Today’s budget statement is expected to provide a blueprint that will salvage the economy from the effects of the COVID-19 pandemic. This is particularly so when the country’s finances are not in the best of health.
The Trades Union Congress, as part of its proposals for the 2021 budget statement, believes the huge fiscal hole in the country’s finances has to be plugged while addressing the rising debt situation. It is convinced that fiscal moderation is expected to be one of the main features of this year’s Budget Statement.
The TUC says the 2021 budget statement requires clear policies and measures on employment, incomes, social protection, and decent housing among others.
The Ghana Employers’ Association (GEA), on the other hand, believes macroeconomic stability would be essential in driving the sustainability and recovery of businesses. Hence, the GEA says it expects this year’s budget will not see the introduction of new taxes as experienced in past fiscal years.
The budget is expected to touch on three main areas: the unsustainable debt situation, revenue shortfalls, and policies to boost growth in the private sector. Consistent revenue shortfall has been the bane of government.
This has been exacerbated by the impact of the pandemic and the pandemic’s effect on businesses affected revenue generation efforts of government, leading to revision of the revenue targets. Data from the Bank of Ghana indicates that as of November 2020, GH¢43.3 billion of total revenue had been mobilized, meaning government needs more than GH¢10 billion in December alone to meet the revised target!
The 2020 third quarter contraction led to a recession, and is attributed largely to the hospitality sector as the hotel and restaurants industry saw a contraction of 62.1 percent, according to data from the Ghana Statistical Service (GSS).
Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey believes it will be extremely important for efforts to be channeled at devising new means, other than increasing taxes, to shoot up domestic revenue.
Another senior lecturer at the University of Ghana, Dr. Patrick Assuming sides with the position that it will be a wrong move for government to attempt to introduce new taxes especially during this pandemic period.
Rather, the many tax exemptions granted businesses should be looked at, as well as taking advantage of the untapped potential of property rates, he contends. He believes property tax is one area where there is a big potential to collect more revenue.
Secondly, Dr. Assuming urged government to be honest about the current economic situation facing the country and desist from trying to paint a fancy picture about the economy in the name of inspiring hope.
Veteran economist, Kwame Pianim asked government to use the presentation of the 2021 budget statement to tell Ghanaians the true state of the economy. That way, he believes it would help Manage the expectations of the citizenry.
He emphasised that Ghanaians need to know that 2021 will be difficult. He advised against th3e continuation of stimulus packages to households and specialized groups, saying such packages have the tendency to deepen the economic woes of the nation since resources are limited.
Professor Peter Quartey also wants government to tell Ghanaians what strategy it has put in place to ensure that in the coming years we get out of this high debt situation. COVID-19 has worsened our debt situation and he is eager to learn what strategy is in place to avert further build ups. According to the Bank of Ghana, the country’s public debt is now more than 74 percent of GDP as of November 2020.
Managers of the economy must therefore desist from painting a ‘bright’ picture when in actual fact the economy is in dire straits. Being candid is of utmost importance to ensure the citizenry appreciate the true situation on the ground and hence, manage their expectations. Building up hope in the citizenry is important but not at the expense of the truth.
All in all, Ghanaians will be glued to their devices today to hear what economic policy the government of the day has for Ghanaians this year and moving forward. The citizenry will be interested to know what the ‘year of roads’ portends for road infrastructure across the country to stem the carnage on our roads, and what financial commitments would be made in the energy sector to forestall another power crisis going forward.