Government decided in 2013, after a 12% deficit and a close to 60% debt to GDP ratio, to embark on a home- grown policy to reduce government expenditure, reduce the national debt and increase revenues.
In order to achieve this, government adopted the fiscal consolidation drive which saw the removal of fuel subsidies, cut public- sector employment and an insistence on State Owned Institutions to borrow on their own books.
Three years on, Ghanaians have been wondering if their sacrifices have yielded any results.
Budget Deficit Reduction
In a press briefing Tuesday, Seth Terkper declared the fiscal consolidation measures a success so far, pointing out the " drastically" reduced budget deficit as one of the visible signs of an economic turnaround.
According to Mr. Terkper, " The fiscal consolidation measures have ensured the reduction of our budget deficit. We had a deficit of nearly 12% in 2013 and that was what we were looking resolve. Now the deficit stands at 7.3%, a clear indication that fiscal consolidation measures are being successfu. We are now looking at a target of 4.5% and 5%."
Single Spine and Payroll Issues
Another measure of success for government's fiscal consolidation measures, according Mr. Terkper, is the Single Spine Pay Structure and Payroll Issues. In 2012 when the Single Spine Pay Policy was implemented, Ghana's wage bill stood at 65% of total tax revenue, which was a concern to government.
Furthermore, government's inability to migrate all workers onto the scheme at the same time sparked numerous labor strikes and agitations. Today, Mr. Terkper says the labour agitations have reduced drastically, as well as the burden of the wage bill on the budget.
Debt Accumulation Rate
Although, the country's debt currently stands at 48 million Ghana Cedis, Mr Terkper said the rate at which government is accumulating debt has decreased.
" Ghana's debt to GDP before HIPC was over hundred percent. And after HIPC, when the debt reduced totally, we started accumulating debt at an alarming rate, up until 2014 when the rate got alarming. But the good news about our fiscal consolidation measures is that the rate of accumulation has decreased" Mr. Terkper said in an interview on the Citi Breakfast Show Wednesday morning.
When asked if interest payments do not defeat his assertion, Seth Terkper conceded that interest payment is a problem which is compounded by the country's foreign exchange situation.
" One of the main threats to our debt today, is not the rate of accumulation as I said before, but the foreign exchange rate. The exchange rate is the main reason why we pay more in servicing our debt", he said.
The Ministry of Finance, under Seth Terkper has been accused of over- emphasising the need to balance the books at the expense of the social wellbeing of citezens. With the guidance of the IMF, in a 960 million- dollar bailout deal, the country is supposed to cut public sector and social expenditure drastically. Ghanaians have to make sacrifices by way of tax hikes and introduction of new taxes. This is why they will pay particular attention to the successes the fiscal consolidation attempts are supposedly yielding to the economy and invariably to their lives.