IMANI Centre for Policy and Education, a leading policy think-tank, in its latest Fiscal Recklessness Index report, underscored how both the ruling New Patriotic Party (NPP) and the opposition National Democratic Congress (NDC) have made bold promises in their manifestos, which could exacerbate fiscal challenges unless systemic changes are implemented.
As Ghana’s political parties released their manifestos ahead of the elections, IMANI noted that their respective promises have the potential to shape public policy, whether effective or not.
“IMANI’s manifesto analysis shows that at least 56% of promises in party manifestos end up in public policy. So whether they are good or not, they will end up in the coordinated program and it will be costed in budget.
“And so we need to find a way to stem the bleeding and ensure fiscal discipline. So what we did as part of this year’s fiscal recklessness index report is that we wanted to look at what are the parties promising in terms of addressing fiscal indiscipline”.
IMANI’s Fiscal Recklessness Index Report, 2024
One of the key concerns raised by IMANI is the urgent need for fiscal discipline, particularly given that both the NPP and NDC are making promises that could balloon public expenditure.
IMANI’s Fiscal Recklessness Index is a tool designed to track and highlight the financial mismanagement that often plagues Ghana’s MDAs, offering a detailed examination of the gaps in procurement systems, expenditure tracking, and fiscal responsibility across various government institutions.
NPP’s Fiscal Promises: Risks and Challenges
Starting with the ruling NPP, the IMANI Fiscal Recklessness Index report indicated that the party has proposed several measures to address fiscal indiscipline, with a focus on leveraging private sector resources.
The ruling party also plans to cut 3% of public expenditure, reallocating GHS 30 billion to public-private partnerships (PPPs) to support government spending on infrastructure and services.
However, IMANI’s analysis pointed to significant weaknesses in Ghana’s public procurement system that could hinder the success of such initiatives.
“In 2022, IMANI analyzed over 1,000 public procurement transactions. What we found is that for transactions that were of high financial value, the government used single sourcing while for transactions that were of low financial value, they used competitive tender.
“Also what we found is that the entity tender committee’s architecture doesn’t allow them to be accountable because most of the people on the tender committee are largely from the same institution or appointed by the President”.
MANI’s Fiscal Recklessness Index Report, 2024
This approach IMANI noted raises concerns about accountability and transparency, arguing that the lack of proper oversight, with key members of procurement committees appointed by the President, creates a situation where self-policing becomes ineffective.
IMANI further warned that without significant reforms to procurement and expenditure tracking systems, the reallocation of public funds to the private sector could lead to inflated costs and limited value for money.
“If we don’t do that, the private sector will give us a cost that may not be reflective of the work that they have done and we have seen some before where a member of the PPA board who was also leading the value for money committee within the PPA was actually found selling contracts and the president had to fire the person and so this is the level of weaknesses within our procurement system;
“So if you are going to implement such a promise we must be mindful of our public procurement system and we have challenges with even expenditure tracking and value for money. So that is a challenge we have with this promise that the NPP wants to implement”.
IMANI’s Fiscal Recklessness Index Report, 2024
The NPP’s commitment to increasing the use of the Government Integrated Financial Management Information System (GIFMIS) also raised concerns.
While the system is designed to improve financial oversight, IMANI noted that the Auditor General’s report has revealed multiple instances of fraudulent withdrawals, unsupported payments, and embezzlement within institutions using GIFMIS.
IMANI stressed the importance of building institutional capacity to ensure that these systems work effectively, reducing fiscal leakage.
Additionally, IMANI pointed out that the NPP’s pledge to legislate the Fiscal Advisory Council, which would serve as an independent body to oversee government spending, reflects a broader recognition across political parties of the need for more robust fiscal governance.
“So we found out that the NPP said they are going to legislate the fiscal advisory council because the one that they set up was not legislated and it became more like an advisory committee to the president. Another thing is that they also want to ensure regular transferring of funds to the DACF.
“Some of the irregularities that you see are also because some of these MDAs overly estimate their revenue and so when they are unable to make that much revenue, they can’t finance their budget. So they may have to now retain some of the amounts of money they collect on behalf of the government to undertake some of their budgetary activities or sometimes because allocations come late, they tend to use some of the government revenues to do some of those activities.”
