Government is considering an amendment to the Public Financial Management Act (PFMA) that will peg fiscal deficit at five percent of the country's Gross Domestic Product (GDP) from next year, Vice President Dr. Mahamudu Bawumia, has revealed.
That, he said, will entrench fiscal stability and responsibility as well as restore public confidence in the managers of the economy.
"Fiscal discipline and growth are critical in ensuring macro-economic stability and for that matter, there is the need for government to deepen and institutionalise fiscal consolidation," he said at the launch of Direct Savings and Loans in Accra.
The Akufo-Addo government, having inherited a budget deficit of around 10 percent of economic output from 2016, has earmarked a deficit of 6.5 percent for this year.
This represents GHC13.2 billion of the difference between the government's revenue expectations for 2017 compared to the expenditure targets for the period.
Government's total revenue target for 2017 is estimated at GHâ‚µ44.9 billion against a targeted expenditure of GHC58.1 billion, representing 28.6 percent of GDP.
Given that revenue deficits arise as a result of increased spending without corresponding mobilised revenue, Dr. Bawumia indicated that the proposed amendment to the PFMA will help arrest the situation as it will instill discipline in government's expenditure.
The vice president also hinted of a Financial Inclusion Strategy from government as part of efforts to formalise the economy and increase access to financial services in the country.
Dr. Bawumia noted: "Deepening the financial system and reducing interest rates requires formalisation of the economy; we need a strong financial sector where banks have the sound footing.
Private sector credit is much needed to push the government's socio-economic growth programmes."
While touting the relevance of non-bank financial institution (NBFIs), he assured industry players that government is committed to addressing the challenges of the sub-sector to ensure that the public get access to sound financial services.
To buttress the assurance, Dr. Bawumia cited ongoing plans to roll out the national system of identification that will enable banks to improve their recoverable loans to address the rising rate of non-performing loans (NPLs) in the industry.
Direct Savings & Loans
Express Capital, having acquired a savings and loans license from the Bank of Ghana, has rebranded as Direct Savings and Loans Limited as it seeks to create and sustain wealth for customers while returning excellent results for shareholders and business partners.
As a leading player in financing micro, small and medium enterprises (MSMEs) in the country, Direct Savings and Loans will leverage its innovative products and services to push the course of financial inclusion in the country.
Chief Executive Officer of the company, Ben Adu-Owusu, told journalists that his outfit recognises the role of private sector investment and innovation in the development of the country and would provide the needed support.
He said: "We remain steadfast in our commitment to contribute to the national interest by way of increasing access to credit and employment.
We pledge to ensure that our established management structures, risk management processes and internal audit procedures will continue to be highly valued hallmark of our institution."