A former Director at the Ministry of Finance, Eva Mends, has cautioned that Ghanaians cannot demand both increased government spending and stable economic indicators at the same time, stressing that difficult fiscal choices are unavoidable.
According to her, while citizens often welcome improvements such as a stronger currency and lower inflation, these outcomes require strict control of government expenditure.
Speaking during a presentation at a workshop for members of the Parliamentary Press Corps in Koforidua, Ms. Mends said the country must recognise that economic stability comes with trade-offs.
“When the cedi gains strength, everybody is happy. When inflation falls, everybody is happy. But you cannot at the same time ask for increased expenditure,” she stated.
Her remarks underscored what she described as the reality that the country cannot “eat its cake and still have it” when it comes to public finances.
Fiscal Discipline and Economic Stability
Ms. Mends explained that pressure on government to increase spending without corresponding revenue could force authorities to expand the fiscal deficit through borrowing.
“If the pressure mounts and government decides to increase the deficit and borrow more just to satisfy demands, all the indicators will shift,” she warned.
She noted that excessive borrowing could push up inflation and interest rates, ultimately undermining macroeconomic stability.
The workshop was organised under the auspices of the Parliament of Ghana with support from the World Bank and the Foreign, Commonwealth & Development Office.
It aimed to build the capacity of parliamentary reporters to better understand and report on public financial management and national budget issues.
Balancing Demands for Spending
Ms. Mends acknowledged that Members of Parliament and sector ministers often push for increased funding to address development needs in areas such as education, infrastructure and social services.
However, she emphasised that the responsibility of maintaining fiscal discipline ultimately rests with the Finance Minister.
“There is nothing wrong with MPs asking for more funds to improve sectors like education,” she said, explaining that the Finance Minister must ensure that expenditure decisions remain consistent with the broader macroeconomic framework.
She added that effective fiscal management requires a finance minister who enjoys the confidence of the President and can coordinate spending decisions across government institutions.
Risks of Unplanned Financial Commitments
The former finance official also warned against financial commitments made outside the national budget framework, particularly by state institutions and state-owned enterprises.
Such actions, she said, often force government to divert resources from planned programmes to meet unexpected obligations, placing additional pressure on public finances.
Managing Expectations in a Developing Economy
Ms. Mends noted that managing the economy in developing countries like Ghana is particularly challenging because of limited resources and rising public expectations.
“When government spends in developed countries, the money circulates within their economies,” she explained. “But in our case, much of the increased demand goes into imports, so we do not get the full multiplier effect.”
She added that social media and global connectivity have heightened citizens’ expectations for rapid development.
“We see lifestyles in developed countries every day on our phones and we want the same things, but we do not yet have the resources to provide them,” she said.
Participants at the workshop received training on analysing fiscal data, understanding budget frameworks and improving reporting on government spending to help citizens better understand the difficult choices involved in managing the nation’s finances.
Source: Clement Akoloh||parliamentnews360.com