IMANI’s Fiscal Recklessness Index Report, 2024
NDC’s Approach: Tax Reforms and Revenue Mobilization
The opposition NDC, according to IMANI has focused its fiscal promises on tax reforms, aiming to reduce the tax burden on citizens while increasing compliance.
The party argues that lowering taxes will boost tax compliance and revenue generation. However, IMANI’s analysis of previous tax cuts in 2017 and 2018 suggests that such reforms may not yield the desired outcomes.
In those years, despite the abolition of multiple taxes, the government faced significant revenue shortfalls—GHS 1.6 billion in 2017 and GHS 1.8 billion in 2018.
IMANI highlighted that weak enforcement of tax compliance is a more significant factor in Ghana’s revenue challenges.
It noted that the Auditor General’s report points to widespread non-compliance with tax obligations, and cutting taxes without addressing these enforcement gaps may not resolve the underlying issues.
Like the NPP, IMANI indicated that the NDC has also committed to strengthening the Fiscal Responsibility Act and ensuring adherence to the 5% fiscal deficit ceiling.
IMANI acknowledged that both parties have recognized the need for an independent fiscal council to oversee government spending, but warned that such a council must have the authority to enforce compliance, otherwise it risks becoming just another advisory body without real impact.
Movement for Change’s Radical Proposal
The newly-formed Movement for Change (MFC), led by a former member of the NPP, according to IMANI has also made fiscal responsibility a central pillar of its platform.
The MFC’s proposal to eliminate single-source procurement, while bold, presents risks. According to IMANI in emergency situations or when a specialized vendor is required, the inability to engage in single-source procurement could delay critical projects.
IMANI thus warned that any promise to reform public procurement must be balanced with practical considerations to avoid creating bottlenecks that could hinder government operations.
Recommendations: Building an Independent Fiscal Council
IMANI’s Fiscal Recklessness Index not only highlighted the current fiscal challenges but also offered recommendations for the next government.
Central to these recommendations is the establishment of an independent fiscal council with the power to oversee government expenditure, particularly high-value projects.
IMANI suggested that the council be given the authority to review and approve major expenditure items, ensuring that they align with the country’s fiscal targets and deliver value for money.
“The independent fiscal council must have the power to bite. We should give that fiscal council the power to oversee the big ticket expenditure items of the government so that they are able to accurately report and say that this thing that you want to do, will jeopardize our fiscal planning or our fiscal targets and it wouldn’t deliver value for money”.
IMANI’s Fiscal Recklessness Index Report, 2024
Again, IMANI urged that the fiscal council should be empowered to enforce sanctions against MDAs that fail to comply with fiscal directives.
It noted that currently, Ghana’s public financial management (PFM) system has multiple layers of oversight, including the Public Accounts Committee and the Auditor General, yet few sanctions are enforced.
IMANI argued that an independent fiscal council with real enforcement powers is the key to addressing Ghana’s long-standing fiscal indiscipline.
In addition to strengthening oversight, IMANI recommended accelerating the government’s digitization initiatives, particularly the e-VAT and e-filing systems, to enhance tax compliance.
It stressed that these systems have already been developed, and prioritizing their implementation could help close revenue gaps.
IMANI also called for a bipartisan approach to fiscal governance, pointing to countries like Jamaica and Kenya, where cross-party collaboration has helped address fiscal mismanagement.
In Ghana’s context, this could mean appointing members to the fiscal council through a transparent process overseen by the Public Service Commission, with regular public reporting on the council’s findings and decisions.
The findings of IMANI’s Fiscal Recklessness Index serve as a reminder of the country’s ongoing fiscal challenges.
IMANI’s recommendations offer a roadmap for the next government to not only stem the bleeding but also build a foundation of fiscal discipline that can sustain future growth
With political parties making ambitious promises, the need for an independent and effective fiscal council is more urgent than ever.
Without it, Ghana risks falling back into the cycle of fiscal mismanagement that has plagued its economy for years.
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