget Responsibility Act (BRA), 2018 (Act 982), according to Mr. Terkper is not original since it only reproduces and modifies Sections 12 to 18 (Macroeconomic and Fiscal Policies component) of the Public Financial Management Act (PFMA), 2016 (Act 921). 

He added that some of the BRA changes rather minimize the overall effectiveness or impact of the PFMA and Petroleum Revenue Management Act (PRMA), 2011 (Act 851). 

He explained that the first substantive BRA quantitative criterion focuses on the fiscal deficit and reinforces the sub-optimal stance in the annual budgets that define deficits as “fiscal anchor” for PFM practice in Ghana. 

This, he said is narrow and not helpful to a comprehensive coverage of fiscal management. In substance, it is only similar to Bank of Ghana’s (BoG) equally narrow stance on “inflation targeting” in relation to monetary and financial policy. 

“These MoF and BoG fiscal and monetary positions continue to minimise the wider breadth of macroeconomic policy objectives under the 1992 Constitution. This is why the PFMA has more fiscal indicators on fiscal sustainability.

It is our view that the passage of the more comprehensive draft PFMA Regulations, in abeyance now for two years — despite the undertaking in paragraph 829 of the 2017 Budget — would have better served the nation’s fiscal policy, rules, and management.”

The BRA’s fiscal responsibility rules are designed to correct distorted incentives; ensure fiscal discipline; prevent fiscal slippages; and improve fiscal and debt sustainability. 

The Act, he said, omits a key objective from the Bill presented to Parliament– achieving “a better match of revenues with expenditures, particularly in good times”.

The crisis since 2008, and intensified by emerging market crisis in 2015, that led to a BRIC meltdown, had a negative impact on Ghana’s economy. 

These resulted in low global demand, growth and drastic fall in crude oil prices and the resultant domestic stress from falling commodity prices and misaligned policies (e.g., disruption in gas supply from Nigeria, subsidies and single spine). 

In contrast, he argued that since 2017, Ghana has tripled and significantly increased its crude oil and gas output, respectively, from further investments in three oil fields (not one, with “turret bearing” issues); and benefited from increases in crude oil price. 

“The government inherited fiscal buffers under PRMA and ESLA; and repairs to the damaged West Africa Gas Pipeline (WAGPL) as well as emergency power plants initiative that resolved the power crisis substantially.

Despite these good fortunes, an economic policy that focuses on consumption and relied on “offsets” instead of payment of arrears has led to sluggish non-oil real GDP growth, increased public debt, high levels of arrears, and unrealistic decline in fiscal deficit.  

In particular, contrary to the benefits of strict BRA practices, we have seen some depletion and relatively slow rebuilding of PRMA buffers as well as recession in a previously vibrant services sector.”

Gov’t urged to adopt new systems of solving mental health care challenges

Government and all Ghanaians have been urged to adopt a system of making mental health care and addiction one of their topmost priority in 2019. 

 

This, government was urged to establish more rehabilitation centers and support the existing ones to make them effective. 

Founder and Chief Executive Officer of the Willing Ways Foundation Ghana (WWF), Madam Lydia Abena Manu said this when she held a ceremony targeted at brining happiness to over 500 drug addicts and prostitutes whose lifestyles have ended them homeless at Ahinsan old Post office drugs ghetto.

“Ghanaians must understand that mental illness and addiction are diseases, therefore, must be treated as such and not to always relate them to satanic diseases.

Treating such illness needs time and monitoring of patients which can not be done without these rehabs,” Madam Manu said.

Some ghettos which were visited were Ahinsan old Post office, Kaase ghetto, Bantama ghetto and popular drugs and prostitutes base B.B. They were served with food, soft drinks and pastries as well as clothes.

According to the CNN 2018 heroes award nominee and CEO of WWF, treatment of the mentally ill and addicts need a united front and joint hands hence the need for everyone to get on board.

Sharing his past experience, Evangelist Lord Kenya founder and head Pastor of the Face of Grace church at Adiebeba, who were partners of the charity ghetto party called on Ghanaians not to neglect persons who have landed in the ghettos rather get close to them, know their problems and help them.

The Willing Ways Foundation is a Non-Governmental Organization (NGO) well known for the treatment of mental health issues, drug addicts and alcoholism. It is based at Ejisu Kwamo in the Ashanti region. The center has two rehabilitation centers for both men and women.

Gold sector receives major boost

…  as maiden certified gold bar unveilled

The first certification and unveilling of the maiden hallmarked gold bar produced and processed in the country has been held to promote trading of the commodity on the international bullion market.

It is also to add value to the country’s raw gold resources, as well as help address the low incomes derived from the export of raw gold while properly accounting for gold exported from the country.

Expressing excitement at the event, the Minister for Trade and Industry, Mr. Alan Keremanten said: “The unveilling is significant in the history of the country, and also marks the beginning of a new era in our gold sector. It clearly exhibits the country’s commitment to its industralisation programme, which is on course. It will help to change the paradigm of development in this country and create jobs for our teeming youth”.

He said the task of refining gold to the purest quality by Gold Coast Refinery Limited is a highly skilled process which will help to transfer Gold Coast Refinery expertise in this field to Ghanaians, and that is how Ghana wishes to partner with investors to promote business in this country.

He added that the gold sector is very important to the economy because of its contribution to the country’s Gross Domestic Products over the years. Indeed, trading hall-marked gold on the international bullion market will be a remarkable achievement in the more than 300-year old gold trade in the country.

He emphasised that the certification of gold will promote the country’s commodity onto international bullion market, and dealers will then accept it as credible and valuable to be negotiated for and purchased.

