Seth Tekper: Is the government treating the exceptional SDR flows from the IMF as a footnote?
Since 2017, we have opposed the change in budget accounting by the current government by treating “exceptional” expenditure items and arrears as a footnote.
In particular, it used this approach to account for the costs of rescuing the banking and energy sectors.
In fact, in the case of energy sector costs, it even left out the footnote processing and brazenly added expenses and arrears to depreciation.
This is a change from what previous governments have done. They treated all exceptional revenue inflows and outflows “above the line”; they therefore added them to revenue, expenditure or arrears, but clearly indicated them in the budget framework.
This means that windfall revenues decrease the deficit while counterpart spending increases the budget deficit (also called the budget balance). Examples include divestiture and the HIPC / MDRI Initiative (as revenue or revenue) and a single backbone, excessive subsidy, additional cost of fuel for thermal power plants during droughts, or disruption of electricity supply. gas (as an expense).
However, when it comes to the exceptional bailout costs, this government has excluded the cost and boasted of a better budget deficit. Note that at the same time, the government has treated the corresponding HLEC flows as revenue, which minimizes the budget deficit or balance.
It is disappointing to note the defense of experts and well-informed institutions that the government had the possibility of going against the well-known accounting rules of GFS and IPSAS in this matter.
The practice also defies the accrual accounting rules of the PFMA – and other knowledgeable experts have simply chosen to remain silent, including those who should be setting our national standards.
It is clear that the IMF and the rating agencies now isolate but include exceptional expenditure in determining budget deficits or the budget balance. To date, however, the government has not changed this practice. Of course, the soaring stock of public debt exposed this practice as a hoax.
As we wait for the budget for 2022 and the provisional overrun for 2021, we wait to see how the government treats the IMF’s “one-off” SDR inflows or receipts of US $ 1 billion as a footnote in l ‘budget schedule or as income.
If so, it will follow the “consistency” rule but will be incorrect. If it doesn’t and follows what it does now with ESLA, it will also be consistent with their current practice, but will simply exercise a discretion or option that does not warrant it comparing its fiscal performance to that of governments. previous ones.
It will remain disappointing for our experts and institutions to continue to defend this practice or to remain silent.
The writer is the former Minister of Finance under the Mahama administration.