Some Economists have told Citi Business News they expect the Public Financial Management Act (PFMA) to restrict government’s future borrowing to specific needs.
According to Lecturer at the University of Ghana Business School, Dr. Lord Mensah, this should regulate spending and avoid budget overruns.
The comment follows the formulation of regulations to guide the implementation of the PFMA.
This also comes almost two years after the passage of the law.
“The law is not able to go into details to tell us the purpose for which we borrow, be used as planned. So at the end of the day, if there is a financial management act which fails to categorise the usage and the sources of funding, then it becomes a problem. We have also opened up the sources of funding that if we do not take care, we could end up even having illegal sources of funding into the country,” he explained.
The PFMA seeks to improve financial discipline and manage the public purse.
This is also to commit the government to the available resources and prevent unwarranted expenditure.
A major highlight of the PFMA has been the capping of the budget deficit between 3 and 5 percent of GDP for any particular year.
The law posits that any public officer who is found culpable of this aspect will face prosecution.
Responding to whether or not the timing for the regulations isn’t a bit delayed, Dr. Mensah rather maintained that it is an ample time to allow effective implementation of the law to the fullest.
“It is an Act that I’d like to see all these in it; moreover the implementation of the regulations and Act itself could take some time so in my view, the timing is alright,” he stated.
Latest figures released by the Bank of Ghana show that the country’s debt stock reached 139 billion cedis.
This represents 69 percent of the country’s Gross Domestic Product (GDP).
By: Pius Amihere Eduku/citibusinessnews.com/Ghana