SUSTAINING FISCAL DISCIPLINE IN 2012

Page 7: Daily Graphic, April 13, 2012. Ghana has had challenges with its economy after elections since the country adopted democratic governance in I993. The elections preceeding this process in I992 disrupted the stable economic environment when the government had to heed to workers’ demands for more pay. Prior to the elections of December 1992, the government had strictly adhered to the dictates of prudent economic management under the guidance of the Bretton Woods institutions under the erstwhile Provisional National Defence Council (PNDC) administration. At the time, there were no elections to push the government to pander to the whims of the electorate in order to retain power. However, maintaining consistent fiscal discipline has become a major headache for many developing countries, especially those on the continent of Africa who have chosen the path of democracy. That has become so because of the tendency of incumbent governments to spend more to provide facilities, put money in the pockets of the people and award contracts for unbudgeted projects. Donor partners, especially the Bretton Woods institutions, have oftentimes commended our governments for the prudent management of the economy and fiscal discipline before elections but turn around after elections to criticise the governments for recklessness in managing the economy. It is in this vein that we find the assurance by the Finance and Economic Planning Minister, Dr Kwabena Duffuor, that government would maintain fiscal discipline by keeping its expenditure within budget targets heartwarming. The minister did not just give the assurance but also backed his words with a circular to all ministries, departments and agencies (MDAs) outlining the dos and don’ts concerning the management of the economy in this election year. The Daily Graphic is aware that many of the MDAs will not be happy with the directives and may want to cut corners at all cost in order to meet the expectations of their targets. We need no reminder that Ghana has come a long way with the management of its economy and we believe the ability of the government to keep its word will help stabilise the economy. The Daily Graphic believes that the country has come a long way from the situation of double-digit inflation and other macro-economic challenges to the current level of single-digit inflation and a stabilised economic environment and thinks that these are achievements that we cannot afford to throw away. The government has been criticised for claiming to have achieved a single-digit inflation and maintaining a stable macro-economic environment. But we believe maintaining the current fiscal discipline can only help us move on to the next level of economic growth and improvement in the living conditions of our people after the elections. What is happening to the cedi now indicates that the economy is fragile and needs more shock absorbers to withstand the competing claims in the system. Although we have done well so far, there is room for improvement and if we work hard to put the parameters right, we shall promote growth and affordable interest rates. Our expectation is a continuous reduction in inflation and interest rates, as well as an increase in business activities and the creation of more jobs, so that our development partners will continue to support us to attain sustainable development.