The government’s decision to cap statutory funds at 25 percent of all government revenue will ultimately be counterproductive, former President John Mahama has warned.
Mr Mahama argued that limiting allocations to the already struggling NHIS is ill-advised while capping disbursements to GETFund also negatively affected its ability to provide infrastructure to Senior High Schools (SHSs) in order to deal with the increased numbers from the implementation of the Free SHS programme.
He believes the only reason government pushed for a law to limit statutory funds was so it could fund its many promises like the 1-district-1-factory policy, among others, at the expense of other key sectors.
[contextly_sidebar id=”nbN75kA99MIJce1ISCuh2n92RkO8bn8d”]Speaking after the National Democratic Congress’s (NDC) Unity Walk in Bolga, Mr. Mahama said the “government should do a rethink of some of some of the sensitive statutory funds, especially NHIS.”
He explained to supporters gathered that “what’s happening is, all those promises are being fulfilled using the statutory funds. For instance, take the National Health Insurance. Parliament passed a law… it says that it will cap all statutory funds at 25 percent of national revenue. So when they cap it, they give every fund a weight and they take that money out of the fund and put it into the consolidated fund for consumption.”
Like the Minority in Parliament, the pressing concern for Mr. Mahama is the effect the cap could have on healthcare.
“For the National Health Insurance, instead of having GHc 2.2 billion from the NHIS levy that we paid, the National Health Insurance ends up with GHc 1.3 billion. Almost GHc 900 million is gone. For some sensitive funds like NHIS, when you are having problems with the sustainability of the scheme, you don’t take money out of a fund like that. And then you come back and tell us that the fund is unsustainable so you won’t impose new taxes.”
Mr. Mahama also said the toll of the cap on GETFund was hurting the implementation of the Free SHS policy.
“This year, GETFund has less than GHc 500 million to do its work and that is why all the educational projects that we were doing under GETFUND has stalled because, again, capping is taking money out of GETFund. Meanwhile, you have started Free Senior High School. The children don’t have dormitories to sleep in. It is the GETFund that you would have used to provide those dormitories and dining halls [for free SHS]. Meanwhile, you are taking all that money out and putting it in the consolidated fund.”
Justification of Capping
When the Earmarked Funds Capping and Realignment Act was passed in March 2017, it was met with some criticism from the Minority.
At the time, the Deputy Minority Leader, James Avedzi, argued that the move will affect the operations of local assemblies with the reduction in allocations from 7.5 to 5 percent.
But the Finance Minister, Ken Ofori-Atta, maintained that the decision was necessary to ensure the government had more fiscal space to undertake other key economic policies outlined in the budget.
There are currently eight earmarked statutory funds namely; the District Assemblies Common Fund (DACF), the Ghana Education Trust Fund (GETFund), the National Health Insurance Fund (NHIF), Petroleum-Related Funds, Ghana Infrastructure Investment Fund (GIIF), Ghana National Petroleum Corporation (GNPC), the Social Security and National Insurance Trust, and the Road Fund.
The previous government varied its allocation to the eight earmarked funds year-on-year.
The Minority Leader, Haruna Iddrissu, later argued that at least, the National Health Insurance Fund must be exempt from the list of statutory funds that are capped.
He said the state of healthcare in the country required adequate financing, and as such the Health Insurance Fund must not suffer a reduction.
By: Fred Awuni & Delali Adogla-Bessa/citinewsroom.com/Ghana