President John Mahama has promised that government is determined to ensure that Ghana does not go for another IMF bailout due to election year expenditure overruns.
According to him, the fiscal imbalances, experienced after the electoral cycle, mostly arise as a result of excessive demands on government by labour unions.
Justifying government’s decision not to heed to unbudgeted expenditure arising out of the current negotiations with labour over its conditions of service, the
President stated categorically that he is ready to pay the political price, by sticking to his guns, and making sure Ghanaians do not go through another round of harsh economic measures, that result from a bloated wage bill.
He made the comments at the 80th anniversary celebration of the Ghana Registered Midwives Association yesterday.
“Election year…pressures from various groups led to award of interim premiums and other compensatory allowances whose net effect ballooned our wage bill from a little of under GH¢3 billion to over GHC8 billion.
This consumed nearly 73% of total tax revenue in wages and compensations alone. The effects on the economy of that increase are still being felt up to this day. And we are managing gradually to turn the situation around,” he noted.
President Mahama while commenting on demands on conditions of service by the Ghana Medical Association said: “Any agreements that are reached in respect of allowances of conditions of services would have to be appropriately captured in the budget.”
“And I want to say for emphasis; I will not authorize any expenditure on wages and compensation not provided for in the budget. Fiscal discipline requires that not a single pesewa is spent on remuneration outside what has been budgeted for. This goes to both article 71 office holders and those on the single spine. It goes for the president as well as the lowest public sector employee. I’m determined to hold the line no matter the political cost.”
“Our people have sacrificed enough. We cannot afford another round of belt tightening after the electoral cycle is over. As I said, the current IMF extended credit facility must be the last time we fall back on the IMF for any respite,” he added.
Meanwhile, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde has admitted that that the real test for Ghana’s commitment to the current bailout programme would be 2016 which is the election year.
According to her, just like other country across the world, election years are always difficult for countries under any programme because they struggle to meet their targets, “which is why for the Ghana’s situation a lot of the fiscal adjustment was frontloaded in 2015.”