The World Bank wants government to phase out COVID-19 support measures in order to ensure a timely return to fiscal consolidation.
According to the Bretton Wood institution, the government needs to ensure that fiscal measures implemented to address the crisis are time-bound.
“Unplanned health spending and the adoption of a stimulus package targeting the real sector have resulted in large expenditure outlays in 2020. For example, the government created the medium-term COVID-19 Alleviation and Revitalization of Enterprises Support (CARES) program to mitigate the economic impact of the pandemic, and the program, which has short and medium-term phases, need to be efficiently implemented”, it disclosed in its Economic Outlook report.
Moreover, the World Bank said the authorities [government] need to reaffirm the fiscal anchor to guide the fiscal consolidation process and ensure that public spending is sustainable.
Due to the pandemic, the government suspended the Fiscal Responsibility Law mandating a fiscal deficit ceiling of 5.0 percent of Gross Domestic Product (GDP) in 2020, and this suspension has been extended in 2021.
“The government, therefore, needs to indicate a clear timeline to reinstate the fiscal rule and increase the flexibility of the budget by further limiting statutory spending”, it said.
To improve macroeconomic stability, the World Bank also urged government to fully implement the Energy Sector Reform programme to improve the financial sustainability of the energy sector.
“The energy sector continues to pose contingent liability risks. The government needs to continue implementing the ESRP, which was approved by the Cabinet in 2019 to serve as a comprehensive roadmap to ensure the efficient management of costs and contain risks to the fiscal and real sector (in case of power outages due to payment defaults).”
Source: Kwame Yamoah