Ghana: Spending Cuts Would Show That Government Shares The Pain – Analysis
By Enoch Randy Aikins*
Ghana signed a staff-level agreement with the International Monetary Fund (IMF) in December 2022 in an attempt to control rampant debt and restore financial stability. Now the government must tighten its own purse strings in solidarity with citizens as it embarks on domestic debt restructuring and painful haircuts to corporate and individual bondholders, reducing the value of their investments.
Several groups – including the Catholic Bishops’ Conference, Ghana Pentecostal and Charismatic Council, and prominent Ghanaians – have called on the state to cut spending to show its commitment to addressing the economic crisis.
Government expenditure has ballooned over the years. For 2023, proposed government spending is GH¢205 431 million (25.6% of GDP), 53.5% more than the previous year. Total revenue including grants is projected at GH¢143 956 million (18% of GDP), leading to a budget deficit of GH¢61 475 million, equivalent to 7.6% of GDP. Although this deficit is relatively low compared to the 14.7% in 2020 and 11.4% in 2021, it’s still high considering the poor state of the country’s economy.
Persistent calls from the public have not seen expenditure reduced to acceptable levels. Modest attempts have been made, such as 30% cuts to government salaries, reducing coupon vouchers for government officials by 50%, and freezing new vehicle imports. But these are seen as inadequate considering that allocations to the offices of the president and vice-president, and other government agencies, shot up by almost 938% in just five years. In 2022, the total allocation to the office was about GH¢3.1 billion.
Spending on the presidency, vice-presidency and other government agencies soared by 938% in five years
Government can do a lot to regain citizens’ trust and confidence, starting with deliberate austerity measures and expenditure rationalisation strategies.
First, the number of ministers, including deputies, could be slashed from the current 86 to a maximum of 50. To achieve this, ministries with overlapping mandates must be combined or scrapped. The Roads and Highways, Transport and Railway Development ministries could be merged. National Security could be joined with Defence. Lands and Natural Resources could combine with Environment, Science, Technology and Innovation.
Similarly, the Information Ministry could fall under Communication and Digitisation, and Fisheries and Aquaculture could join Food and Agriculture. Sanitation could be combined with Local Government, Decentralisation and Rural Development, while Religious Affairs and Chieftaincy could merge with Tourism, Arts and Culture.
The number of government appointees could also be reduced. Some ministries have four ministers each, including deputies. The national purse is drained not just by ministerial salaries but accompanying costs for personal assistants, drivers, security and domestic help. In these times of economic stress, all these ministries could be effectively run by a single minister and deputy each, with chief directors and staff.
The number of ministers and deputies could be slashed from the current 86 to a maximum of 50
Aside from ministers, the number of presidential staff can be cut. For a small country like Ghana to have about 995 staffers in the presidency including 337 political appointments – apparently the largest in West Africa – is unconscionable. Many of these are redundant in their duties. For instance, over 20 people are paid to run the Presidency’s communication, separate from Information Ministry staff and those handling social media. Presidential staff salaries grew by 508.4% from 2020 to 2021.
Also, the secretariats under the Presidency for implementing flagship programmes could be placed under their sector ministries. Examples include the Agenda 111 Secretariat, Free SHS (Senior High School) Secretariat, One District One Factory Secretariat, Ghana Enterprises Agency, and National Entrepreneurship and Innovation Programme.
The cost of running the government can also come down. The state should suspend or reduce sitting allowances, bonuses and per diems, suspend foreign travel and fuel coupons, and ban importing new vehicles for government staff. Furthermore, government appointees could use a bus for national tours instead of long convoys of cars. This would save on fuel, driver and operational costs.
When a nation is in crisis, its leaders should surely sacrifice the most. It was commendable when Vice-President Dr Mahamudu Bawumia joined 40 Members of Parliament (MPs) in a commercial bus to attend a funeral this month.
Expenditure relating to state-owned enterprises (SOEs) could also be cut by reducing the number of appointees to boards and management. Most SOEs in Ghana have ridiculously high numbers of political appointees. Some have as many as three deputy chief executives or managing directors alongside numerous directors. Yet most SOEs consistently make losses and are heavily indebted. Despite this, their salaries, bonuses and allowances are higher than those of MPs.
For a small country like Ghana to have 995 presidential staffers is unconscionable
Expenditure on some flagship programmes should be reviewed, and cuts made to non-essential projects. Programmes like the Free Senior High School should ensure that those who can afford to pay fees, do. Students from private junior high schools could be charged, while senior high schools remain free for those coming up from public junior high. Alternatively, parents could pay feeding fees while government pays other costs.
Beyond these measures, the government must abolish or at least suspend the four yearly payments of gratuities to the governing elite listed in Article 71 of the 1992 constitution. A total of GH¢207 845 120 was paid as end-of-service benefits to Article 71 holders who served from 2017-20.
Corruption must of course also be addressed. The 2022 Auditor General’s report shows that irregularities in the public sector in 2021 amounted to about GH¢17.5 billion. Similarly, the Auditor General’s COVID-19 expenditure report shows that US$81 million worth of vaccines paid for by the state were never delivered, among other infractions.
These measures would not only plug the holes in the public purse but show that government is ready to share the burden of the nation’s suffering. By helping to reduce the fiscal deficit, savings from these cuts could fund infrastructure projects in vital sectors such as education, health and roads.
*About the author: Enoch Randy Aikins, Researcher, African Futures and Innovation, ISS Pretoria
Source: This article was published by ISS Today