The government has commenced a review of its major social intervention programmes on the back of developing an Enhanced Domestic Economic Programme (EDP) expected to be supported by the IMF.
According to the Ministry of Finance, some of these social intervention programmes under review are the Free SHS, School Feeding Programme and Agenda 111.
In a Q&A document on Ghana’s request for a bailout from the IMF and published by the Finance Ministry, the Ministry states that the review of the said social intervention programmes is not to scrap or cancel them but to “see how best they can be optimized and become more efficient.”
According to the Ministry, the aforementioned social intervention programmes are of utmost priority to the government and as such, they will be maintained.
The Ministry, however, added that lower priority or non-productive spending (white elephant projects) will be curtailed as part of the government’s fiscal adjustment under the IMF-supported programme.
“IMF programmes are flexible in response to evolving circumstances. Ultimately, the IMF encourages governments in their programme design to protect the poor or vulnerable groups from the impact of fiscal adjustment. Free SHS, and the School Feeding programme, among others are good social intervention programmes and it is the lack of financing and unsustainable debt burdens that could constrain a government’s ability to maintain its level of spending, including social or investment spending.
“In our situation, the IMF may ask Ghana to consider curtailing lower priority or non-productive spending (such as “white elephant” projects) as part of its fiscal adjustment but to preserve priority social spending, including on health and education. The objectives are typically aimed at providing a social safety net for the poor and ensuring that investment spending boosts the economy at a critical time. However, Government in its Enhanced Domestic Programme has started a review of these programmes to see how best they can be optimized and become more efficient,” the Ministry stated.
Huge spending on the government’s flagship programmes particularly, the Free SHS is believed to have contributed to the country’s present unsustainable public debt stock.
With all of the country’s tax revenues covering only interest payments and compensation and crowding out other expenditures such as amortisation, the government is left with no other choice than to borrow to finance its flagship programmes such as the Free SHS, Agenda 111, School Feeding Programme, among others.
Meanwhile, the government has vowed to enforce the Enhanced Domestic Economic Programme (EDP) as it prepares to engage the Fund on a Balance of Payment (BoP) Support Programme to help turn around the country’s economic fortunes.
The Enhanced Domestic Programme (EDP) is a 3-year fast-tracked macroeconomic stabilization programme that seeks to restore policy credibility and achieve fiscal and debt sustainability.
The programme is heavily driven by a mix of robust structural reforms and revenue, expenditure, and financing policies.
The proposed programme seeks to achieve the following objectives:
Improve the credibility of government policy and restore investor confidence in the economy, thereby, regaining market access, boosting DP disbursements, and unlocking other financing sources;
Restore debt sustainability and macroeconomic stability to support green growth, economic transformation and job creation while protecting social spending;
Strengthen the Central Bank’s Monetary Policy Regime, and build buffers to strengthen resilience to economic shocks
