The Institute of Fiscal Studies (IFS) has urged government to limit the amount of money it borrows to the barest minimum, in order not to cause fiscal overruns and generate macroeconomic instability.
According to the Research Institute, large amount of borrowing would plunge the country into serious fiscal difficulties and macroeconomic instability.
This was indicated in a presentation issued by IFS yesterday, as part of their expectations of the soon to be presented 2019 budget.
The Akufo-Addo led government in a quest to ensure growth in the economy introduced several initiatives such as the US$10 million National Entrepreneurship and Innovation Program (NEIP); Planting for Food and Jobs; Establishment of a GH₵400 million Fund to de-risk Agriculture; Development of Modern Storage Facilities through “One-district, One Warehouse” program, amongst others.
However, IFS in its twenty-four page presentation has stated that the flagship programmes introduced by government is the cause of its continuous borrowing spree.
“It is commendable that the government has recognized the need for a broad-based approach to economic growth. However, the programs and initiatives are too many. Some of them are also too grandiose. They require very large amounts of funding,”
According to IFS, with the country being on fiscal consolidation path, government would be able to fund these initiatives.
“How can the government fund these numerous and grandiose programmes and initiatives, given that government revenue has consistently fallen short of initial budgets since 2012; and there is presently no available free fiscal space, since three rigid expenditure items in the forms earmarked expenditure, compensation of employees and debt service expenditure have consistently exceeded total revenue and grants since 2013?” the Institute quizzed.
The Research Institute further urged government to pruning down the numerous programs and initiatives it is pursuing.
The Finance Minister, Ken Ofori-Atta is expected to present the 2019 budget in Parliament on Thursday, November 15 this year.
By: Emmanuel Yeboah Britwum