The former Finance Minister Hon. Seth Terkper has stated that the continues use of Primary Balance as fiscal anchor in data management and reporting is an inferior tactics deployed to conceal the true health or state of the economy.
Mr. Terkper made this call during a press briefing at Coconut Groove Regency Hotel in Accra yesterday to analyze the state of the economy vis-a-vis the nation’s commitment to the current arrangement with the International Monetary Fund (IMF).
He said, relegating or treating high liabilities like arrears and interest payments as exceptional footnotes or memorandum in the fiscal analysis is a major understatement of the overall fiscal balance on cash basis which obviously distorts the overall finance balance.
The Former Finance Minister said, the use of primary balance is a tool crafted to soften the fiscal objectives and stance on the 2023 IMF Program which seriously undermines the recent reforms started in 2009 to ensure that debt obligations are met.
He said, this leads to false budget expectations, excessive borrowing and high public debt stock because of the under-reporting which makes the books look good thereby creating more room for unnecessary borrowing.
The former minister added that one other major problem is the inadequate accounting for significant ‘pipeline’ contracts and unpaid bills that cause budget overruns which further aggravates the fiscal situation since it combines with the ‘offsets’ and the ‘footnotes’ culminating into the false picture of fiscal consolidation as against the reality on the ground.