Professor Alex Dodoo, Director-General, Ghana Standards Authority (GSA), expressed delight at the Authority’s contribution to the national economy by certifying purified gold in the country.

He explained that certification of any product, including precious metals like gold, is an established conformity assessment activity that provides confidence to customers, regulators, industry and other interested parties - to the effect that the product conforms with specified requirements, including products performance, safety, interoperability and sustainability.

Product certification facilitates trade, market access, fair competition and consumer acceptance of products on national and international levels.

“Globally, the certification and hall-marking of gold is undertaken by national standards bodies, the leading agencies in developing  countries,” he said.

He indicated that the GSA has developed and adopted over 10 national and international standards for gold, precious minerals and jewellery, adding that the Authority currently has a world-class gold assay laboratory equipped with state-of-the-art equipment comprising X-ray Fluorescence Machine and all the requirements for fire assay analysis.

These methods are the only acceptable ones world-wide in the assay of gold, he said.

He revealed that the GSA intends to work with stakeholders to ensure that gold purified in Ghana is traceable and of known province.

“These are exciting times in Ghana, and GSA is pleased to be contributing its share toward a modernised and transformed Ghanaian economy for a Ghana Beyond Aid.”

Chairman, Gold Coast Refinery Limited, Dr. Said Deraz, expressed profound gratitude to government for its support - adding that the refinery is a modern facility with state-of-the-art equipment and machinery to produce the highest purity of refined gold.

It has the capacity to conduct internationally acceptable assaying and produce Hallmarked Gold.

“With our plant size at full capacity operation, we will be able to absorb the entire gold production in Ghana and the sub-region of West Africa. This gives our operations a regional scope and the potential to stage Ghana as a gold-hub in the sub-region,” he said.

Mining industry plays key role in national growth— UMaT Prof.

Professor of Engineering at the University of Mines and Technology (UMaT) - Tarkwa, William Buah has acknowledgeD the country’s mineral industry as the foremost source of revenue generation, with prestigious status on contributing significantly to national growth.

He said statistics from the Ghana Revenue Authority (GRA) show that the minerals and mining sector is the major source of direct domestic revenue mobilised by the Authority in 2017, with overall total mining fiscal receipt mobilised by GRA increasing by 31 percent year on year - from GH¢1.65billion in 2016 to GH¢2.16billion in 2017.

Delivering the second public lecture in Accra to mark the 90th anniversary celebration of the Ghana Chamber of Mines, under the theme ‘A Responsible and Sustainable Mining Industry, a Partner for National Development’, Prof. Buah contended that the mining industry’s contribution to national development can be directly linked to national revenue generation, corporate social investment programmes of the industry, and sustainable alternative livelihood programmes.

He added that the mining industry is committed to responsible and sustainable mining practices, and therefore is positioned to continuously support national development.

“The industry’s fiscal contributions to Direct Domestic Tax Revenue from 2011 to 2017 have been consistent.”

He emphasised that corporate income tax receipts increased from GH¢696.9million in 2016 to GH¢969.6million in 2017, while mineral royalty revenue grew from GH¢550.7million to GH¢702.4million over the same period. These represent an increment of 39 percent and 28 percent respectively.

Employee income tax (pay-as-you-earn), he indicated, also increased by 22 percent to GHȻ487.9million in 2017 as compared to GHȻ399.9million in 2016.

Prof Buah stated that gold exports increased from 3.84 million ounces in 2016 to 4.61 million ounces in 2017, which he attributed to the upturn in output of large-scale producers, increase in volume of gold exported by Licenced Gold Exporting Companies; and exports of manganese increased from 2 million tonnes in 2016 to 3 million tonnes in 2017.

Meanwhile, bauxite also expanded from 1.14 million tonnes to 1.47 million tonnes over the same period, he stated.

“It has also emerged that the Minerals and Mining sector is the leading source of foreign exchange for the country from the export of commodities. The share of mineral receipts in total merchandise export for 2017 was 43 percent, while proceeds from the country’s major export commodities - cocoa and oil - accounted for 19 percent and approximately 23 percent respectively of merchandise export revenue in 2017.

“In essence, receipts from the export of gold were slightly higher than the sum of receipts from cocoa and oil put together in 2017.”

The main objectives of the industry’s Corporate Social Investment (CSI) programmes, Prof Buah said, are to support the training and development of local people in engineering, construction, electrical and other technical fields; and to provide support for research and charitable projects that are beneficial to the host communities and entire nation.

Chief Executive Officer of the Ghana Chamber of Mines, Sulemanu Koney, underscored the need to ring-fence revenues accruing to the state from the exploitation of minerals and mining resources.

This, he said, has come to the fore following the people’s inability to properly track contributions of the sector to the country’s national economy.

He indicated that though the mining sector has significantly contributed to the country’s development over the years, its contribution cannot be properly traced because the revenues mostly end up in the consolidated fund.

He is of the view that ring-fencing mineral revenues is the best way to assess the mining sector’s contribution to the economy, whereby the benefits which have been accruing to the state and mining communities can be properly evaluated.

Making a strong case for measures to be put in place to enhance transparency and accountability of the country’s natural resources-administration/exploitation, a Member of Parliament for the Tarkwa-Nsuaem constituency, George Mireku Duker, said that such a move will enable the state to prove the value of mining to the people.

Year	Expenditure on Corporate Social Investments (US$)
2010	17,590,469
2011	43,732,833
2012	26,676,354
2013	12,124,053
2014	20,769,049
2015	17,094,776
2016	12,203,889
2017	19,888,164