The Head of Department at the University of Ghana Business School (UGBS), Professor Godfred Bokpin, has proposed the development of a strategic budget implementation policy that will ensure the effective execution of the government’s economic policies in the country.

The strategy, he said should reflect specific ministries, departments and agencies (MDAs) understanding of the budget and their role in the fulfilment of government policies.

Prof Bokpin who was speaking at the 2017 national budget seminar organised by the Ghana National Chamber of Commerce (GNCC) in Accra, noted that all stakeholders must come on board including the central government to ensure the effective execution of the budget.

“The beauty of a budget rather lies within its implementation rather than its presentation. That said, it represents good intentions at the inception and it should not be mistaken for accomplishment,” he indicated.

“If you look at the architecture of governance in the country the implementation of the budget does not lie in the ampit of the Finance Ministry after it has been presented. The ministry does not have the power to ensure that everything is done according to plan. So what is important for us is that we should develop an implementation strategy that will reflect the central government’s understanding of the budget, the specific ministries understanding of the budget, and how they intend to execute as scheduled,” he said.

The lecturer observed that the variance at which the country misses its target was sometimes higher than that of the target itself and this according to him does not communicate integrity to the outside world.

Fiscal indiscipline 

Lauding the government’s fiscal indiscipline initiative, Prof Bokpin underscored the need for the country to introduce a framework through the establishment of the proposed Fiscal Responsibility Council to anchor fiscal discipline and to avoid huge budget deficit.

To be able to hold macroeconomic stability in the country, he said the policy when implemented would ensure that governments declare and commit to the fiscal policy.

He said while the government needed to restore fiscal discipline as a matter of urgency, which alone would not be enough, adding that restoring the confidence of investors and financial markets required that the country put together a policy framework that would provide assurance to the effect that fiscal excesses would not happen in the future.

Impact of tax cut

For his part, the Chief Executive Officer (CEO) of Dalex Finance, Mr Kenneth Thompson, said taxes that were abolished in the 2017 budget statement were woefully inadequate to positively impact on private business operations.

He explained that the removal of duties imposed on kayayei, religious institutions, real estate, as well as the reduction in the public lighting levy from five per cent to two percent were largely irrelevant to positively impact on the businesses as majority of the people were not compliant in paying.

“As a business community, we were looking forward to the government to cut taxes but what we found was that some of the tax incentives introduced have very marginal effects on the development of the private sector.’

He opined that until the government buttresses measures to curb the depreciation of the local currency against the major foreign currencies, the private sector would always suffer exchange losses.

“Unless we develop measures to curb the depreciation of the cedi against the major foreign currencies, the taxes will not make any direct impact on the private sector. I am not exactly sure why we struggle with cedi depreciation. The cedi will always depreciate; it is the rate at which it depreciates that matters. It is a supply and demand situation,” he said.

Economic incentives

Among other economic incentives announced in the budget statement and economic policy of the government for the 2017 financial year was the reduction in taxes to ease the high cost of doing business in the country.

Taxes such as the 17.5 per cent Value Added Tax (VAT) on financial services, domestic air tickets and imported medicines have been scrapped, while others such as the one per cent special import levy has been removed.

Also, the excise duty on petroleum, duty on imported spare parts, levies imposed on kayayei, levies imposed on religious institutions and the five per cent VAT on real estate have been abolished under the new government.

Meanwhile, the 17.5 per cent special petroleum tax rate has been reduced to 15 per cent, while the five per cent national electrification scheme levy has also been reduced to three per cent, and the five per cent public lighting levy has been reduced to two per cent.