The executive arm of government, which include the presidency, ministries and other departments, is likely to either stagnate or cut down its wages as a means to show leadership and rally all Ghanaians along the path of economic revitalization, the B&FT has gathered.
Sources close to the President have hinted that in the past few days, there have been several conversations as to how the executive arm of government can lead in explaining the current economic challenges the country is faced with as a result of the impact of COVID-19 and why it is important for every Ghanaian to participate in the economic recovery plan.
A source at the Presidency told the paper that “the talks have begun and everyone is aware of the economic challenges at hand. Something must give and the executive is having some discussions on their contribution to hastening economic recovery.”
Already, new and adjusted taxes have been announced in the 2021 budget as a measure to shore up government revenue. Government is planning to raise at least GH¢72.6 billion in revenues to execute its business this year.
The Finance Minister-designate, Ken Ofori-Atta during a post-budget forum organised by PricewaterhouseCoopers (PwC), noted that the main motive behind the introduction of new and adjustment taxes is to ensure that a collective effort is adopted in fighting the impact of COVID-19 on the economy.
“The whole issue of the ‘won ya wohia’ budget is really to rally all of us around as a country, to say what are we all going to be doing to make sure that COVID-19 does not sink us. While at it, the battle-cry for transformation is also not forgotten because we are always trading growth and consolidation. Also, must grow and we must do it deliberately, and it is our responsibility as a people to do that. I think that is what the president is looking at,” Mr. Ofori-Atta, said.
His Senior Advisor, Dr. Samuel Ashong also at a post-budget forum organised by the Ghana National Chamber of Commerce and Industry’s (GNCCI) noted that the drafting of this year’s budget has been one of the toughest ever in the history of the country as the expenditure demands outweigh expected revenue inflows.
“There is little room in the budget for expensive projects. The growth trajectory of the economy has been brought down; we are in a lower trajectory part of growth and all the income-based taxes have been affected that is why in the budget most of the taxes are consumption-based because the industries are hurting.
We have to clean the house and make sure that this economy survives in the foreseeable future even as we revive the industries. Government must function, and government functions only on revenues from taxation, levies and fees. So, in as much as it may not be good news for certain sectors of the economy, this is the reality.
Something has to give and unfortunately, if there are no businesses, there will be no employment, therefore we need to protect the businesses that is why we didn’t put a lot of taxes on production but on consumption so that businesses can be able to revive, employ people and get them working, earn income and contribute their quota to the coffers,” Dr. Ashong said.
According to the 2021 budget, government will spend GH¢35.9 billion as interest payments and GH¢30.3 billion on workers’ wages and pension. This means that over 90 percent – some GH¢65 billion – out of the money government hopes to generate from revenue – GH¢72.6 billion – is going into the debt servicing, wages and pension payments; therefore, government would resort to borrowing to cover the GH¢113 billion approval being sort from parliament.