Avoid excessive borrowing – IMF tells government

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde has cautioned against excessive borrowing by the government to finance the free Senior High School (SHS) policy.

According to her, excessive borrowing could put the economy in debt stress and derail the macroeconomic stability the country had achieved.

Ms Lagarde who disclosed this at a conference on, ‘The future of work in Sub-Saharan Africa’, in Accra on Monday, said the government should focus on domestic revenue mobilisation to raise money to finance the free SHS.

The conference which forms part  of activities of the two-day working visit of  Ms  Lagarde, the IMF Managing Director, to Ghana  is on  the theme, ‘Looking ahead to chart today’s course:  The future of work in sub-Saharan Africa’.

It was to come out with strategies to create decent and quality jobs driven by technology for the youth in SSSA in the three decades in view of the growing population of SSA which is projected to hit 1.7 billion by 2040 from the current one billion.

Ms Lagarde suggested that domestic tax avenue was a route government could pursue to raise resources to finance the free SHS.

“Our research has show that there is potential to raise three to five percent of GDP in domestic revenue by improving the efficiency of the tax system and through institutional reforms,” she said.

Ms Lagarde said the IMF was ready to help Ghana “achieve this potential through technical assistance, including by helping government’s leveraging technology”.

The Vice President, Dr Mahamudu Bawumia who delivered the keynote address said government had worked in the past 24 months to achieve macroeconomic stability.

He said interest rate was low, the budget deficit had been reduced and inflation rate had currently hit single digit.

Dr Mahamudu Bawumia said government next year would establish an independent fiscal and stability council to ensure that politicians spent within the budget, a law was being developed to cap the fiscal deficit at five per cent.

The Vice President lauded the IMF for holding the ‘The Future of Work in Sub-Saharan Africa,’ conference in Accra.

By Kingsley Asare

 

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