Ghana Is Not Broke – Finance Minister

Finance Minister, Seth Terkper has denied media reports that Ghana is broke saying “Ghana is not broke. We are a country that collects 15-16% GDPs as taxes. Some developing countries do 9-10%… we need to widen the tax base and bring in more revenue.

We are also a country that gets grants and have good ratings that will help us borrow to finance our developmental expenditure so to say that Ghana is broke, is overstretching the issue,” he stated.

Speaking on the Citi Breakfast Show, Hon Terkper said, “We are talking of the sustainability of a policy that was put in place; which is throwing the budget out of balance and I think this is the history.”

“We are in red and that is factual but is our being in red planned or unplanned? If I am in red because I could not finance or complete the Accra-Kumasi road on my budget as a developing country and therefore go for a loan which I plan to pay within the spate of 15 or 30 years and I’m able to maintain it over time, that is planned expenditure,” he stated.

According to the Minister, the Ghana Revenue Authority (GRA) to takes a while to raise the revenue which is supposed to come in 12 months because “It takes time for GRA to bring in the revenues which comes in over 12 months… our taxes are based on a system called pay-as-you-earn…Our taxes come in but expenditure can’t stop. We need to run the police and military service, hospital service, school feeding has to run so for that reason, usually in the first and second quarters, you do some borrowing called breached financing and when we get the revenue, we pay. That is planned borrowing.”

Hon Terkper also added, “Borrowing is unplanned when we lack budget discipline; when someone overspends and we have to borrow to pay back, this kind of red is undesirable.”

Government has said the public sector wage bill is draining the national coffers but many public sector workers are on strike demanding pay increases and salary arrears under the new pay structure.

Executive Director of IMANI, Franklin Cudjoe has said that the Single Spine Salary Structure was flawed from the beginning due to the size of government which was too large and also the failure of the SSSS to “respect the relative levels of productivity.”

However, the Finance Minister said some of Mr. Cudjoe’s observations were inaccurate.

“Even though Mr. Cudjoe raised certain important points that we will take into account in the evaluation on-going, I think there are certain inaccuracies in what he said. First of all, the Ministry of finance is part of the technical team and together with the Minister for the social welfare representative government in the tripartite as and when necessary, other ministers come in so to say that the finance ministry and other government machinery is not involved is inaccurate…if we also got the Fair Wages and Salaries Commission to come and explain the interrelationship between the base allowances and the issues of premium, we will avoid some of the distortions that go around,” he stated.

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