Government must as matter of urgency stop borrowing more money and impose fiscal discipline to restore Ghana’s economy.
That is according to Associate Professor of Finance at the University of Ghana Godfred Bokpin who says government must adopt a war-like approach to tackling the crisis that is pushing the Ghanaian economy towards the edge.
Speaking at the Graphic Business/Stanbic Bank Breakfast meeting held in Accra on Wednesday 9 November 2022, Professor Bokpin stated that President Akufo-Addo needed to take the lead by cutting down expenditure at his office and reduce the size of ministers to 40
The event, the fourth and final for the year 2022, which was on the theme; ‘’17 times too many! What should we stop doing and start doing as a people?’’, was organized for the business community to exchange ideas as well as make suggestions that will feed into the 2023 budget statement.
The recommendations are expected to help the government to plan well in order to prevent another economic crisis and ensure the country does not return to the IMF for the 18th bailout.
The event was attended by experts from academia, civil society organization, international organizations, trade associations among others.
Professor Godfred Bokpin stated the need for the country to live within its means to overcome the present economic crisis that has resulted in prices of food and other goods rising daily.
He recommended that the Ghanaian government should ensure prudent fiscal discipline and put in place strategies to boost domestic revenue.
“When you look at the data, anytime we are under the IMF, there is fiscal discipline but when we come out of the program, we miss up. Fiscal discipline is very important, we have a large government size that is not productive, inefficient state own enterprises, high debt servicing, the government must adopt a war like approach to addressing the situation by cutting down expenditure beginning from the office of the president and reduce the size of ministers’’.
Economic challenges
In the last few years, global events, including the COVID-19 pandemic and the raging Russia/Ukraine war, have created a lot of challenges for many economies including that of Ghana.
The country’s inflation rate for October 2022 stood at 40.4 per cent with the rate expected to rise again in November. The trend is an indication that the government is likely to miss the revised target of about 28 per cent at the end of the year.
The cedi has heavily depreciated since the first quarter of the year and lending rates are now hovering around an average of 33 per cent.
Fuel prices, since January this year to date, have risen by more than 160 per cent, pushing transport fares up almost every quarter since the beginning of the year.
According to the Bank of Ghana, the country’s stock of gross international reserves declined to US$6.6 billion, equivalent to 2.9 months of import cover for goods and services in September 2022. This compares with the December 2021 position of US$9.7 billion, equivalent to 4.3 months of import cover. Net International Reserves, which exclude encumbered assets and petroleum funds, is estimated at US$2.7 billion also as of September 2022.
The World Bank in its Africa Pulse Report released in October, projected that Ghana would end the year with a Debt –to –GDP ratio of 104 per cent.
Story by: Emmanuel Coffie/Radiogoldlive.com
