Lead partner at PFM Tax Africa Network, Seth Terkper, has opined that government’s rising expenditure levels coupled with almost stagnant revenues, will render austerity measures outlined in the 2021 budget ineffective.
This according to the former Minister for Finance, will not result in the expected improvement in the country’s current difficult fiscal situation.
Currently, Ghana uses close to 100 percent of its tax revenues for interest payments and compensation – wages and allowances of workers – borrowing to finance other critical expenditure.
Making a presentation at the maiden edition of the PFM Dialogue Series, Mr Terkper asserted that government’s expenditure over the medium term is expected to average 23 percent with total revenue averaging 16 percent.
Speaking further at the dialogue series, Mr Terkper, noted that to improve the country’s fiscal situation, government must do away with some non-critical expenditure.
Adding that, mass social intervention polices like the Free SHS undermine the progressivity of the country’s fiscal regime.
Further calling for a consensus on the review of ‘big ticket’ expenditure items like the Free SHS, interests and wages to help create for government, the needed fiscal space.
The maiden edition of the PFM Dialogue Series was held in partnership with the Natural Resource Governance Institute (NRGI) with acknowledgments to the African Development Bank (AfDB) and Africa Centre for Energy Policy (ACEP).
