Finance Minister, Ken Ofori-Atta, believes the approval of the Earmarked Funds Capping and Realignment Bill, 2017 by Parliament will transform the economic fortunes of the country.

“It begins the whole transformation exercise of ensuring that government can have its policies implemented in a more effective way and without the rigidities that are created by structural issues such as Earmarked Funds, wages and salaries. So this is a key pillar towards freeing fiscal space to enable us to more effectively realign resources,” he told B&FT in an interview after the approval of the Earmarked Funds Capping and Realignment Bill, 2017 by Parliament.

The Earmarked Funds Capping and Realignment Bill,2017, is to provide a cap for Earmarked Funds to ensure that the total of Earmarked Funds for each financial year is equivalent to twenty-five percent(25%) of tax revenue and to provide for related matters.

It is also aimed at freeing up public resources by placing a cap on the specified Earmarked Funds to ensure that tax revenue encumbered by those Funds as a result of allocations to them does not exceed twenty-five percent of total tax revenue.

Mr. Ofori-Atta said: “It is important to go back to the first principle, currently the whole country is suffering. We are trying to realign and move forward, in the interim there will be adjustments to be made, there will be mid-year review and we will see how we cover the tracks.

These were institutions that were not getting full funding anyway, so we can’t pretend that this is what is creating the problem, we now have a better way of freeing fiscal space and realigning in a more progressive way.”

There have been criticisms, mostly by the minorities MPs in the 275-member legislature, on the capping of MDAs Internally Generated Funds (IGF).

The Member of Parliament for South Dayi, Rockson-Nelson Dafeamekpor, said the passage of the bill will send “shockwaves” to various institutions who, hitherto, depended significantly on earmarked funds.

“The source of funding for these institutions has shrank by virtue of the cap policy that has been introduced at 25percent, so it is a problem,” he said.

According to Mr. Dafeamekpor, it is also a problem for an institution like the Registrar General’s Department, which generates a lot of money for the Justice Ministry.

The Earmarked Funds Capping and Realignment Bill also seeks to empower the Minister responsible for finance in consultation with relevant sector Ministers to review the enactments under which the Earmarked Funds are established and to make a determination as to whether or not a particular Earmarked Fund has outlived its usefulness and should cease to exist.

On what happens to ongoing projects under the Earmarked Funds after the capping arrangement, the Finance Committee of Parliaments, in its report submitted to the House said: “The Committee was informed that such uncompleted projects would be funded within the priorities of each budget year and that the arrangements for the involvement and monitoring of projects by Members of Parliament would be continued.”