The Director of Research at the Institute of Economic Affairs, Ghana (IEA), Dr. J. K. Kwakye has mapped out some policy interventions which he believes can help in rebuilding Ghana’s economy after the global crisis caused by the pandemic which is crippling the country is over.
“The post-pandemic recovery will be arduous and protracted, and it will require well-coordinated and comprehensive policies to turn the situation around”.
In a statement, he suggested that the policies when religiously adhered to will augur well for the economy and set it on the path of progress.
“The Covid-19 pandemic has caused extensive disruption to Ghana’s economy. It will take well-coordinated and comprehensive policies to spur the immediate recovery and sustain growth over the long term”.
The policy initiatives suggested by Dr. Kwakye includes fiscal policy, scaling up revenue, reforming expenditure, monetary policy, natural resource policy, agricultural policy and industrial policy which he believes will take the country out of the economic quagmire post-Covid.
According to him, Ghana has persistent problem with revenue mobilization and the failure to collect taxes.
“Fiscal policy must lead the recovery. To this end, fiscal policy should raise the needed revenue by plugging numerous leakages in the tax system. Expenditure should be reformed to reduce the excessive earmarking and scale up pro-growth”.
Dr. J. K. Kwakye
In explaining how the country can scale up its revenue income, he expressed the need for the government to reduce tax evasion enjoyed by some selected companies and also focus more on the informal sector.
“The problem, therefore, does not lie with our tax rates; it rather lies with the taxes that we fail to collect. To raise Ghana’s tax effort to international standards, the problem of tax losses must be tackled head on”.
According to the Institute’s research director, the informal sector is ‘almost entirely outside the tax net’ although the sector contributes nearly 30 per cent of the country’s Gross Domestic Product (GDP).
“Government’s initiative to digitize the economy is well directed to bringing the informal sector into the tax net. This effort should be supplemented by leveraging new information and communication technologies, such as mobile money and other tech platforms”.
Monetary policy according to him, should provide direct support to the recovery. Coupled with that, the central bank should as a matter of priority reactivate its development finance function.
“The central bank should ensure that affordable credit is made available to priority projects and sectors, while also providing financial accommodation to Government, as needed”
“Ghana’s natural resources should be leveraged optimally to support the recovery and long-term growth. This requires that exploitation of the resources should be based on fiscal regimes that provide maximum benefits to Ghana”.
Dr. Kwakye further intimated that agricultural resources should also be used to support industrialization.
The Director of Research did not mince words as he expressed that industrialization is a key propeller of economic growth.
“Industrialization is pivotal to the immediate recovery and long-term transformation of the economy. Ghana’s comparative advantage in natural and agricultural resources should be leveraged to support industrialization and rapid development of the economy”.
On reforming expenditure, he expressed worry over the excessive expenditure on wages payment and debt services adding that Ghana sacrifices its capital needed growth on these bills.
Due to damning implication of the pandemic he called for a concerted effort by government to address the challenges which when handled will lead to economic recovery
“Policy must necessarily lead the post-Covid recovery because it is uniquely placed to mobilize and manage the needed resources. To be able to play its role effectively, persistent lapses in both revenue and expenditure must be addressed”.
Dr. J. K. Kwakye
