Economists react to 2020 budget

An economist, Dr John Kwakye has described the 2020 budget statement and economic policy of the government as a pro-poor.

According to him, his description of the 2020 budget as pro-poor was premised on the numerous social intervention policies the government had outlined in the budget.

Speaking in a telephone interview with Ghanaian Times on his impression about the 2020 budget and economic policy of the government, Dr Kwakye, who is the Director of Research at the Institute of Economic Affairs (IEA), said the Free Senior High School programme, Nation Builders Corps (NABCo), Teacher and Nursing Training Allowance, Planting for Food and Jobs, were meant to bring relief to people as well as build the human capital of the country.

He said even though the current government was capitalist, it was more socially oriented in terms of policies and spends so much on socialist intervention policies.

“The government in the past three years has spent so much on social intervention programmes than capital expenditure,” he said, adding that the “policy direction of the current government “is developing the human capital” to propel and accelerate the growth of the country.

Dr Kwakye observed that that given the huge social spending the government had done in the past years to the disadvantage of capital expenditure; the government was shifting into infrastructure development.

The Economist stressed that the government seemed to “be walking on a tight rope of maintaining macroeconomic and fiscal stability and promoting growth of the economy.”

He explained that the government had projected a fiscal deficit target of 5.7 percent for 2019, which is below the 5 percent prescribed in the Fiscal Responsibility Law, and the government was doing its best spend above the ceiling set in the law.

“The government needs to be commended for the passing the Fiscal Responsibility Law and the Fiscal Responsibility Council whose mandate was to advise government on fiscal issues so as to maintain fiscal stability of the country,” Dr Kwakye said.

Debt

On debt, the Economist said the growing public debt which was currently GHC208 billion was a “source of concern.”

Dr Kwakye said the country’s debt was moving beyond the 60 per cent threshold and 40 percent of the country’s tax revenue would be used for debt servicing, leaving 60 percent for other government expenditures.

Government would use more than GHC21 billion to debt and interest servicing next year.

Dr Kwakye said using the absolute figures was not the best in assessing the debt situation of the country, stressing that it had be related to the Gross Domestic Product of the country.

Given the medium-term fiscal deficit estimate from 2020 to 2023, the Economist said, he was convinced the country’s total public debt would decline over the period.

Dr Raymond Dziwornu, Dean, Faculty of Accounting and Finance, University of Professional Studies, Accra (UPSA) lauded the government for not introducing new taxes in the 2020 Budget and Economic Policy Statement.

According to him, the decision of the government not to introduce new taxes was a step in the right direction.

He suggested that what the government needed to do was to focus on how to make the revenue generation system more efficient.

Speaking to the Ghana News Agency on Thursday in Accra in reaction to the 2020 Budget, Dr Dziwornu noted that the budget, which was on the theme “Consolidating the Gains for Growth, Jobs and Prosperity for all”, was a comprehensive one.

This, he said was so, because all key areas of the economy, such as infrastructural development, rail, digitisation, agriculture and health were covered.

“With respect to revenue, what I think we need to look at is that digitisation is now the order of the day. It is rather unfortunate that as at September this year, government has not been able to meet its revenue targets” he said.

The Dean said the informal sector had always been talked about, and these were people that digitisation was in their hands.

Dr Dziwornu urged the government to take advantage of leveraging on the digital period that Ghanaians found themselves in.

On his part, Dr Richard Agbanyo, Lecturer, Department of Banking and Finance, UPSA, in his general impression about budget, described it as quite an ambitious one.

He explained that it was because the expenditure was on the higher side; one might be tempted to conclude that the budget was quite ambitious.

“We are talking about total expenditure of 86 billion Ghana Cedis, expected revenue of 67 billion Ghana Cedis, which created a deficit of about 18.9 billion Ghana Cedis,” he said.