We expect a major budget review – Economist tells govt

The government has been asked to undertake a major review in the 2022 mid-year budget.

A Professor at the University of Ghana Business School, Lord Mensah said he expects that the government will sacrifice some expenditure lines to save the economy.

“We are going to have a major budget review, several expenditure lines will be sacrifice,” he said on the New Day show with Johnnie Hughes on TV3 Monday July 25.

He added “for the people, I expect the government to give them tax incentives.”

The Finance Minister Ken Ofori-Atta will be presenting the 2022 mid year budget review today Monday July 25 at 1PM.

Professor Lord Mensah further asked the government to control its discretionary expenditure.

He said the government must, at this moment, focus on spending on projects that will keep the country afloat.

For instance, he said, with the construction of the Agenda 111 project to build hospitals across the country, the government should not necessarily build 111 hospitals across the nation.

“I expect this to look at the statistical data,” he said on the New Day show with Johnnie Hughes on TV3 Monday July 25.

“You don’t necessarily have to provide 111 hospitals. You ration expenditure you make sure that the one that will keep you afloat is what you finance,” he said and further indicated that those are the discretionary,” he added.

Other analysts, including the Chief Operations Officer at the Dalex Finance, Mr Joe Jackson also asked the government to cut spending on some programmes especially the feeding component of the free Senior High School (SHS) programme.

In his view, times are hard, the country is broke therefore, critical decisions ought to be taken by managers of the economy to look at ways to cut expenditure.

“It is time for us to look at all the expenditure cuts, it is time for us to look and wonder, do wo we want to spend this much on feeding and boarding in the SHS regime?

“Is this what we want to spend our money in the such difficult times on? These are hard times, there are hard decisions to be taken and one of the things we must realize is that Ghana is broke.”

Ghana’s economy is currently saddled with severe challenges.

This has led to the country heading to go to the International Monetary Fund for support.

Accordingly, a staff team led by Carlo Sdralevich arrived in Ghana on July 6 to engage the government of Ghana. The team concluded its initial work on Wednesday July 13.

The IMF team met with Vice President Dr Mahamudu Bawumia, Finance Minister Ken Ofori-Atta, and Governor Ernest Addison of the Bank of Ghana.

They also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank to engage on social spending.

At the conclusion of the mission, Mr. Sdralevich issued the following statement said Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment.

The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.

“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.

“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term,” the IMF said.

It added “The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.

“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation

“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.

“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission.”

The Government of Ghana on Friday July 1 announced that it was seeking support from the IMF.

This followed a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund, a statement by the Ministry of Information said.

source: 3news