Business News of Saturday, 10 November 2018
The Institute for Fiscal Studies (IFS) has said it will be prudent for government to use the upcoming budget to rein in on some of its numerous development initiatives owing to the lack of fiscal space to enable their successful implementation.
Dr. Said Boakye, a Senior Research Fellow at the fiscal policy think tank said already three items on government’s budget – public sector wages, interest payments and earmarked revenue – account for more than 100 percent of government’s revenue leaving virtually no room for any other initiative except through borrowing.
The Senior Research Fellow who was commenting on the 2019 budget set to be read on November 15 said: “Government should consider pruning down the numerous programs and initiatives it is pursuing. This is because of the weak fiscal state in which the country finds itself which is caused by the weak revenue generating capacity of the state and the excessive fiscal rigidity in the budget.
According to Dr. Boakye, while the IFS is in full support of government’s three-pronged economic development program which focuses on agriculture, infrastructure and industrialization, the policy think tank is of the view that the economy cannot take on more debt to finance the numerous government initiatives.
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Notable among the numerous government initiatives that must be relooked include the Infrastructure for Poverty Eradication Program (IPEP); One District, One Factory (1D1F), Planting for Food and Jobs, Free SHS, Akufo-Addo Program for Economic Transformation (AAPET) among others.
“Indeed, these programs and initiatives can only be accommodated if the government resorts to large amounts of borrowing. But should history repeat itself, borrowing huge sums of money to fund the numerous program and initiatives of the government will have the potential to reverse the fiscal gains made and throw the country deeper into fiscal and debt distress, since real GDP growth rate may not increase as expected due to possible macroeconomic instability that may arise” he added.
Dr. Boakye in a presentation on the topic: “Ensuring strong broad-based economic growth and significant reduction in unemployment in Ghana,” urged government’s support for agriculture to boost economic growth and employment by giving priority attention to the implementation of well-designed programs of public investment in agriculture, continue progress on land regulatory reform, and the establishment of specific initiative such as a “School to Land Program” to engage young people in agriculture.
“A “Public Works Program (PWP)” that aims at providing work opportunities coupled with training through the delivery of public works to the youth and unemployed graduates also needs to be developed and implemented,” he added.
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Dr. Boakye advised government to encourage and support entrepreneurship development by reforming the post-senior high school education curricula to include technical and entrepreneurial disciplines to provide the youth and graduates with entrepreneurial skills that will enable them to set up their own businesses or to become more employable in the job market.
He urged government to set up business incubators as a mechanism to support business development and management, and strengthen labour market information and monitoring systems to ensure a regular flow of information on employment opportunities.
Also, to be able to genuinely transform the economy of Ghana through industrialization so as to achieve sustainable growth, generate high-quality jobs and significantly reduce unemployment, the government, through NDPC, should prepare an implementable long-term national industrialization strategy (as part of a broader long-term national development plan)