Ghana – The new Ghanaian government's pledge to provide
free secondary education at public schools, less than a month after it said it
found a budget hole of 7 billion cedis (R20.4 billion), could compound the
nation’s financial troubles.
After initial reports, quoting senior minister Yaw Osafo
Maafo, that an oil-savings fund would be used to underwrite free education,
Finance Minister Ken Ofori-Atta said in a broadcast on Citi FM last week that
the government would not touch the so-called Heritage Fund and that schooling
would be funded from the budget. President Nana Akufo-Addo, whose New Patriotic
Party won a general election in December, campaigned on a promise of providing
free secondary schooling for all Ghanaians.
The West African nation in April 2015 turned to the
International Monetary Fund for a three-year programme of almost $1bn
(R13.07bn) to help prop up its finances and currency. Ghana’s budget deficit
for this year could be almost double the government forecast of 5.3 percent of
gross domestic product (GDP), Ofori-Atta said after the state announced earlier
this month it discovered about 7 billion cedi in undisclosed spending by the
previous administration.
Break the bank
In the eyes of the politician everything is achievable if
you break the bank, Franklin Cudjoe, president and chief executive of Imani
Center for Policy and Education, a research agency in the capital Accra, said.
“If we use all the oil money for education, it will be at
the expense of other critical sectors of the economy.”
On Tuesday, Akufo-Addo delivered his state-of-the nation
address to lawmakers, outlining his administration’s plans for the year. The
government will use next month's budget presentation to announce tax breaks and
other measures that it hopes will strengthen the private sector and revive the
economy, which probably expanded at the slowest pace last year since 1990,
Ofori-Atta said on Sunday.
“The new government has to react to the fiscal reality, the
country has a budget deficit that is blowing out, they need to tighten up on
the expenditure side and also to grow revenue to narrow that gap,” Yvonne
Mhango, an analyst at Renaissance Capital in Johannesburg, said.
Free secondary school education "will only add to
the pressure on the budget and expanding debt position, she said.
The cedi strengthened 0.2 percent to 4.545 per dollar by
5.33pm in Accra on Monday, paring its decline for the year against the US
currency to 6.3 percent.
National budget
While the cost of the government's promise on schooling
has not been announced, the previous government allocated 6.5bn cedis for all
levels of education in 2016, representing about 14 percent of the national
budget of 46.5 billion cedis for the year, according to estimates presented to
lawmakers in November 2015. The nation's debt as a percentage of GDP was close
to 74 percent at the end of last year, according to the IMF.
“Ghana doesn't have much fiscal space,” said Edem
Harrison, an economist at Accra-based Frontline Capital Advisors. “This is a
huge project that would require huge expenditure“ the IMF programme has made
our budget tighter and this could throw the programme off.”