Gov’t not planning for emergencies, spending more than generating – ACEP
The Executive Director of the Africa Centre for Energy Policy (ACEP), Ben Boakye, has raised concerns over Ghanaian governments’ failure to plan for emergencies in their budgets. Speaking at the 3Business Economic Sustainability Summit in Accra, Boakye highlighted the country’s tendency to spend far more than it generates, resulting in severe financial strain during difficult times.
As Ghana grapples with economic challenges, such as high inflation, unemployment, and currency depreciation, it has become increasingly apparent that the government’s approach to revenue utilization requires reform. Boakye’s concerns regarding the inefficient utilization of public funds and the absence of emergency planning point to a need for a more disciplined fiscal approach in the country.
Moreover, the issue of Ghana’s rising debt is becoming a significant point of concern for the country’s financial stability. Professor Godfred Bopkin of the University of Ghana noted that 70 percent of the government’s total revenue goes into debt servicing. This high level of debt servicing leaves very little room for other spending, resulting in a constrained fiscal space for the government.
The IMF debt sustainability framework has deemed Ghana’s debt unsustainable, necessitating the need for the country to reduce its debt-to-GDP ratio from over 100 percent to 55 percent by 2028. The framework categorizes Ghana as a medium debt-carrying country, highlighting the need for the government to take a more proactive approach to debt management.
The high debt levels in Ghana raise concerns about the country’s ability to finance future growth, support social programs, and manage external shocks. Ghana’s economy has been hit hard by the COVID-19 pandemic, which has significantly affected the country’s revenue generation and increased its expenditure. Therefore, there is a need for the government to take urgent action to address the country’s fiscal challenges.
To address these concerns, Ghana’s government must take a disciplined approach to fiscal management. This approach should focus on improving revenue mobilization, enhancing budget planning and implementation, and optimizing expenditure management. A proactive approach to debt management is also necessary to reduce the country’s debt burden.
Ghana’s financial stability is at risk due to the government’s approach to revenue utilization and rising debt levels. Urgent action is required to address the fiscal challenges the country is facing. A disciplined approach to fiscal management, coupled with proactive debt management strategies, is necessary to restore Ghana’s financial stability and support its economic growth.
