Ghana’s Ability To Run State Funds In Doubt As Taxes Fall Short

Written by Kevin Mwanza

Feb 25, 2014

Public Agenda’s probe into the current state of other existing statutory funds has revealed government’s failure to pay collected revenues into the accounts of the respective funds. The Ghana Education Trust Fund (GETfund), the Ghana Road Fund and the National Health Insurance Fund (NHIF) have since January last year not received any payments, even though the stipulated sources of revenues for these funds have continued to provide the required resources.

Already, government has allocated 40% of the 2014 Annual Budget Funding Amount (ABFA) from petroleum receipts to the Ghana Infrastructure Fund while it continues to collect the additional 2.5% VAT announced in 2014 budget supposedly for the fund which is yet to be fully established and operationalised. The Ministry of Finance and Economic Planning is also yet to present the necessary documentation of the GIF to Parliament for enactment into law; our investigations have revealed.

The objective of the GIF is to help finance critical infrastructure projects needed to accelerate economic growth and development in the country. The primary source of funds for the GIF would be the 2.5 per cent increase in the Value Added Tax (VAT) rate, the Annual Budget Funding Amount (ABFA), a portion from the petroleum revenue meant for amortisation and infrastructure development and other such funds as Parliament may approve.

The Ghana Education Trust Fund (GETFund), for example, is a public trust fund set up by an Act of Parliament in 2000 (ACT 581) to provide funding to supplement the government’s efforts to provide education infrastructure from pre-tertiary to the tertiary level. It is specifically to fix the funding gap in education. The Fund is expected to be financed by levies accrued from 2.5 per cent VAT imposed on selected goods and services, but it is currently in arrears of about GHC 687 million. Same is to be said of the NHIF and the Road Fund which are estimated to be in arrears of GHC 850 million and GHC 900million respectively.