He said the move will put to rest concerns over possible slippages in the fiscal space as the country prepares to exit its three-year Extended Credit Facility (ECF) programme with the International Monetary Fund by April next year.
“We are going to implement fiscal measures to tackle some of the long-term structural issues. These include a new law, a Fiscal Responsibility law, to cap deficit at 5 percent of GDP for the fiscal year 2019 going forward.
The fiscal responsibility law – along with other measures, he added – will help government to control the debt-to-GDP ratio, which is the difference between government’s expenditures and its revenues – excluding the money it borrows.
“We will also establish, as a third leg, an independent Fiscal Council to oversee the implementation of fiscal policies,” he noted.
Ghana’s budget deficit has been increasing steadily over the last few years; reaching 9.3% in 2016 and reducing to 6 percent of GDP in 2017, according to BoG provisional figures for last year.
Dr. Bawumia, who was speaking during a US-Ghana business forum in Accra, reiterated that the Akufo-Addo-led administration, in its quest to create the necessary fiscal space for growth and improve the overall business environment, will ensure that there is irreversibility in gains made so far under the IMF deal.
Some of the policies also being put in place, he indicated, include the operationalisation of a Treasury single account to consolidate all government accounts at the Bank of Ghana, and to de-emphasise the use of single or sole-sourced contracts and adopt competitive tender processes to eliminate wastage and prevent corruption.
Deficit to be capped at 5% of GDP from 2019 - Vice President
Government’s budget deficit will be capped at 5 percent of GDP from 2019 as part of measures aimed at preventing fiscal slippages, Vice President Dr. Mahamudu Bawumia has revealed.