Accra, 18th July, 2019 - An 11-member Fiscal Risk Sub-Committee of the Economic Policy Coordinating Committee to oversee issues relating to fiscal risk management has been inaugurated with a call to help bring sanity to Ghana’s fiscal management.
Inaugurating the committee on behalf of the Hon. Minister for Finance, Mr. Ken Ofori-Atta, the Coordinating Director at the Ministry of Finance, Mr. Michael Ayesu stated that the committee was constituted pursuant to Regulation 9 of the Public Financial Management Regulations, 2019 (L.I. 2378).
Fiscal risk refers to the possible deviations of fiscal outcomes from their targets arising mainly from macroeconomic shocks and the realization of contingent liabilities.
According to the Minister for Finance, the realization 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 realization of fiscal partly accounted for 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 revealed. He also cited the fiscal cost of over GHȼ11 billion government had to spend to clean-up the banking sector as clear examples of fiscal risks.
Enumerating some of the steps being taken to avert the dangers of the fiscal risks, Mr. Ofori-Atta hinted the enactment of the Fiscal Responsibility Act in December 2018, which capped the fiscal deficit at five (5%) percent of GDP with the maintenance of primary surplus annually, the establishment 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, as well as the passage of the PFM Regulations, 2019 (L.I 2378), which makes clear provisions on fiscal risks management.
The Minister of Finance 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 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 sub-regulation 3 of regulation 9 of the PFM Regulation, 2019, includes 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 sub-committee include Hon. Kwaku Kwarteng, Deputy Minister for Finance as the Chairperson; Dr. Maxwell Opoku Afari, First Deputy Governor of the Bank of Ghana; Mr. Patrick Nomo, Chief Director of the Ministry of Finance; Hon. Stephen Asamoah-Boateng, Director-General, State Interests and Governance Authority; and Mr. Wisdom Messan, Deputy Controller and Accountant General.
Others members from the Ministry of Finance are Dr. Alhassan Iddrisu, Director, Economic Strategy and Research Division; Mrs. Evelyn Authur, Director of Budget; Mr. Samuel Arkhurst, Director, Treasury and Debt Management Division; Mrs. Mangowa Ghanney, Director, Legal Division; Mr. David Collison, Director Public Investment and Asset Division; Mr. Hayford Amoh, Director, Internal Audit; and Dr. Mawuli Gaddah, Head, Fiscal Fisk Unit as Secretary.
There were presentations on Fiscal Risks Management Framework by Dr. Mawuli Gaddah, Head, Fiscal Risk Unit of the Ministry, Emerging Risks from the Power Sector by Dr. Joseph K. Asenso Head, Energy and Petroleum Unit and Emerging Risks from the Treasury Management by Mr. Samuel Arkhurst, Director, Treasury and Debt Management Division. END
Issued by Public Relations Unit
Ministry of Finance