The government has uncovered startling revelations from an ongoing audit of the country’s fiscal account in a prelude to the preparation of the 2017 Budget and Economic Policy.
They include numerous unbudgeted projects and commitments amounting to about GH¢7 billion.
The Minister of Finance, Mr Ken Ofori-Atta, said this came out when the Ministry of Finance and the Economic Management Team (EMT) met with the various metropolitan, municipal and districts assemblies (MMDAs) as part of a forensic audit of the assemblies.
“We are in the middle of preparing the 2017 budget and the numbers we have seen are very difficult for us to swallow. But that is what we have inherited and so we are going to work to resolve them,” Mr Ofori-Atta said at an end-of-year get-together organised by the Ghana Revenue Authority (GRA) in Accra.
He said the government would have to get a better sense of the numbers before the budget would be finally drafted, adding that a team would be assembled to complete a forensic audit to confirm the validity of those expenses and ensure that value for money was obtained at all times.
He said the government would work assiduously to restore credibility, which would provide the basis for the preparation of its 2017 Budget and Economic Policy.
Rationale for audit
The Finance Minister said the audit was to restore fiscal policy credibility and transparency, as well as policy clarity, in the formulation of the 2017 budget.
Last week, a statement released by the Ministry of Finance cited a number of ministries, departments and agencies (MDAs) that had submitted unbudgeted projects and commitments of about GH¢7 billion ahead of the preparation of the 2017 budget during a meeting with the Finance Ministry and the EMT.
As part of the process, Mr Ofori-Atta is holding bilateral discussions with the heads of the MDAs to review their policies and ensure consistency with the government’s medium-term policy strategy.
This is in line with the ministry’s mandate of facilitating a cross-sectoral meeting of MDAs to discuss issues related to the budget preparation and to scrutinise activities to avoid duplication, overlaps of activities and programmes.
Tax cut
This year’s preparation is expected to mark a clear departure from the previous procedure because the new government wants to implement some tax cuts.
Among the numerous economic interventions promised by the governing New Patriotic Party (NPP) ahead of the elections was a reduction in taxes to bring down the high cost of doing business in the country.
Taxes such as the 17.5 per cent Value Added Tax (VAT) on financial services and domestic air tickets will be scrapped, while others such as the corporate income tax will be reduced from 25 to 20 per cent.
Also, the special import levy, the 17.5 per cent VAT on imported medicines and the five per cent VAT on real estate are expected to be abolished under the new government.
Meanwhile, the 17.5 per cent VAT for small enterprises is expected to be reduced to three per cent flat rate.
First budget
The budget was expected to be presented in November last year, in line with Article 179 of the Constitution, but it was rescheduled because of the general election held on December 7, 2016.
However, Parliament approved GH¢10.99 billion to finance critical government expenditure in the first quarter of 2017. The provision was to cater for estimates of the first quarter expenditure on essential and other statutory payments.
The expenditure categories covered compensation of employees, goods and services, capital expenditure, interest payment, grants to other government units, non-road arrears, tax refunds and amortisation.
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