Government has given a strong assurance that measures outlined in its policy statement delivered on Thursday will put the economy on sound footing in the coming months.
Finance Minister Seth Terkper yesterday presented to Parliament, measures being implemented to mitigate the impact of decliningcrude oil prices on the budget.
The measures will result in slashing budgets for Ministries Departments and Agencies by 1.2 billion Ghana cedis. It also reviewed Government’s revenue and expenditure targets, while announcing new measures to control the rising wage bill.
There have however been concerns over one of the major problems facing the economy- which has brought it onto its knees- lack of confidence in the managers of the national purse.
Deputy Minister of Finance Ato Forson, however, says the measures will result in donors and foreign INVESTORS reacting positively.
“What we are saying today is that we have been prudent, we have identified what may increase the deficit; we have identified what may lead to a possible slippage.”
In stark contrast, economist, Dr. Eric Osei Assibey tells Joy Business the policy measures outlined by the Finance Minister cannot do the trick.
Meanwhile some businesses have welcomed plans by Government to engage in more international borrowing. This is expected to free the domestic market for private firms to borrow from commercial banks.
Businesses over the years have been struggling to get credit from banks because financial institutions prefer to lend to Government than private firms but Chief Executive of the Associations of Ghana Industries, Seth Twum Akwaboah says Government must also work hard to reduce interest rates.
Meanwhile, Government is expected to end the year by spending 10 billion cedis more than its projected income, despite a decline in its revenue because of falling crude prices.
Government’s expected revenue will fall by 2.7 billion cedis to 30 billion Ghana cedis, while expenditure on the on hand will decline marginally to 40 billion Ghana cedis.
This has raised concerns about its commitment to slash spending as revenue continues to drop but answering questions at a press conference, after a statement in parliament, Finance Minister Seth Terkper says there some areas that cannot be touched such as school feeding and maternal care.
Meanwhile member of Parliament’s finance committee, Dr. Mark Osei-Assibey says Government might be forced to increase taxes to make up for the shortfall in revenue, noting that challenges with revenue has more to do with energy than OIL prices.
Economist and head of finance at the University of Ghana Business School, Dr. Godfred Bokpin says the statement points to some challenging times ahead.