When I presented the 2018 Budget Statement and Economic Policy to Parliament on Wednesday, 15th November, 2017, I indicated government’s resolve to adequately address the challenges facing the economy, improve economic development and restore hope to Ghanaians. The Budget outlined pragmatic policies and prioritized key programmes and flagship projects to promote economic growth, restore macroeconomic stability, increase revenue generation, promote private sector participation and wealth creation, boost agricultural productivity and production, promote quality education, develop leadership skills, and to institutionalize vocational and creative skills in order to promote and establish an entrepreneurial culture.
The economic challenges that we inherited as a government in January 2017 included a weakened financial services sector; our debt to GDP overhang of 73.1 per cent and our over exposure to the global economy; however, Government’s disciplined and prudent management of the economy based on the implementation of sound macroeconomic policies and fiscal consolidation has yielded positive results.
All the macroeconomic indicators are pointing in the right direction: overall real GDP growth (including oil) of 8.5 percent; headline inflation of 9.9 per cent as at July 2017 compared to 15.4 percent in December 2016; declining interest rates (from 25 percent in 2016 to 19.3 percent in 2017); improved balance of payment surplus of US$1,091 million (201 percent higher than the 2016 surplus of US$362.1 million), increased international reserves of US$7,554.8 million which amounts to 4.3 months of import cover; and declining fiscal deficit from 9.3 per cent of GDP in 2016 to 5.9 per cent in 2017 (outperforming the target of 6.3 per cent). These are some of the remarkable achievements in 2017.
The medium to long-term outlook is indeed positive. As we resolve to grow this country beyond aid, it is important that our State Owned Enterprises (SOEs) are run efficiently so they can positively contribute to the nation’s economic transformation agenda. Like all business enterprises, SOEs are affected by prevailing economic conditions. Hence, the positive outlook for the Ghanaian economy bodes very well for companies operating in the country including our SOEs, which constitute a significant portion of our public finances and play a major role in our economy. SOEs, which control more than 50 per cent of national assets, therefore have important roles to play in the Ghana Beyond Aid agenda. SOEs can be a powerful lever for national economic development by accelerating socio-economic transformation.
The strategic role of SOEs has been duly recognized and is reflected in government’s national development agenda. Any successful leveraging of SOEs to potentially support our development requires a robust institutional framework to enable SOEs diligently execute their mandates. In this regard, government has initiated various policy reforms and interventions to achieve the key objectives of fostering coherence in the supervision and oversight of SOEs as well as addressing key constraints hampering the performance of these enterprises.
In pursuit of these objectives, I am pleased to announce that significant progress has been recorded in our reform agenda for the SOE sector in 2017. The Economic Management Team (EMT) approved the establishment of a Single Entity to manage the interests of the State in SOEs, joint venture companies (JVCs) and other state entities including regulatory bodies. The Single Entity, which is proposed to be known as the State Interests and Governance Authority (SIGA), is expected to streamline and centralize government’s currently fragmented framework for managing the interest of the State in the specified entities, particularly SOEs. It would ultimately help to improve the governance and performance of the entities.
In 2017, Cabinet approved the Corporate Governance Action Plans for implementation by government and five (5) SOEs. The Action Plans are intended to address gaps in the corporate governance regimes of the selected SOEs, namely Volta River Authority (VRA), Electricity Company of Ghana (ECG), Ghana Water Company Limited (GWCL), Ghana National Petroleum Corporation (GNPC) and TDC Development Company Limited.
I would like to reiterate government’s commitment to carry through its reform agenda to put SOEs on a sustainable path to financial and commercial viability. As part of efforts to address the issues of inconsistencies in as well as rationalize and standardize emoluments of Chief Executives Officers (CEOs) of public sector institutions, their Boards and Councils, Government set up a committee to develop a broad policy on the remuneration of CEOs and Boards of public sector institutions and make recommendations for government’s consideration. Government’s aim is to instill the underlying principles of equity, fairness, transparency and productivity in remuneration as well as eliminate ‘excessive’ executive remuneration.
Government has also commenced the development and implementation of a State Ownership Policy, which will, among others, outline the rationale for the State’s strategic ownership of interest in SOEs and JVCs and also clarify the relationship between the State as the owner and SOEs/JVCs. The Policy will help define, separate and strengthen government’s role as shareholder, policy maker and regulator of SOEs.
This State Ownership Report is one of the key tools being utilized by the Ministry of Finance to ensure effective oversight of Government’s equity investments. In this regard, the 2017 Report includes a section on financial reporting and compliance, in part to provide more detailed insight into how SOEs are responding to their reporting and disclosure obligations under the PFM Act.
The maiden edition of the State Ownership Report issued in 2016 focused on eighteen (18) entities on which we had financial and other relevant information. This year’s edition covers forty-nine (49) entities out of eighty-six (86) entities in which government has equity investments. There are thirty-seven (37) more entities who are yet to submit the required information. They are however in clear contravention of the Public Financial Management (PFM) Act, 2016 (Act 921) and as such the necessary sanctions and penalties provided for under the Act will be enforced.
Going forward, the Ministry will ensure the enforcement of sanctions and penalties provided for in the PFM Act, 2016 (Act 921) for breaches and non-compliance.
Government remains committed to building strong and viable SOEs that are capable of taking the lead in the next phase of Ghana’s developmental agenda. I call on all SOEs to rise up to the occasion and to build the structures that will support the vision of a Ghana Beyond Aid.