Ghana�s development partners have cautioned government to avoid temptations of deficit-led growth in the coming year, saying the costs of stabilization in the last three years describe the destructive nature of these short-term and myopic programmes.
�Indeed, we see the development of a fiscal responsibility framework as the next crucial next step in Ghana�s march towards becoming a mature democracy with high growth�, the development partners (DPs) alluded.
Ishac Diwan, World Bank Country Director, at the 2011 Multi Donor Budget Support (MDBS) Annual Review recently, said the partners welcomed the progress achieved on the macroeconomic front, with the stabilization of the fiscal deficit and a reduction in arrears in early 2011.
However, it urged the government to remain vigilant in the coming year.
�There are high risks of fiscal slippages in the period ahead, relating to fuel price volatility which now affect both revenue and expenditure, the upcoming elections which will increase the political pressure for spending, the expected termination of the International Monetary Fund (IMF) programme which has played an important coordination role in the past three years, and more generally to the ambitions for fast growth of the ordinary Ghanaian, which is reflected in the ambitious nature of the Ghana Shared Growth and Development Agenda (GSGDA).�
Though the partners supported the installation of the new Ghana Integrated Financial Management and Information System (GIFMIS), they called for the strengthening of the external auditor.
In addition, they said on-going efforts to increase state revenues from their current levels of 13-15 percent of Gross Domestic Product ought to be strengthened.
The discussions revealed the importance of strengthening the public sector and modernizing the state as a pre-requisite to a more vigorous management of the challenges of the middle-income country that Ghana has become.
The World Bank Country boss therefore emphasized the need for Ghana to structure and accelerate its dialogue in order to reach common views on strategic directions and the way forward.
Meanwhile, MDBS financing will start declining in 2012.
This, according to the DPs, is partly the result of a return to normalcy after the financial crisis came to an end though it was also a reflection of Ghana�s new Middle Income Country status, as well as budget difficulties in DPs countries.
�We expect that this will be at least partially offset by a parallel rise in sector budget support. It would be important to develop other broad instruments that would appeal to DPs, such as the Savannah Accelerated Development Authority (SADA), which focuses on the poor part of the country.�
Though Ghana continues to make rapid progress in reaching the Millennium Development Goals (MDGs) and fighting poverty, the DPs identified new development challenges, which were more complicated.
In this regard, they called for the strengthening of monitoring and evaluation to learn from experience and the eventual reinforcement of the contribution of public policies and expenditures to development outcomes set forth in the GSGDA.
The DPs however expressed satisfaction with the progress made by the government in 2010 over 2009 in meeting Progress Assessment Framework targets and triggers.
The MDBS review, they added, has been one of the most constructive to date with deep dialogue and discussions of the main policy issues, good participation by government agencies, and active engagement of Civil Society Organizations (CSOs). Ownership by Ministries, Department and Agencies (MDAs) has also improved since they have started signing the PAF.
<<Print>>