Among notable positive measures adopted were the following:
1. The commitment to service and re-schedule domestic and external public debt obligations: this is a critical primary step towards building investor confidence and setting the framework for re-engagement with the international community and multilateral funding agencies;
2. Fiscal Deficit Targeting which aims to halve the deficit for 2018 to 4% of GDP and subsequently capping it at 3%. The 2017 deficit is at 11.2%, and the commitment to halve it in 2018 could be a boon especially if it is a result of fiscal discipline. However, it remains to be seen if the measures proposed in the 2018 budget for implementation will drive such reduction of the deficit;
3. Setting baseline expenditures on infrastructure to 15% of the budget in 2018 and 25% in 2025. The thresholds should, however, be demand aligned and flexible. Budgetary allocations to infrastructure development must be congruent with the corresponding infrastructural gaps.
4. The expenditure management measures are a positive development especially in view of solutions aimed at containing the Civil Service wage bill. At $3.3 billion in 2017 (more than 80% of the budget), this was not sustainable and was largely consumptive. This left limited space for expanded capital expenditure. Measures to contain the wage bill will bear a progressive mark only when:
i. The ghost workers have been cleaned earnestly from the fiscal payroll. The removal of 3700 youth officers is positive but that will be negligible until the removal of about more than 75000 ghost workers in government reported by an Ernst & Young Report in 2014. This could save about $17.5 million per month.
ii. The issue of civil service bonuses should be addressed firmly. The New Economic Order can only be a success if the bonuses were suspended in part or total. By merely reducing the bonuses to 50% the government could have resulted in savings in the region of $100million in the current fiscal year. Alternatively, the bonus could be suspended for subsequent fiscal periods when the economy would have begun the recovery. However, this is a sensitive and emotive proposition especially for a year when harmonised elections are slotted.
5. The reduction in foreign business travel, related delegations, and cost drivers; the reduction of foreign service missions and their increased roles, are essential to cost management.
6. The commitment to uphold the Public Finance Management and other relevant Acts is noteworthy though it should be undertaken within the context of institutional reform and strengthening.
Continued next page
(486 VIEWS)
0 Comments