Business News of Thursday, 3 August 2017
The Institute of Economic Affairs (IEA) has predicted that government will not meet its revenue targets for the financial year 2017, despite the downward review of the target.
Finance Minister Ken Ofori Atta presenting the government’s mid-year budget review Monday July 31, 2017 disclosed that the country’s fiscal deficit target for 2017 has been reviewed from 6.5percent to 6.3percent of GDP.
According to him, the revision aims at preventing lapses in government’s fiscal consolidation objectives, targets and expenditure.
“The downward revision in revenues and expenditures as well as reclassification of inflows from the sale of shares have resulted in the revision of the fiscal deficit target from 6.5 percent of GDP to 6.3 percent. These revisions are consistent with our fiscal and debt sustainability objectives.
“Being mindful of the high debt burden which has arisen largely because of high fiscal deficits in the past, the revision of the fiscal deficit further demonstrates our commitment to fiscal discipline,” he told parliament.
He added, “Going forward, we will strengthen the implementation of revenue measures to ensure that we meet our revised revenue targets. To ensure that the fiscal objectives and targets are not compromised, we will make the necessary downward adjustment to discretionary expenditures in the event that we are not able to meet our revenue targets.”
But in his analysis of the presentation by the Finance Minister, Dr. Eric Osei-Assibey, senior research fellow at the IEA argued that the country is likely to end the year 2017 with a debt to GDP ratio of 71percent, about a two-percentage point reduction of what was recorded last year.
“Despite the debt management effort by government, we think that the debt stock is still very high and unsustainable,” he said.
Citing the International Monetary Fund (IMF), he said Ghana remains at the high risk of debt distress which has implications for its credit worthiness and borrowing cost.
“Although government has revised downwards its revenue projections for the second half of the year, we believe that government may still not realise the projected revenue as the above challenges remain,” he predicted.
He thus urged government to “pursue a more aggressive domestic tax revenue mobilisation by ensuring that the compliance rate is increased substantially and the loopholes within the tax collection systems are plugged.”
Also, he advised that “much more innovations should be introduced in the tax collection system particularly within the informal economy.”
But the government insists it has put in place strategic measures to achieve the set targets.
Speaking to Starr News Thursday, a deputy Finance Minister, Kweku Kwarteng said, “the target that we brought in the mid-year review are achievable and I dare say we do have some hope that we could exceed them but we do not anybody to get any impression that this a government that will over spend its means.”