Dr. Kwadwo Opoku has lauded the government for taking the initiative to cut down on some of its expenditure items outlined in the 2022 Budget Statement.

The Research Fellow at the Centre for Social Policy Studies (CSPS) at the University of Ghana said this move by the government is a demonstration by the managers of the economy to the people of Ghana that Government is aware of the challenges facing the country and is ready to make some sacrifices to fix them.

Dr. Opoku told the Vaultz news in an interview that most of the expenditure items that consume a chunk of government’s resources are discretionary. However, even though wages and salaries – one of the major components of government expenditure – in principle is discretionary because government chooses to employ or not, “in reality it is not discretionary because once you fix the contract, it is difficult, especially for the public sector, to start to lay-off people”.

So, to Dr. Opoku, with such expenditures, it is difficult to reduce them. Nevertheless, he argued that even though the impact of the expenditure-cut measures announced by government on the country’s public debt may be minimal, the move is worth the commendation.

“So, all of them become actually compulsory or mandate spending or expenditure. You don’t have that discretionary to reduce it. So, for the entire measures to reduce spending, it’s good for a leader to tell your people that we are sacrificing and ready to go the extra mile. It is not going to actually change or reduce the expenditure much, that will affect our fiscal deficit, but of course, any small money matters. It’s important to reduce but in terms of the quantum, what we expect in terms of the debt and the deficit that we have as a country, this cannot be much. At least, it’s good as a symbol for policy purpose to show us that our leaders are ready to sacrifice for us”.
Dr. Kwadwo Opoku

Dr. Opoku said a government official earlier estimated that the announced 50% cut in fuel coupon allocations for all political appointees and heads of government institutions, including SOEs, effective 1st April 2022, will save the country about GH¢50 million which he said, is huge, looking at the current state of the economy.

Dr. Kwadwo Opoku however, edged the government to demonstrate some level of policy credibility by implementing the measures as announced, so that it will gain the confidence of the citizens and also send a signal to the international community that government is committed to its fiscal consolidation plans.

Government outlines measures to reduce expenditure

On March 24, 2022, the Minister of Finance, Hon. Ken Ofori-Atta, outlined a number of measures to mitigate the economic difficulties facing the country which he attributed to recent global and domestic conditions. These difficulties, Mr. Ofori-Atta said, have manifested in rising fuel prices, rising inflation and cost of living, exchange rate depreciation, rising interest rate, and revenue mobilization challenges.

Apart from the 50% cut in fuel coupon allocations for all political appointees and heads of government institutions, government has also imposed a complete moratorium on the purchase of imported vehicles for the rest of the year; imposed a moratorium on establishment of new public sector institutions by End-April, 2022; and reduced expenditure on all meetings and conferences by 50% with immediate effect.

Hon. Ofori-Atta disclosed that Government has begun implementing the 20% expenditure cut as part of fiscal stabilization and debt sustainability measures announced in January 2022. During his address to the nation, he announced an additional cut in discretionary expenditures by 10% for the 2022 fiscal year.

All these expenditure measures in addition to other revenue enhancement measures announced, Hon. Ofori-Atta said, forms part of measures taken by the government to ensure the achievement of the fiscal deficit target of 7.4% of GDP for 2022.