Finance Ministry urged to ensure growth in limited fiscal space

Dr Robert Osei, Economist and Researcher at the Institute of Statistical and Economic Research (ISSER), says the Ministry of Finance would have to come up with ways of ensuring economic growth within the limited fiscal space.

Speaking in an interview with the Ghana News Agency (GNA) on issues raised in President Nana Addo Dankwa Akufo-Addo’s maiden State of the Nation Address, Dr Osei said it was of paramount importance for the Ministry of Finance to think deeply on how it would grow the economy in spite of the limited fiscal space and high debt stock.

President Akufo-Addo, in his statement to Parliament on Tuesday, bemoaned Ghana’s high debt stock, saying the total debt stock had ballooned to GH¢122 billion, 74 per cent of Gross Domestic Product (GDP) from GHC9.5 billion in 2009, while interest costs on this debt had also increased and would amount to an estimated GH¢14.1 billion in 2017.

He noted that a combination of higher expenditures and lower revenues projected had resulted in a significant increase in the budget deficit for 2016, also constraining the fiscal space for other growth initiatives.

Dr Osei acknowledged the difficulty posed by the high debt stock, an issue which, he said, had consistently been raised by ISSER in its annual reports on the state of Ghana’s economy compromising the fiscal space.

“We expect the Ministry of Finance to think carefully about how to prioritise,” he said, explaining that the problem in the fiscal space was not wholly a revenue problem but had more to do with spending.

He said it was as critical to improve spending efficiencies as it was to look at revenue enhancing measures, noting that efficient spending would free up some revenue for use in other areas.

Commenting on the overall state of the economy as portrayed in the address, Dr Osei said the issues raised such as budget deficit were not surprising to those who had spent time studying the macro economy adding; “we all knew the issues”.

He commended some of the initiatives, especially the focus on both economic growth and fiscal stability, which were important so as not to compromise one at the expense of the other and the revision of some taxes which were burdensome to entrepreneurs and small and medium scale enterprises.

On the proposed listing of the Volta River Authority and the Ghana Grid Company (GRIDCO) on the stock exchange, Dr Osei said although it was feasible, there was the need for the proposal to be well thought out to ensure that it did not have dire implications, especially for the vulnerable in society.

President Akufo-Addo, in his maiden State of the Nation Address, said Ghana’s economy was ‘in a bad state’ as a result of fiscal indiscipline of the previous government.

He said an audit would be carried out into some GH¢7 billion of arrears and outstanding payments which had circumvented the Ghana Integrated Financial Management Information System (GIFMIS).

Source: GNA

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