According to the Minority Leader, Haruna Iddrissu, the state of healthcare in the country requires adequate financing, and as such the Health Insurance Fund must not suffer a reduction.

[contextly_sidebar id=”BIwtmiqiSXscJYLjp7wQcm878dpmFhHR”]The Earmarked Funds Capping and Realignment Act passed in 2017, stipulates that all allocations to the eight statutory funds must not exceed 25 percent of all government revenue.

But the Minority believes this must change, especially for the health sector.

Speaking ahead of the approval of over GHc2.3 billion Ghana cedis for the National Health Insurance Authority for 2018, the Minority Leader, Haruna Iddrisu, said “if the Ministry of Finance wants to cap [funds], cap other areas. You can cap the Common Fund. You can cap the GETFund as you have done. But for health insurance, no.”

“Many of these allocations are for IT infrastructure. Every year, we are dedicating money for IT infrastructure and its improvement. We need to see a stop,” he added.

Justification of Capping

When the Earmarked Funds Capping and Realignment Act was passed in March 2017, it was met with some criticism from the minority.

At the time, the Deputy Minority Leader, James Avedzi, argued that the move will affect the operations of local assemblies with the reduction in allocations from 7.5 to 5 percent.

But the Finance Minister, Ken Ofori-Atta, maintained that the decision was necessary to ensure the government had more fiscal space to undertake other key economic policies outlined in the budget.

This stance was supported by the Institute for Fiscal Studies (IFS), which had been a strong critic of the allocation to the statutory or earmarked funds.

The IFS argued that the allocations has made it difficult for government to carry out some critical expenditure due to the unavailability of the needed funds.

There are currently eight earmarked statutory funds namely; the District Assemblies Common Fund (DACF), the Ghana Education Trust Fund (GETFund), the National Health Insurance Fund (NHIF), Petroleum-Related Funds, Ghana Infrastructure Investment Fund (GIIF), Ghana National Petroleum Corporation (GNPC), the Social Security and National Insurance Trust, and the Road Fund.

The previous government varied its allocation to the eight earmarked funds year-on-year.

In its last year in 2016, it allocated about 33 percent of the government’s revenue to the earmarked funds.

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By: Duke Mensah Opoku/citifmonline.com/Ghana

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Under the new policy, institutions such as the Universities and Psychiatric hospitals will not retain all their internally generated funds, a policy which has been condemned by the Minority in Parliament.

[contextly_sidebar id=”Zog62uhyx77so57Pwd0M3YdcwTNylAW6″]But addressing MPs, Minister of Finance, Ken Ofori-Atta said several measures had been put in place including the committee to be headed by a deputy Minister, to ensure smooth implementation of the policy.

“Additional budgetary allocations were made , prior to programmes such as National Health Insurance, Ghana Revenue Authority. Mr Speaker, for ease of implementation of caps on internally generated funds, we have retooled the non-tax revenue unit in the Ministry of Finance and also set up a new desk which will be overseen by the Deputy Minister to ensure that all implementation issues are dealt with strictly and efficiently.”

The setting up of this committee, has become necessary given the various concerns some Ministries have expressed over the move.

The Foreign Affairs Ministry had argued that, the Finance Ministry’s decision to limit its [Foreign Affairs Ministry] to only 35 percent of its internally generated funds, will make it challenging for them to fulfill commitments to Ghanaian missions abroad, as well as pay a $50 million loan from Societe Generale secured in 2016 for the refurbishment of Ghana’s foreign missions.

The Sector minister, Shirley Ayorkor Botchway, indicated that her outfit’s ability to handle basic responsibilities and cater for emergencies will be limited with the cut.

“The money that we are supposed to use to service the loan is the money that has been reduced considerably by the ministry of finance so what is going to happen is that, we might not be able to do anything and that will be a sad situation for us,” she complained.

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By: Marian Ansah/citifmonline.com/Ghana
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The government in its 2017 budget statement and economic policy indicated that it will cap all statutory funds at 25% to finance the one-district-one-factory and free SHS policies.

[contextly_sidebar id=”Qyp9kIdy8q7sXhEVADJn3wmKi9j4zNko”]This means that  7.5% of all total revenue of the country that goes to the District Assemblies Common Fund (DACF) will be slashed down to 5% if this is implemented.

But Cassiel Ato Forson believes 25% cap on statutory funds such as the District Assembly Common Fund would affect the release of funds to contractors handling various projects.

This he said would result in an increase in non-performing loans in the banking sector.

Speaking to Citi News, the Ajumako Enyan Essiam lawmaker said government should have consulted widely before reaching its decision.

“…If care is not taken we will see a new scenario where the banks are seeing a lot of government contractors not getting paid and therefore they are not servicing their debt. There is a likelihood that we are going to see a lot of non performing loans in the banking sector. ..that is why I said it was prudent for them to have engaged them and agreed on the moratorium…so they can have the revenue  and then use it to service those things because the impact on the economy might be very dangerous.. “

Reducing statutory fund allocations will slow dev’t – Avedzi 

Before the budget presentation, the Deputy Minority Leader in Parliament, James Klutse Avedzi, had kicked against the possible review of the law to reduce the allocation of statutory funds.

Mr. Avedzi had argued that, a likely downward review of allocations as they have gathered, would negatively impact development.

Mr. Avedzi, as an example, explained that “if you want to reduce the Assembly common fund from 7.5 percent to 5 percent, what it means is that about one-third of what is going to the assembly will no longer go there. So if the Assembly had 1.5 million, this assembly will only receive 1 million.”

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By: Marian Ansah/citifmonline.com/Ghana
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Speaking on Eyewitness News ahead of the government’s first budget statement, Mr. Avedzi argued that, a likely downward review of allocations as they have gathered, would negatively impact development.

[contextly_sidebar id=”fXuTdAdu60VJG7PqiQC07oj9bPq32F5r”]There are currently eight earmarked statutory funds; the District Assemblies Common Fund (DACF), the Ghana Education Trust Fund (GETFund), the National Health Insurance Fund (NHIF), Petroleum-Related Funds, Ghana Infrastructure Investment Fund (GIIF), Ghana National Petroleum Corporation (GNPC), the Social Security and National Insurance Trust, and the Road Fund.

Mr. Avedzi, as an example, explained that “if you want to reduce the Assembly common fund from 7.5 percent to 5 percent, what it means is that about one-third of what is going to the assembly will no longer go there. So if the Assembly had 1.5 million, this assembly will only receive 1 million.”

Development at district level to suffer

Development could also suffer at the district level, Mr. Avedzi cautioned, if the level of funding drops, thereby affecting the output of beneficiary institutions.

“We know that the money for development at the assembly level affects the masses, so if you are reducing this allocation to the assemblies, what it means is that, the development at the local level will suffer.”

He explained that “for instance, if you are not able to get enough school infrastructure at the basic schools; then the level of teaching; the quality of children that will be churned out at the basic schools will suffer. When they suffer, how do they end at the secondary schools.”

In defence of the Ghana Infrastructure Investment Fund, he said “the infrastructure funds are funds that are meant for infrastructural development. If you want to amend the laws so you can use part of that money for recurrent expenditure, you are going to ensure that the infrastructure sector suffers.”

“When the infrastructure sector suffers and we don’t have good roads that can propel economic activity, it will end up affecting the GDP so there are so many factors to consider. It is not just a matter of amending the law.”

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By: Delali Adogla-Bessa/citifmonline.com/Ghana

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