The Institute of Economic Affairs (IEA) has announced a number of measures to enhance fiscal discipline and entrench fiscal sustainability.

They are fiscal consolidation, consisting of an appropriate mix of revenue-enhancing and expenditure-rationalisation measures to rein in fiscal deficits and revenue measures aimed at stemming losses by closing the several loopholes in the tax system.

Others are expenditure measures aimed at reducing recurrent spending such as emoluments and spending on goods and services, reducing the current Fiscal Rule of 5% deficit to Gross Domestic Product (GDP) ceiling to a tighter rule of 3% in conformity with the ECOWAS criterion and establishing an independent Fiscal Council with the mandate to evaluate and monitor fiscal policy, among other functions, to help foster fiscal discipline and fiscal sustainability. 

On monetary policy management, the IEA said it should be strengthened through the strict enforcement of the 5% ceiling on Bank of Ghana’s lending to government through reinforced Parliamentary oversight; Improved inflation management by supplementing the Inflation Targeting framework and the appropriate coordination of monetary policy with fiscal policy to ensure a low regime of interest rates to spur investment and economic growth.

On exchange rate management, it said it should be improved by implementing measures to address the perennial foreign exchange supply-demand imbalance through some of the structural reforms; better management of the exchange rate through prudent fiscal and monetary policies and building up Bank of Ghana’s reserves progressively to at least six months of import cover to strengthen the exchange rate. The additional reserves it said could be derived from natural resources through increased ownership and value addition.