Business News of Monday, 30 January 2017
As the Finance Minister, Ken Ofori Atta officially assumes his office today; some financial observers have charged him to immediately reduce the appetite for borrowing.
According to some public finance experts, it is time for government to move away from directly growing the economy to allow the private sector to lead in economic growth while government creates a conducive environment for the private sector.
Speaking to Citi Business News, Economist Dr. Lord Mensah was of the view that lowering the appetite for borrowing will create a financial space for the private sector to access credit and grow.
“The government should ensure that the borrowing aspect comes down, they should reduce their appetite for borrowing. I know as a developing country we need to grow, every developing country has an appetite for growth but you can slow it down a bit,” he said.
He stated that it is important for government to pursue such a fiscal policy since it will help create room for the private sector.
“When you lessen the borrowing you more or less going to force the private man to come up because as you increase your borrowing appetite what’s going to happen is that you are more of less increasing interest rates structures in the system and in the end, you are forcing the private man out of business because the private man will borrow at a higher cost”.
“The other businesses that have the money, the banks, will push the money to government through treasury bills and all that,” he added.
Dr. Mensah maintained that such a fiscal policy will help the private sector to grow by making available funds to businesses.
Cautioning against crowding-out the private sector, Dr. Mensah was of the view that the sector can lead economic development if granted the space.