SEND Ghana concerned about overdependence on donors …as it analyses 2019 budget

The government must find sustainable ways to raise revenue domestically to implement the budget and achieve its vision of Ghana Beyond Aid, SEND Ghana, a civil society organisation has said.

SEND Ghana in its   preliminary analysis of the 2019 budget statement and economic policy of government, expressed concern about government over overdependence on donors and private funding to support the country’s annual budget.

“After 60 years of independence government continues to rely on development partners and the capital market for funding,” SEND Ghana stated.

It said in the health sector, government had failed to allocate enough government funding to the Ministry of Health for capital expenditure in the 2019 budget.

“In fact, 73.9 per cent of allocation for capital expenditure is expected to come from development partners, with the annual budget funding amount and internally generated funds providing the remaining 26.1 per cent,” SEND Ghana said.

The CSO said the same problem reflected in the education, water and food and agriculture sectors.

SEND Ghana further in its analysis said there was serious fragmentation in budgetary allocation to the Ministries, Department ad Agencies in the 2019 budget and this could cause weak governance and high transaction costs.

“A common observation, we have made is that the 2019 national budget is characterised by too much fragmented allocation.  This is a recipe for duplication of functions, poor implementation and coordination, and likely low or no value for money.  This must change to avoid unnecessary increases in transaction costs.  The ambition of the budget can be greatly undermined by the current poor allocation and implementation framework,” Country Director of SEND Ghana, George Osei-Bimpeh said.

SEND Ghana indicated that low budgetary allocation and overspending on government salaries was “short-changing” goods and services.

For instance, the CSO said the allocation to the   Ministry of Food and Agriculture for goods and services next year had been reduced by 6.7 per cent, stressing that “the decline poses a potential challenge to the implementation of continuing and new initiatives, and risks government missing its target of having one million farmers beneficiaries,” under the Planting for Food and Jobs.

SEND Ghana, said the proposed review of personal income tax band from GHȻ10, 000 to GHȻ20, 000 was not “revenue enhancing”.

It said the introduction of the personal income tax band rate exceeding GHȻ10, 000 at a rate of 35 per cent in the 2018 mid-year budget was seen as a key revenue enhancing measure.

“Indeed, by our estimation, the revenue targets for the last half year of 2018 were exceeded partly due to this and other progressive tax measures that were introduced.  From the 2018 performance indicators, records show that personal income tax revenue projection out-turns recorded a 0.6 per cent increase over the revised budget figure.  It can be inferred that the tax band contributed significantly to this achievement and has the potential to reduce increasing income inequality in the country,” SEND Ghana said.

Unfortunately, the SEND Ghana said the 2019 budget proposal to review the income tax band to exceeding GHȻ20, 000 at a lower rate of 30 per cent will adversely affect revenue generation.

By Kingsley Asare

 

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