The International Monetary Fund (IMF) has told the Ghanaian government to ensure that appointments to state-owned enterprise boards are merit-based, rather than favoring friends and allies.
The IMF's warning comes in its latest country report on Ghana, which highlights the need for stronger governance and oversight of state-owned enterprises (SOEs) to contain fiscal risks.
SOE Governance Must Improve
The IMF has advised the government to ensure that the appointments of the boards of state-owned enterprises (SOEs) are merit-based. This means that individuals should be selected based on their skills and expertise, rather than their connections or friendships with government officials.
The IMF has also called for audited financial statements to be submitted in a timely manner. This is essential to ensure that the government has a clear picture of the financial health of SOEs, which are currently loss-making in aggregate.
Weak Tax Compliance Undermines Revenue Efforts
The IMF has also highlighted the need to improve revenue administration in Ghana. Despite the introduction of digital tools, the report warns that compliance gaps remain large, reflecting structural weaknesses in the Ghana Revenue Authority (GRA).
The report notes that the GRA has limited the use of risk-based approaches and suffers from operational inefficiencies, including delays in the not fully digitalized VAT refund process. This is a major concern, as it undermines the government's efforts to increase revenue and reduce its reliance on external funding.
Strengthening PFM Systems Crucial
The IMF has also emphasized the need to strengthen Public Financial Management (PFM) systems in Ghana. This includes expanding the coverage of the Government Integrated Financial Management Information System (GIFMIS) to all central government entities.
The report also notes that the government needs to fully utilize the integrated GIFMIS and GHANEPS platforms, enforce competitive procurement practices, and achieve full visibility over government accounts. This is essential to operationalize an effective Treasury Single Account (TSA) and consolidate gains under the Extended Credit Facility (ECF).
Public Investment Management Needs Reinforcement
The IMF has also pointed out that public investment management needs to be reinforced. The report notes that public investment is set to scale up in the coming years, and that this will require significant improvements in project appraisal and selection procedures.
The report highlights persistent weaknesses in project appraisal, which underscore the need to ensure that all capital projects entering the budget comply with legislated appraisal and selection procedures. This is essential to ensure that public investment is used effectively and efficiently to drive economic growth and development.
What's Next
The IMF's recommendations are likely to be closely watched by policymakers and stakeholders in Ghana. The government will need to take swift action to address the issues highlighted in the report, including improving SOE governance and strengthening PFM systems.
The IMF's warning also underscores the need for the government to prioritize good governance and transparency in its dealings with state-owned enterprises. This will require significant reforms and changes to the way the government operates, but it is essential to ensure that the country's economy is stable and secure.
Source: Joy Online
