Former Finance Minister, Seth Tekper is cautioning the government not to breach the Public Financial Management Act by making sure the $1 billion dollar in Special Drawing Rights (SDR) from the International Monetary Fund goes through the Appropriation Act- an act of Parliament- before being spent.
This he believes will also ensure proper accountability and efficient allocation of the resources.
Finance Minister, Ken Ofori-Atta has revealed that government will spend the $1 billion from the Fund, to aid the ongoing Covid-19 economic recovery. But Mr. Tekper who is also the Executive Director of accounting and tax consultant, PFM Tax Africa, says any plans to spend the money without going through Parliament is contrary to the constitutional and legal framework.
He tells Joy Business the normal practice is that any fund from the IMF rather goes to support the country’s balance of payment than going into spending.
“From the national context, what we are saying is that it is income, revenue or resources to the state. And we are saying that once resources flow to the country, there is a constitutional and legal context [framework]. The constitutional and legal context is that any revenue that is accruing to the state must be paid into the consolidated fund, which the consolidated fund is part of the public account of the state, unless Parliament has another law that empowers a body to either withhold or accrue monies coming to them in a separate account.”
“If you look at IMF programmes that we have done in the past, of course Parliament is notified about the programme and then the resources come into the country. All IMF programmes like the $900 million plus that came in as the ECF [Extended Credit Facility], we often use it to support the country’s balance of payments, so it goes to the Central Bank. In actual fact, it’s usually the Central Bank that pays for the loan from its resources”, Mr. Tekper explained.
He stressed that Parliament is involved in any fund that comes from the Bretton Wood institution, adding “so far as it goes through as balance of payment, Parliament is notified through the fact that we are entering into a programme.
“Continuing, Mr. Tekper said “procedurally, it is wrong to spend the money without recourse to the law. Of course Parliament is in recess and is possible that when they reconvene, the Minister of Finance [Ken Ofori-Atta] will go to Parliament.”
Again, he said “but what is worrying is the indication that somehow, there are known plans already as to how the money will be spend in the short to medium term plans of the government; this was not part of the 2021 budget. So we are saying that until Parliament approves the use of the resources because they are national resources, then any attempt to use the funds is wrong.”
IMF Board approved $650bn to aid recovery of global economies
The IMF Board earlier this month, approved $650billion worth in SDR to support member-countries in the fight against the Covid-19 pandemic.
Member-countries were expected to have had their accounts credited with their share of the amount from August 23, 2021.
According to the IMF, this would ensure that its members, including Ghana, have a strong external position to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT).
This SDR allocation provides an alternative to borrowing because the country does not need to reimburse the Fund. The allocation is not a loan as it represents Ghana’s share of the US$650 billion-worth in SDR reserve assets created by the Fund and distributed to its members.
The SDRs (SDR456 billion = US$650 billion), are distributed in proportion to countries’ shareholding in the IMF capital (or quota), which in turn closely relates to the size of their economies.
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