Dr John Kwakye
The Institute of Economic Affairs (IEA) has observed that grants to Ghana are likely to experience large shortfalls as donors have expressed concern about government’s financial indiscipline.
According to the IEA, donors are not happy about the way the government is managing the finances of the country, hence their refusal to offer the needed financial support.
President John Dramani Mahama recently told chiefs at the National House of Chiefs in Kumasi that Ghana’s donor partners were reluctant to release funds for the country’s budgetary support.
‘We however, must learn to pull ourselves up by our own bootstraps; it is in challenging things that one needs their best friends. Unfortunately, our development partners have not been as responsive to our home-grown fiscal stabilization policy as I would have hoped’, he lamented.
Since last year, donors’ budgetary support of about $1billion had not been released.
Dr. John Kwakye, Senior Economist at IEA, told journalists at a press conference in Accra yesterday that ‘Ghana is an economy under sanction.’
‘Which donor would want to give you money to pay single spine and subsidies?’ he questioned.
Dr. Kwakye said until more serious measures were taken by the government to address the fiscal indiscipline such as payments of dodgy claims to SUBAH, the GYEEDA and the SADA saga, donors would refuse to release funds to support the economy.
Seth Terkper, Finance and Economic Planning Minister, last week in his mid-year review policy presentation to Parliament, blamed the government’s inability to achieve its budgetary target on lack of donor support and appealed to the House to approve over ¢3.3 billion to support the budget.
Though Dr. Kwakye admitted that the economy had been affected by some external factors, ‘many of the sources of the challenges are of domestic origin.’
He said domestic policies have an important role to play in resolving the challenges, stating that ‘As a priority, we have to undertake serious fiscal adjustment by tackling tax fraud and corruption and broaden the tax bases, especially by roping the informal sector into the net’
Dr. Kwakye said fiscal adjustment is critical to consolidating macroeconomic stability.
‘I must say that unless we are willing and able to implement a home-grown fiscal discipline regime, the alternative would be to have one imposed from outside, including the IMF, so as to unlock much-needed donor support for the economy,’ he said.
He suggested that the country should begin to lay the foundations for an economy that is self-reliant and that depends less on low-value products and external support.
‘That is how we can achieve sustained growth, poverty reduction and prosperity for all’, he noted.
Dr. Kwakye charged government to recover illegal judgment debts and other known misappropriation funds such GYEEDA, SUBAH and SADA, to support the economy.
‘We say we don’t have money but we have allowed people to squander such huge amounts of money. It is also necessary for regaining investor and donor confidence in order to have a reflow of resources into the economy to alleviate the acute liquidity crunch,’ he said.
By Cephas Larbi
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