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Seth Terkper, former Finance Minister, has called on government not to engage in another ‘fiscal offset’ in the 2023 budget, similar to what occurred in the 2017 budget, citing concerns over transparency and accountability in government finances.
He is urging the government to disclose its plan for dealing with a large ¢77 billion pipeline of arrears and contracts in the 2021 Budget Performance Report, adding that a similar plan was used to deal with the “single spine” wage arrears in 2020.
Terkper argues that transparency and accountability in government finances are crucial for securing an IMF programme and sustainable economic growth and development, noting that budget overruns are at the core of most debt challenges.
He also raised concerns over the treatment of banking and energy sector bailout costs as memoranda items, rather than adding them to the country’s deficit and public debt stock, which creates a false impression of fiscal consolidation.
The former Finance Minister further pointed out that this practice resulted in the rapid rating downgrades of the country’s sovereign bonds and eventual debt default.
Terkper recalled that in 2017, the incoming Akufo-Addo administration accused the John Mahama administration of overlooking arrears of about ¢7 billion, with only about ¢2bn being carried forward to the 2017 fiscal year after an apparent offset of ¢5billon against total expenditures.
In a similar move, Terkper noted that the 2023 budget showed another apparent offset of ¢22 billion that also appears to reduce the deficit from about ¢60 billion to approximately ¢38 billion.
He cautioned that this practice by government creates a false impression of fiscal prudence, which is unsustainable in the long term and can lead to financial instability and economic turmoil.
Terkper’s concerns reflect a broader need for transparency and accountability in government finances, and he urged the government to address these concerns to build trust with its citizens, investors, and international partners, warning that failure to do so could lead to further economic instability and harm the country’s long-term economic prospects.