The Government must be prepared to take “tough measures” geared towards cutting down expenditure as it engages the International Monetary Fund (IMF) for support.
The measures include reducing the size of government and reviewing some
flagship programmes such as the Free SHS Programme to reduce expenditure.
Speaking to selected journalists at a forum dubbed: “Time with IEA Fellows,” Dr
John Kwabena Kwakye, the Director of Research at the Institute of Economic
Affairs (IEA), said the IMF Programme would not achieve its objective of
stabilising the economy if the Government failed to cut expenditure and
increase revenue.
He said the main goal of the Programme was to provide policy credibility and
help to restore confidence in the markets in the short term.
“We have large economic and structural imbalance; IMF will close the budget
gap. The Fund will not essentially solve the structural weaknesses in Ghana’s
economy.
“...Our authorities ought to negotiate for policies that support long-term
growth,” Dr Kwakye said.
Ghana last month commenced engagements with the IMF for Balance of Payment
support to quicken the country’s economic recovery process.
The first round of discussions between the Government and the IMF ended on
Wednesday, July 13, 2022.
Experts project that the IMF could disburse as much as $3 billion to Ghana and
unlock budget support from other multilateral lenders. They, however, indicate
that the timing of the support would be dependent on the country’s ability to
present a credible fiscal reform plan.
Dr Kwakye said Ghana must prepare its own programme and present it to the IMF
as part of the negotiations.
He said although the country would not get all that it desired in the
negotiations, the indigenous programme would help to make a strong case for the
country and quicken the process.
He said one of the key requirements to address the country’s economic
challenges was to “enlarge our revenue envelop” and take drastic measures to
reduce expenditure.
With respect to the Government’s flagship programmes, Dr Kwakye said the
Government must focus on policies that were geared toward human capacity
development and forego those that would put a strain on its expenditure.
“I don’t see why we can’t touch Free SHS...Let parents who can afford to pay part
of the cost. Policies that do not focus on human capacity development can be
phased out,” Dr Kwakye said.
He also urged the Government to create an enabling environment for the private
sector to grow and create employment.
“There are a lot of rigidities in our expenditure. Public sector compensations
are huge. The public sector needs to be downsized to be more productive so that
we can remunerate them better,” Dr Kwakye added.
Source: GNA