Gov’t urged to explore more areas to cut expenditure
Senior Lecturer at the University of Ghana Business School, Professor Godfred Bokpin, has urged government to explore more areas to cut its expenditure.
In his view, this will further boost the domestic revenue generation drive by the government as well as raise additional revenue for national development.
“We all agree that our revenue generation effort is below [expectation] and there is the need to raise more revenue.
“I also do agree that expenditure is very high, we need to do something about expenditure but there is a limit to how much cut you can do.
“We all do agree, if you look at the proportion of the earmarked funds, compensation and interest payment, those ones may not be enough, we can look at which other areas that the government can cut as a signal to the market that we are doing something about the expenditure situation in the fiscal space which is an assurance to investors,” he stated.
“The economy does not exist to please only foreign investors, there is much more to the economy than pleasing foreign investors, we have local investors,” he added.
Meanwhile, the Minister of Finance, Ken Ofori Atta, has revealed that government has suspended 20 percent of the 2022 Budget expenditure.
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Parliament has already approved government’s total expenditure for 2022, but the government, in a prudent fiscal consolidation move, has decided to cut down on its expenditure up to a whopping 20%.
Addressing the media, the Finance Minister said the expenditure management by government, is expected to continue from this year and beyond in the midst of the global impact of the covid-19 pandemic on economies.
“To ensure that the government matches all expenditure to revenue inflows, all expenditure commitments in 2022 will be be adjusted to match revenue collection.
“Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment beginning in the first quarter of 2022 in commitments across board for all covered entities benefiting from the 2022 Budget subject to revenue performance,” the Minister of Finance, Ken Ofori Attah announced at a briefing.
The Minister said that this means that Ghana’s fiscal consolidation agenda is going to be primarily driven by the expenditure side with support from additional revenue. In this regard, projected revenues in the 2022 budget will only be spent when they materialize.
Following the impact of the pandemic on the economy, the latest bold step, adds to government’s announced fiscal consolidation strategies, which includes a focus on more internal revenue generation.
Government’s projected expenditure for 2022, which has already been approved by Parliament is GHs 135.5 billion.
