President Nana Addo-Dankwa Akufo Addo has indicated that his government’s support to Ghanaian households and businesses during this pandemic is essential and not freebies.
After the Finance Minister Ken Ofori-Atta presented the mid-year budget review in Parliament last month, a Senior Research Fellow with the Institute of Fiscal Studies, Dr Said Boakye accused the government of engaging in “fiscal populism.”
This is because, according to Dr Boakye, the country’s finances are not robust enough to withstand the amount of spending being done by the government to cushion Ghanaians from the economic pummeling of the pandemic. One of his concerns was the fact that some Ghanaians didn’t need some of the social interventions being implemented by the government. And as such the wholesale implementation of some of the interventions were not needful.
But, the President disagrees as he indicated in his 15th broadcast to the nation yesterday, 16 August, 2020, that his administration is supporting Ghanaians because it cares.
“I know that the pandemic has adversely affected many lives and livelihoods. It is for this reason that the government has implemented several measures such as free water and electricity and funding to support small businesses and tax relieves amongst others to cushion the effect of the pandemic.
“We are not providing freebies, we are providing critical help to households, families and businesses in the midst of this pandemic because we care. It is my conviction that in times of crisis, it is the duty of a responsible and sensitive government to protect the population and provide relief.”
Not long ago, Dr Boakye, restated the need for more political commitment to ensure fiscal discipline amidst the Coronavirus pandemic.
He indicated that, with Ghana’s debt servicing taking 72 per cent of government revenue, the country’s fiscal position is likely to get worse if the government does not take some tough measures in reducing expenditure while it increases revenue.
Hammering on the government’s “critical help” to Ghanaians in these times, Dr Said Boakye pointed out that the government must tread cautiously as most of its social intervention programmes in the pandemic have been poorly executed and lack fiscal prudence.
Another economic think tank, the Institute of Statistical, Social and Economic Research, (ISSER), also called on government to monitor spending necessitated by the COVID-19 pandemic to prevent corruption.
But government has assured and reaffirmed its commitment to fiscal prudence for the rest of this year.
The spending being done due to COVID-19 has raised varied views. Some economists support the government’s decision to spend to alleviate the economic plight of businesses and households. Others are also concerned about the rising debt of the country.
According to the mid-year budget review by the Finance Minister, the country’s debt stock as at June 2020, stood at GH¢258.73 billion, representing 67% of GDP.
Moody’s, a bond credit rating company, predicted in April this year that, Ghana’s debt is to hit 70 per cent of the Gross Domestic Product (GDP) by the end of this year.
The suspension of the Fiscal Responsibility Act was approved by parliament because of the effects of the pandemic. The FRA was promulgated to prevent governments from crossing the threshold of 5 per cent budget deficit.
An economist with ISSER, Prof. Augustine Fosu has warned that the suspension of the Act could negatively affect the country’s credit ratings.
Because of the growing debt concerns, Dr Boakye has indicated that the government must “immediately seek debt release” as the country did in 2001 under President John Agyekum Kuffour.
During that time, the country declared itself as a Highly Indebted Poor Country (HIPC). This posturing caused a huge part of the country’s debt to be slashed.
