The Director of Research at the Institute of Economic Affairs (IEA) Dr. John Kwakye has said that the 2023 Budget and Economic policy is being presented at a time Ghana is at a crossroads, experiencing one of its worst economic crises since independence. Speaking at a press conference organized by the institution, he added that the 2023 Budget is therefore a “make or break one” to the extent that if it fails to get it right, near – irreversible damage could be done to the economy.
He said, “Most importantly, the Budget must not be business as usual. It must break from the past and chart a new course to restore macroeconomic stability while laying the foundation for long-term sustainable growth and poverty alleviation.”
Dr. Kwakye added that it is sad that in spite of our huge domestic resources endowment in the form of (potential) government revenue and natural wealth, we still cry about not having enough money to execute our development agenda, and have to look elsewhere begging or borrowing. He said that Ghana’s resource constraints, which have impeded its progress, is self – inflicted and not unsurmountable.
He said as a county, we collect a mere 12-13% of GDP in taxes and 15- 16 % in total revenue. He advised the Finance Ministry that the 2023 budget must break from this unacceptable past.
“We believe that we should be able to increase tax revenue to the GDP to at least 15-26 % in 2023 and further to 18 -20% in 2024. At the same time, total revenue to GDP could be increased to 18-20 in 2023 and 22-25% in 2024,” he said.
Dr. Kwakye said that unsustainable fiscal deficits and debt have endured and created overall instability for the economy over the years. The 2023 budget must clearly mark a complete break from this perennial threat. To that end, the deficit must be significantly curtailed. The 2022 mid-year budget projected a deficit of 6.6% and a primary balance of 0.4% for the year. The 2023 budget must project a deficit of not less than 5% which is the current ceiling in the Fiscal Responsibility Act.
He added that notwithstanding fiscal estimates submitted to parliament, which include the deficit and associated financing or borrowing, invariably our Governments are able to borrow more and escalate the public debt as a result. To avoid this nuisance, we are proposing that borrowing and debt ceiling be imposed in the Fiscal Responsibility Act, should Government want to borrow beyond the ceiling, it should seek parliamentary approval.
Commenting on the strengthening of parliamentary budget oversight, Dr. Kwakye said that weak budget oversight by parliament has allowed expenditure and deficit overruns to occur regularly and with impunity, in breach of the parliamentary budgetary oversight.
He said there is an urgent need to strengthen parliamentary budgetary oversight. He further called for the creation of a Parliamentary Budget Office (PBO) which comprise independent professionals who will assist parliament by providing it with budget analysis, forecast, and cost estimates, among other fiscal watchdog functions.
