Though African governments have made significant progress in fostering development and improving people’s lives through investments in health care systems, COVID-19 has resulted in an unprecedented increase in government debt, a fall in revenues, and higher fiscal spending.

Most governments have been caught unaware by the pandemic and had to face the effects of weak revenue collection systems, a big partially tapped opportunity available for all governments, and Adhoc public spending due to Covid. Successive PEFA assessments conducted in several developing countries before the pandemic, indicated weaknesses in policy-based budgetary processes and as sub-Saharan African countries slowly bounce back from the pandemic and secondary effect created due to that, it is prudent to revisit three important levers of public finance productivity:

1.     Role of Independent finance councils – it is quite clear from previous ‘black swan’ events such as 2008 financial crisis, independent finance councils are able to reduce budget forecast errors, reduce deficit bias, and have strengthened governments’ capacity to comply with numerical fiscal rules.

As the World Bank points out, Independent counsels can help governments refocus on sustainable public finances and help build trust in government fiscal actions.

This becomes even more important as African governments have to walk a tightrope in not burdening themselves with more debt.

2.     Refocus on revenue growth opportunities – though it might sound a bit untimely, governments should figure a way to mobilize domestic resources for their own development and improve efficiencies in public spending. It is worthy to note that there are multiple opportunities to tap into additional annual tax and customs collections. Though Covid expenditure is a drainer, along with independent finance councils, there are still ways to adopt leaner capital expenditure practices, revamp procurement procedures, and eliminate “ghost” workers.

3.     Transparency in reporting – A well-structured financial reporting system based on a credible accrual basis accounting system (aligned with International Public Sector Accounting Standards (IPSAS)) could support fiscal councils understand not only the assets, liabilities, revenues, and expenditure of the government but also the medium-term impact of pandemic responses on the government balance sheets.

These are a few steps governments can take to ensure Sub-Saharan African countries can prudently manage fiscal imbalances and bounce back to fund critical initiatives that allow people to move ahead with greater hope.


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