A Deputy Finance Minister, Kwaku Kwarteng has said government will make sure it doesn’t spend to cause any harm to the health of the economy.
His comments follow a barrage of concerns from economists in the country about the future of the country’s finances.
But the Deputy Minister has assured the country that, the government is committed to targeting its expenditure at areas that will stimulate growth.
He made this assurance in an interview after deliberations on the floor of Parliament on 11th August, 2020.
“We will be prudent. As I indicated on the floor while we seek to spend to contain the pandemic and to protect our people, we are also conscious of the fact that we don’t break the backbone of the economy so that the recovery will not be too painful for Ghanaians. And so we have been spending prudently.”
Most of the concerns by some economic heavy weights in the country were raised after the Finance Minister, Ken Ofori Atta presented the mid-year budget review to Parliament last month.
The Institute of Fiscal Studies (IFS) and the Institute of Statistical and Social Economic Research (ISSER) have been the leading economic think-tanks prescribing and proscribing the right direction government must take to strengthen the economy.
A senior research fellow at the IFS, Dr Said Boakye has cautioned the government about the country’s rising debt stock and has demanded that government must seek debt forgiveness in the near future to prevent any economic melt-down.
He has described most of government’s expenditure during these pandemic times as being influenced by populism.
The Director of ISSER, Prof. Peter Quartey has also pointed out that, even though government’s move to revise some fiscal targets is necessary, it must ensure that in its spending, it targets areas that can revive the country’s economy.
As a result of the COVID-19 government has been supporting businesses in the country to ensure they do not crumble under the pressures of the pandemic.
Even though ISSER lauds this action by government, it has made the case that any amount expended to support businesses because of the pandemic must be tracked to prevent corruption and the misapplication of public funds.
Another economist with the Institute of Statistical and Social Economic Research, Prof. Augustine Fosu has also warned that the suspension of the Fiscal Responsibility Act could negatively affect the country’s credit ratings.
On the suspension of the FRA, Prof. Quartey has made it clear that, the government has very little choice to maintain the obligation of not spending more than 5 percent of the country’s GDP.
At the moment, the country’s fiscal deficit stands at 11.4 percent.
Not excluding the country’s history of disregarding fiscal prudence in an election year, Dr Theo Acheampong, an economist and political risk analyst, has warned that if this antecedent is followed this year, which is also an election year, the country’s finances will be in a dire state.
