IFS advises gov’t to review its 2016 borrowing plans

Business News of Wednesday, 17 August 2016

Source: Myjoyonline.com

2016-08-17

Seth Terkper Finance MinFinance Minister, Mr. Seth Terkper

The Institute for Fiscal Studies (IFS) is pressing for government to review its borrowing plans for 2016 to limit the interest cost burden and associated risks.

This is part of the institute’s recommendations after analyzing the 2016 supplementary budget. More in this business desk report.

IFS in an official concluded that the prevailing weak economic conditions in the country are likely to continue until the end of the year.

This it attributed to the weak economic growth, high inflation as well as debt unsustainability among others.

According to the Institute, the increased borrowing, especially given the interest payment, would only worsen the situation thus the need for government to reconsider its borrowing for the year.

It also described goverment’s 2016 Gross Domestic Product (GDP) growth estimate from 5.4 percent to 4.1 percent as rather worrying.

The IFS also raises issues government’s revision of the 2016 expenditure emphasising that sacrificing capital expenditure for physical consolidation may do more harm than good to the economy in the long term.

It also questioned the feasibility of reducing compensation of public sector workers by cutting social security payments without incuring arreas.

The institutute is therefore asking government to also pay much greater attention to the real sector than it has been given in current economic policies if the bid to turn around the fortunes of the economy is to be realized.

In another development, there is a renewed call for measures to improve the country’s trade deficit.

This is contained in a new report by an investment firm, InvestCorp which highlighted imports continue to dominate exports in Ghana’s foreign trade dynamics.

A shift, according to the report is, therefore, important to spurring economic recovery.

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