Towards a More Comprehensive Fiscal Policy Management in Ghana

27 Pages Posted: 10 Jun 2014

Date Written: April 9, 2014

Abstract

Ghana’s thriving democracy has created space for the country to implement various fiscal reforms with the aim of ensuring a sustainable macroeconomic environment over the past three decades. Despite these reforms, the country has experienced recurrent fiscal slippages since 1992 usually occurring in election years. The paper investigates four sources of budget rigidities and fragmentation which fuel expenditure overruns in Ghana; namely the type of fiscal rules governing the budget process, the poor administration of internally generated funds, the increasing share of earmarked budget revenue, and the over dependence of state owned enterprises on central government budget. The main finding of the paper is that budget rigidities explain the country’s inability to successfully prevent budget overruns during elections. The paper concludes that Ghana could be ranked very high for undertaking fiscal reforms but equally scores very low for functionality of the reforms overtime. Many of the reforms are abandoned after they gain legitimacy from development partners. Ghana’s piece meal approach to the implementation of fiscal reforms and the lack of strong oversight of fiscal policies have also contributed to the inability of the country to put in place appropriate fiscal management systems to solve its macroeconomic challenges. It is recommended that Ghana creates a comprehensive fiscal reform package within which it will address the inherent fiscal rigidities in the budget cycle.

Keywords: Budget, Fiscal Policy, Fiscal Management, Fiscal Reforms

JEL Classification: H6, H3

Suggested Citation

Oppong, Felix, Towards a More Comprehensive Fiscal Policy Management in Ghana (April 9, 2014). Available at SSRN: https://ssrn.com/abstract=2447776 or http://dx.doi.org/10.2139/ssrn.2447776

Felix Oppong (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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