Business News of Friday, 28 July 2017
The Institute of Fiscal Studies (IFS), founded by Dr Kwabena Duffuor, a former Finance Minister, has called on the New Patriotic Party (NPP) administration to introduce additional policies that will enhance its revenue mobilization efforts for the second half of 2017.
According to IFS, this has become necessary due to the central government’s failure to meet the set target for the 2017 budget in the first half of the year.
IFS made the call yesterday at a press conference in Accra, highlighting measures that could help to meet the budget target over the next six months, if introduced by government.
Gov’t missed the revenue target by 1.1 percent for the period January to April this year.
“Given that the objective of the 2017 budget to achieve strong revenue mobilization is not likely to be achieved, at least for now, there is the need for the government to introduce additional measures to enhance the revenue mobilization effort,” the Executive Director of IFS, Prof. Newman Kwadwo Kusi, said.
He posited, “Serious reprioritizing of spending in favour of payment of valid arrears, increasing capital spending, dealing with budget rigidity caused by the wage bill and interest payments would also help.”
Prof. Kusi urged the government to also enforce strictly the provisions of the Public Finance Management Act (Act 921) to deal with unauthorized, irregular and fruitless spending, as well as strengthening fiscal transparency and accountability.
“The IFS shares the view that the steps taken by the government during the first half of the year are yielding some positive results,” he said.
According to him, the macroeconomic stability during the first half of 2017 was encouraging, saying, “inflation is on the decline.”
However, the Executive Director observed that much more was required to achieve fiscal sustainability, sustained macroeconomic stability and high non-oil Gross Domestic Product (GDP) growth.
IFS, however, expressed disappointment in the rate of growth of non-oil GDP, saying, “This unfortunate development is partly due to the government’s spending retrenchment, which has severely hit expenditure on goods and services, capital expenditure and arrears payment.
“Crude oil production from the Jubilee field and the coming on stream of the Tweneboa, Enyenra and Ntomme (TEN) fields together increased oil production by as much as 58.9 percent year-on-year, which helped boost the overall GDP growth. Non-oil real GDP, however, grew by only 3.9 percent against 6.3 percent growth recorded in 2016, due largely to low activity in the services sector, which grew by 3.7 percent in the first quarter of this year, compared with 6.6 percent in the same period last year,” Prof. Kusi observed.
He averred that “the overall real GDP growth of 6.3 percent projected for 2017, reflecting largely increased production of crude oil, is encouraging.”