2021 Budget still dependent on foreign donors – SEND Ghana

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Budget Analysis
Budget Analysis

Ghana’s 2021 Budget is still dependent on foreign support, SEND Ghana, a policy research and advocacy civil society organization has said.

It said its analysis of the national budgets from 2018-2021 revealed that government still relied heavily on Development Partners (DPs) to fund its capital investments, despite its vision to pursue “Ghana Beyond Aid” agenda.

Mr George Osei-Bimpeh, the Country Director, SEND Ghana, at a News conference in Accra on the assessment of the 2021 budget statement, said in the Agriculture sector, DPs were expected to contribute 84.8 per cent of allocation to finance Capital Expenditures (CAPEX) of the Ministry of Fisheries and Aquaculture Development.

Also, 88.9 per cent of projected allocations in the budget to CAPEX of the Ministry of Food and Agriculture would be funded by the DPs, he added.

Mr Osei-Bimpeh stated that while investment in CAPEX was critical in stimulating growth, over reliance on donor support, which was unpredictable, put at risk the government’s drive in pursuing agricultural modernisation and industrialisation.

Touching on the Ministry of Water Resources and Sanitation, he said, investments in the provision of Water, Hygiene and Sanitation (WASH) service in the last three years was largely donor-driven.

He explained that in 2019, 70.26 per cent of projected allocation to WASH was sourced from donors and in 2020, it increased to 82.39 per cent, stressing that the trend had continued in 2021 with projected funds of 75.43 per cent from DPs.

“With this trend, the government will most likely miss its target to reducing grants by 10 per cent to finance goods and services and CAPEX by 2023 as envisioned in Ghana Beyond Aid strategy document”, he said.

The ongoing COVID-19 pandemic, the Country Director said, had significantly transfigured the development financing landscape, and that external supports were more focused on combating and defeating the pandemic.

He stated that capital inflows to developing countries from external private sources were projected to drop by US$700 billion with foreign direct investment flows forecast to decrease by up to 45 per cent in developing economies.

Mr Osei-Bimpeh recommended to government to renegotiate and control the country’s natural resources and find, a sustainable way to fund and implement its capital investments, since over-reliance on dwindling and unpredictable donor support had serious implications on the implementation of government’s key interventions.

That, he added would make Ghana self-sufficient towards attaining the “Ghana Beyond Aid” agenda and the Sustainable Development Goals 1, 2, 6, and 17, with focus on no poverty, no hunger, clean water and sanitation for all, and strengthened domestic resource mobilisation.

Touching on the cross-sector observation of the budget, he said the 2021 budget statement did not indicate the actual fiscal performance of Ministries, Departments and Agencies and Metropolitan Municipal and District Assemblies on education and other sectors for the year ending 2020.

Such information, Mr Osei-Bimpeh said was relevant for assessing previous year’s performance based on which projections were made for the current and other years.

He said the education sector was known for over-spending its budget, especially on the compensation line item, stressing that in 2018, the Ministry spent GHS 12.77 billion, which was above its allocation of GHS 9.25 billion in nominal terms.

“We call on the government, within the spirit of transparency, to be consistent with the provision of budget information on all sectors, and in formats that are accessible and understood by all citizens”, he said.

The 2021 budget proposed tax components of one per cent COVID-19 Health Levy, one per cent increase in VAT Flat Rate, and 5.7 per cent increase in petroleum prices at the pump (Energy Sector Recovery Levy of 20 pesewas; the 10 pesewas Sanitation and Pollution Levy per litre on petrol/diesel).

Mr Osei-Bimpeh said the taxes were more of consumption based and that the burden would fall more on the poor and vulnerable, urging government to be more innovative with the taxation option by targeting the “haves” instead of burdening “the have-nots.”

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