Former Finance Minister, Mr Seth Terkper has called on government to be strategic in introducing prudent fiscal policies. According to him, government must be meticulous if they are to achieve their objectives.
Speaking at an Economic Dialogue forum, Mr Terkper explained that the country needs to do more in order to attain the desired growth.
“But we must be realistic. My analysis of the government’s own data suggests that we are going to be shrinking the deficit but if you add up arrears then your deficit remains above 10 per cent.”
Seth Terkper
Commenting on his assertions, a Senior Policy advisor for Fiscal Management at the Ministry of Finance, Dr Nii Noi Ashong, assented to the high level of borrowing by the government. However, he intimated that the country has limited options available and as such, must borrow to save the people.
“We can’t borrow forever; we need to grow the domestic economy.
“Growth is going to be broad-based characterized by the CARES programme. So, we are on the right path.”
Dr. Nii Noi Ashong
Government concerned over excessive borrowing
Commenting on the degree at which government is doleful at their rate of borrowing, Mr. Ashong noted that, they are worried “but in the short term”.
“We need to pay workers, we need to build hospitals, and we need [to] strengthen health systems. All these had to be done as a responsible government.”
“We are where we are because of history. Revenues have not grown enough.
“We have a lot of revenues earmarked, about 35 per cent; the extra 65 per cent not enough so you have got to borrow to take care of the other projects.
Additionally, he insisted that lowering deficits “while people die out of covid-19 [is] not the best”.
“So, you will do whatever it is to protect lives and property. When the dust settles something have to give.”
On his Part, Vice President of Imani Africa, Bright Simons, further disclosed that the country’s “debt service situation is bad”. He further highlighted on the fact that the debt service situation was catastrophic.
Dr Nii Noi Ashong, commenting on the claims of Mr. Simmons then suggested that “we will need to reduce the stock”.
“… the Zero coupon for instance, you can use it to reduce the stock so that interest payment will be reduced”.
New taxes likely to collapse businesses
Meanwhile, the Director of the Institute of Statistical, Social and Economic Research, Professor Peter Quartey, has indicated that the new taxes introduced by the government may likely collapse businesses in the country.
Prof Quartey also indicated that the taxes will also increase the inventive for people to avoid paying levies.
Additionally, he maintained that businesses will have no option but to pass on the cost of these taxes to consumers.
“The tax increase for instance is likely to increase the cost of doing business for many of the private sector operatives. It might reduce investments, it might also increase incentive to avoid tax. People naturally don’t want to pay tax unless we have a robust system, otherwise it will lead to tax avoidance in some instances.”
Pro. Quartey
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