Ken Ofori-Atta, Minister of Finance : Interview

Interview : Ken Ofori-Atta

How do you assess the public sector’s institutional capacity in maintaining macroeconomic gains?

KEN OFORI-ATTA: The institutional capacity of the public sector has always been strong, and was further strengthened by implementation of the 2016 Public Financial Management Act. The act ensures prudent financial management within a clearly defined macro-fiscal framework, and seeks to maintain the improvements we have made in key indicators.

We have also committed ourselves to certain measures that would ensure the irreversibility of these gains, achieved by our engagement with the IMF under the Extended Credit Facility. These include the 2018 fiscal responsibility rule, which will cap the fiscal deficit at 5% of GDP and ensure a positive primary budget balance. We have also set up a fiscal council to promote sustainable public finances through the public assessment of fiscal plans and performance. This is complemented by a fiscal risk unit now running out of the Ministry of Finance. On the policy side these developments are underscored by a commitment to zero-financing from the central bank and a continuation of structural reforms.

Central to all of this is increased domestic revenue mobilisation (DRM). There is great potential for DRM if we can curb leakages and plug loopholes. Consequently, the government has been working with the Ghana Revenue Authority (GRA) to expand compliance measures and broaden the tax net.

To achieve this, some specific compliance interventions being implemented include increased prosecutions; a special value-added tax task force with enhanced collection; institutional reforms at the GRA; downstream petroleum monitoring; the introduction of a cargo tracking note; and expanded auditing.

In what ways is finance being secured to underpin Ghana’s industrial and agricultural push?

OFORI-ATTA: The government has developed a 10-point industrialisation plan, which focuses on producing high-demand agricultural goods, and prioritises manufacturing and advanced value-chain output.

The major sources of financing for the industrial strategy include government resources, such as domestic revenues; donor funding and external borrowing; the private sector; and public-private partnerships. The strategy is being driven by the flagship One District, One Factory (1D1F) initiative, which aims to take full advantage of local resources by establishing a factory in each district and ensuring that the benefits of industrialisation are well distributed geographically. It is important to note that government is only playing a facilitatory role in 1D1F, notably in terms of funding. Instead, the private sector is the real driver.

The Planting for Food and Jobs (PFJ) initiative is another government scheme, aimed mainly at improving food security and farm incomes, and creating jobs. To facilitate access to markets for increased crop output achieved under the initiative, the authorities recently established the Ghana Commodity Exchange – the first of its type in West Africa. By allowing for orderly, efficient and transparent transactions, the exchange will enable smallholder farmers to earn additional incomes that were hitherto unjustifiably captured by traders. This will be important for lifting farmers out of poverty, while ensuring sustained production of commodities and the development of associated value chains.

To what extent is the economy protected against further commodity price shocks?

OFORI-ATTA: Vulnerability to negative commodity price shocks is not a condition that can be eliminated overnight. Rather, we are pursuing a long-term vision aimed at structurally transforming and diversifying the economy. Reducing the importation of commodities which we can potentially be self-sufficient in – particularly under 1D1F and PFJ – could also lessen vulnerability to price shocks. An example is rice, which is imported each year at a conservatively estimated cost of $500m.