The Institute of Statistical Social and Economic Research (ISSER) says achieving economic targets next year is a test case for government to break the ‘political business cycle’ characterised by high spending in election years.
ISSER observed that for many years, governments during election years, even under International Monetary Fund (IMF) programme, tended to overrun their budgets causing high inflation and high budget deficits leading to excessive borrowing.
‘If we don’t have fiscal rules and we don’t respect some of the rules, we will still be under an IMF programme and once we get into the last quarter of the year, that is where we will be showing our true colours,’ said Professor Peter Quartey, the Director of ISSER.
He was Speaking at the 2024 Budget Statement Review programme and noted that achieving the end period inflation target of 15 per cent in 2024, though ambitious, was achievable if the government remained resolute in pursuing prudent fiscal and monetary policies respectively.
He urged c
itizens to manage their expectations of the government during the period as government may have to overspend to fulfil promises made to the electorate.
Such actions, he noted, would further worsen the economic predicament of the country in the 2025 economic year.
To ensure prudent fiscal measures, he recommended the re-introduction of public road tolls, linking the tax exemptions granted local producers of sanitary pads to capacity to increase production, monitor the implementation and effect of tax reliefs on private sector and conduct regular procurement audits.
He also advised that the second tranche of the IMF Fund be invested in the completion of existing infrastructure projects to avoid cost overruns due to delay in completion.
Prof Quartey also noted that though reliefs for electric vehicles were important, there was the need for investment in complementary infrastructure such as electricity, charging ports to help the country optimise the benefit.
‘There is the need to broaden the tax base to rop
e in the informal sector, which is estimated to make up 60 to 70 per cent of Ghana’s economy,’ he added.
Source: Ghana News Agency