The Ministry of Finance, has inaugurated a 13-member Fiscal Risk Committee to bring sanity to Ghana's fiscal management.
The inauguration of the committee is pursuant to Section 9 of the Public Financial Management Regulation, 2019 (L.I. 2378).
Fiscal risk refers to the possibility of deviations of fiscal outcomes from what was expected at the time of budget preparation or other forecasts, arising mainly from macroeconomic shocks and the realisation of contingent liabilities.
The Minister for Finance, Mr. Ken Ofori-Atta, whose speech was read by the Coordinating Director in-charge of operations at the Ministry, Mr. Michael Ayesu, at the inauguration said the realisation of fiscal risks could affect the achievement of key fiscal targets, reduce the accuracy of fiscal forecasts, weaken the credibility of the budget and consequently contribute to macroeconomic instability hence the need to tackle it from all fronts.
"You may recall that the realisation of fiscal risks resulted in the derailment of the IMF supported Extended Credit Facility (ECF) Programme, originally scheduled to be completed in April 2018 and subsequently extended to April 3, 2019," he stated.
Mr Ofori-Atta enumerated some of the steps taken to avert the dangers of the fiscal risks as; the enactment of the Fiscal Responsibility Act in December 2018, which capped the fiscal deficit at 5 percent of GDP with an annual primary surplus at all times, the formation of the Presidential Advisory Fiscal Council and the Financial Stability Council in December 2018 to keep government in check and to help sanitize the financial space and the passage of the PFM regulations, 2019, which made clear the provisions for fiscal risks managements.
He added that the Fiscal Risks Unit (FRU) was subsequently established within the Ministry of Finance with the responsibility of coordinating fiscal risks management including identifying, analyzing, disclosing and proposing measures to manage fiscal risks.
The high-level Fiscal Risk Committee, he stressed, was constituted as part of the Economic Policy Coordinating Committee to oversee issues relating to fiscal risk management.
"The composition of this committee is carefully selected from key institutions whose functions impact directly on fiscal management and members are made up of distinguished officers with vast experience which we expect them to bring to bear in the discharge of their duties," Finance Minster entreated.
The Terms of Reference of the Fiscal Risk Committee as enshrined in Section 9 of the PFM Regions, 2019 included the following; review the fiscal risks statement and any other reports prepared by the Fiscal Risks Unit as well as other reports pertaining to fiscal risks management, exchange information and make recommendations pertaining to fiscal developments in relation to fiscal risks, give directives on the implementation of relevant policy recommendations from studies on fiscal risks and propose typical areas for research on fiscal risks, facilitate the provision of data and information needed for fiscal risks analysis and reporting and perform any other function assigned by the Minister.
Membership of the committee included, a Deputy Minister responsible for Finance who is the chairperson, the Chief Director of the Ministry, the Director of the Division of the Ministry responsible for macro-fiscal policy, the Director of the Debt Management Office, the Director of the Division responsible for public investment management, the Director of the Budget Office, the Director of the Division of the Ministry responsible for providing legal advice to the Minister, a Deputy Governor of the Bank of Ghana nominated by the Governor, a Deputy Controller and Accountant -General nominated by the Controller and Accountant General, the Chief Executive of the central oversight body, the Head of the Internal Audit Unit of the Ministry and any other member nominated by the Minister.
Source: ISD (Emmanuel Boakye Ansah)