2023 Mid-Year Budget: Terkper calls for bold fiscal reforms to revitalize private sector investment
In a resounding call to action, Seth Terkper, former Finance Minister of Ghana, has urged the government to capitalize on the upcoming mid-year budget to embark on ambitious fiscal reforms that will create an environment conducive to increased private sector investment. Terkper’s warning about the waning confidence among the business community, primarily due to high taxes, highlights the urgent need for the government to address this pressing concern.
In an interview, Terkper emphasized that the government has a unique opportunity to restore confidence in the mid-year budget through the recently approved International Monetary Fund (IMF) deal. He stressed the importance of utilizing this opportunity to its fullest potential by implementing substantial reforms that can stabilize the economy and pave the way for a rapid recovery.
Terkper argued that the government cannot afford to squander resources in the public sector any longer, especially considering the substantial inflows the country has received in recent years. Despite the significant financial injections into the economy in 2020 and 2021, the desired turnaround and tangible results have remained elusive. Terkper believes that the IMF deal offers a critical turning point and the necessary impetus for the government to embark on much-needed reforms that will lead Ghana out of its economic challenges.
He commended the IMF for taking swift action and making necessary adjustments to support the country’s recovery efforts. Terkper believes that the IMF’s proactive approach is a positive sign and should be leveraged to regain economic stability. He also stressed the importance of focusing on reducing the fiscal deficit and addressing the mounting debt stock to create room for sustainable economic development.
Terkper further emphasized that the success of Ghana’s reform efforts will hinge on tangible performance and results. With the IMF’s continued scrutiny, it is imperative for the government to deliver on its promises and adhere to the agreed-upon benchmarks. Terkper cautioned that it is vital to remember that the funds received from the IMF are not grants but loans, underscoring the need for prudent and effective use of these resources.
One of the key aspects of the government’s reform agenda is the implementation of wage moderation measures aimed at reducing public sector employee compensation by 0.5 percent of GDP. This strategic move, outlined in the Ghana 3-year program developed in collaboration with the IMF, seeks to achieve fiscal discipline and revitalize the country’s economic growth. By calibrating public sector wages to strike a balance between burden sharing, productivity, and the government’s capacity to pay, the government aims to enhance the fiscal position and create an enabling environment for sustainable economic development.
These comprehensive reforms and the government’s commitment to addressing fiscal challenges and stimulating private sector investment reflect a concerted effort to rejuvenate Ghana’s economy. Terkper’s call to action resonates with the need for decisive and bold measures to restore confidence among businesses and attract much-needed investment. The success of these reforms will be pivotal in positioning Ghana on a path of sustainable economic growth and prosperity.
Ghana stands at a critical juncture, with the upcoming mid-year budget presenting a unique opportunity for the government to drive meaningful change through fiscal reforms. By heeding Terkper’s advice and leveraging the IMF deal, the government has the potential to restore confidence, stabilize the economy, and unleash the full potential of the private sector. The challenges ahead are substantial, but with the right approach and commitment, Ghana can emerge stronger and forge a path towards sustained economic progress.
