World Bank commends Ghana’s fiscal improvement

Albert Zeufack, Chief Economist for Africa, World Bank

The latest Country Policy and Institutional Assessment (CPIA) index by the World Bank scored Ghana at 3.0 in its fiscal policy indicator. The report indicated that on a scale of one to six, Ghana scored 3.6 in total of the CPIA index, representing a 0.1 percentage point increase from the previous year.

In spite of the gains, the country remained at the same average with Sub-Saharan Africa (SSA) on fiscal policy.

In a video conference at the World Bank office in Accra, the Bank’s Chief Economist for Africa, Albert Zeufack indicated that, the score of fiscal policy captures the debt management of the country as well as how cyclical the fiscal policy is.

“For 2017, what we have noticed is that, there has been an improvement in the way the fiscal was managed. However, it remained just at the average score for Africa,” Zeufack said.

He was quick to add that, in Ghana, there is political cycle to public expenditure that ends to actually increase debt situation, adding, there was more work to be done by government in terms of its fiscal policies.

The index captures four main clusters of indicators which include Economic Management, Structural Policies, Policies for Social Inclusion and Equity, as well as Public Sector Management and Institution.

The CPIA is a diagnostic tool that focuses on the key elements that are within the country’s control rather than its outcomes, such as growth rates that are influenced by external elements.

This further measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance.

Zeufack emphasized that a change in policy doesn’t necessarily translate into an immediate change in the CPIA index and explained “because it’s a composite index government need to sustain reforms for some time before they see a change in the index.” Government therefore needs to coordinate policies across the four clusters to see a change, he added.

In the structural policies for example, Ghana scored 4.0 in trade, and averagely in the financial sector with 3.0.

With the Social Inclusion and Equity policy indicators, Ghana scored an overall of 3.8. For this category, the country performed better by scoring 4.0 in Gender Equality, 3.0 in Equity of Public Resource use, 4.0 in Building Human Resources, 4.0 in Social Protection and Labour and 4.0 in policies and institutions for environmental sustainability.

In the Public Sector Management and Institution category, Ghana performed better compared to its peers with 3.6 percent score overall.

The country scored 4.0 for Property Rights and Rule Based Governance, 3.5 for Quality Budgetary and Financial Management, Efficiency of Revenue Mobilization, Quality of Public Administration and Transparency, Accountability and Corruption in the public sector.

By Joshua W. Amlanu