Governor of the Central Bank, Dr Ernest Addison, has said government going forward will have to make some difficult decisions to reorganize it’s finances and expenditure priorities.
According to the Governor, a reorganization of government’s finances and expenditure priorities will have to be done while exploring more sustainable sources of revenue.
Dr Addison’s assertion has to do with the fiscal gaps created and its corresponding financing needs with the advent of the Covid-19 pandemic and the roll-out of the various fiscal stimulus packages by government to mitigate the adverse socioeconomic impact of the pandemic on Ghanaian households and businesses.
This would be the second time the governor is urging the government to take a relook at the fiscal implications of the various interventions, making the first call during the 97th MPC press briefing in November.
Delivering an alumini lecture themed Pandemic, The Economy and Outlook, at the University of Ghana on Thursday, Dr Addison noted that, fiscals costs of the various stimulus packages had reached Ghs 11.2 billion.
“So far, in terms of stimulus package deployed to moderate the adverse socioeconomic consequences on the households and businesses, is estimated at over Ghs 11.2 billion. If you add the financial sector costs and the energy sector costs, it raises the estimate of the financial burden from these three sources alone to Ghs 24 billion. As at half year it was estimated that government paid Ghs 4.7 billion in excess capacity payments in the energy sector. This has pushed the debt/GDP ratio above the threshold for Market Access Countries,” he said.
Speaking further, he cautioned against the use of the Central Bank’s funds as an alternative to financing government interventions, noting that would weaken the bank’s ability to serve as an anchor of monetary and exchange rate stability.
“The programme of interventions should be no expectation that these are obligations of government. The wide fiscal gap raises important financing issues, and its financing should not be by recourse to central bank funds as this will weaken the bank’s ability to serve as the anchor of monetary and exchange rate stability,” he added.
