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An Economist at the Institute of Statistical, Social and Economic Research (ISSER), Professor Charles Ackah, says calls for more expenditure cuts are not the answer to Ghana\u2019s economic downturn.<\/p>\n
Going against the grain, he said government rather needs to spend more by increasing its expenditure and pursuing sustainable development goals in order to regain the confidence of Ghanaians and spur growth.<\/p>\n
He noted that if indeed austerity was the answer, Ghana would not have been in this dire economic situation considering how successive governments have been particularly thrifty with expenditure.<\/p>\n
Speaking on JoyNews\u2019 PM Express Business Edition, he said, \u201cI don\u2019t think the solution lies in fiscal consolidation. I don\u2019t believe that at all because once you accept that it is fiscal consolidation we need then you\u2019re saying that we have been profligate, we have been expending too much, and we need to cut down.<\/p>\n
\u201cAnd I don\u2019t think that is it because the evidence doesn\u2019t support that. If you look at Ghana\u2019s expenditure over the last 60 years, we\u2019re not spending enough as the government expenditure is moving just around 10% of GDP.<\/p>\n
\u201cLook at Sub-Saharan Africa, they\u2019re spending more than in Ghana. If you look at Japan, they\u2019re spending about 25%, if you look at Malaysia, German, you will see that Ghana\u2019s government is actually thrift. We\u2019re too austere, we have not been able to spend enough in infrastructure, in social expenditure, and that is not something that we need to reduce.\u201d<\/p>\n
According to Prof. Ackah, successive governments have failed to adequately invest in grants and subsidies especially in comparison with other countries, thus, inadvertently thwarting development and making life difficult for Ghanaians.<\/p>\n
He noted that these austerities have affected business growth, resulting in low revenues from taxes.<\/p>\n
He explained, \u201cLook at subsidies, the amount of money that government sends in terms of grants and subsidies to fertilizer to farmers, to LEAP and social benefits. In 2000 we were spending just about 3% of our GDP or of our total expenditure, now it\u2019s gone to just about 20%. Malaysia is spending about 50%, look at Belgium, look at all these countries, so which means that government actually is austere.<\/p>\n
\u201cWe have been too hard on ourselves. So in times like these, I think what we need to do, if the government is struggling, it\u2019s a manifestation of a general suffering of businesses and households so the government cannot be too constrained by resources.<\/p>\n
\u201cSo if government says that we don\u2019t have money, it means that on average unemployed people, the civil servants, the business sector, they\u2019re also always struggling and therefore it\u2019s going to affect tax revenue and the aggregate demand is going down that\u2019s why we\u2019re revising our GDP down because we\u2019re in a recession and it\u2019s going to continue.\u201d<\/p>\n
The Economist suggested that the only way to get out of this quagmire was for the government to focus within and build local confidence.<\/p>\n
\u201cSo how do we overcome recession? How do we make sure that we build confidence? The confidence is not supposed to be built for the external creditors, the confidence is supposed to be built rather for the Ghanaians.<\/p>\n
\u201cThe Ghanaians must not be hopeless and lose confidence in their government. That can lead to Arab Spring and lead to those kind of social unrest. So I think that government must focus within first and build the confidence,\u201d he said.<\/p>\n
He added that with exports experiencing some boost due to the devaluation and depreciation of the cedi it is now possible to restructure the country\u2019s debts to service the interest payments in the short to medium term at least for the next 12 months.<\/p>\n
\u201cWe have enough buffer from the reserves and enough buffer from the exports of cocoa and the syndicated loan and all that is coming to be able to at least pay our interest that we\u2019re going to be doing in the next 12 months,\u201d he said.<\/p>\n
\u201cIf that is the case, then I think what government needs to do now is to begin to solve the structural difficulties that will increase aggregate demand instead of actually cutting down expenditure. Government needs to spend more. They need to spend more to support Ghana like they did during Covid, we don\u2019t need to only wait for emergencies to spend.<\/p>\n
\u201cWe need government expenditure to spur the economy and to spur confidence and to critically reduce productivity into the system so that we can raise our GDP from the current 590billion to about a trillion so that Ghana can become rich.<\/p>\n
\u201cAnd once the GDP grows the debt level to GDP ratio just falls because no matter how much we borrow, if the GDP is growing about 10% per annum the ratio doesn\u2019t matter again,\u201d he added.<\/p>\n
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An Economist at the Institute of Statistical, Social and Economic Research (ISSER), Professor Charles Ackah, says calls for more expenditure cuts are not the answer to Ghana\u2019s economic downturn. Going against the grain, he said government rather needs to spend more by increasing its expenditure and pursuing sustainable development goals in order to regain the […]<\/p>\n","protected":false},"author":1,"featured_media":1175267,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[187],"tags":[3889,1561,2545,268,1090,2280,2692],"class_list":["post-1175265","post","type-post","status-publish","format-standard","has-post-thumbnail","category-politics","tag-ackah","tag-cut","tag-doesnt","tag-expenditure","tag-government","tag-prof","tag-spend"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1175265","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1175265"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1175265\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1175265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1175265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1175265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}