Economists pass verdict on 2018 budget

Professor Godfried Bokpin, Economist and Head of Finance at the University of Ghana Business School has described the 2018 budget as “good and pointing to the right direction.”

“Overall, the 2018 budget is a good budget. It is building on the progress we have recorded in 2016 and 2017,” he told the Ghanaian Times in Accra.

The Minister of Finance, Ken Ofori-Atta last Wednesday presented the 2018 Budget and Economic Policy of government to Parliament.

Speaking to Times Business to share his perspective on the budget, Head of Finance of the University of Ghana Business School, Prof. Bokpin, said the improvement in the macroeconomic indicators, such as fall inflation and policy rate, indicated that government was on course.

“This means the economy is responding to the policies set in the 2017 budget,” he said.

Prof. Bokpin, however,  said the  trending down of inflation and policy rate had not seen a reduction in the lending rates and efforts must be made to “improve the weak transmission effect,” on the market.

He said the government had outlined a number of “real market interventions” to propel the growth of the economy and mention some of the measures as tax holidays and exemption for start-up companies and the intention of government to reduce electricity tariffs.

The Head of Finance of the University of Ghana Business School entreated government to “give practical meaning”   to the flagship programmes it outlined in the 2017 budget, such as the One District, One Factory and the Planting for Food and Jobs, since feasibility studies had been completed on them, saying the work “done so far on the projects have been paperwork.”

He said the Planting for Food and Jobs held a good prospect to boost agriculture, reduce the country’s import and create jobs for the youth.

On revenue mobilisation, he entreated the government to put strategies in place to increase its financial resource envelope, saying the country’s current tax revenue to Gross Domestic Product of 17 per cent was far below the 25 per cent standard for the Lower Middle Income economies.

To this end, he said, government must put measures in place to expand the tax net and resource well the Ghana Revenue Authority to deliver on its mandate.

On job creation, Prof. Bokpin, said, he did not agree with the National Builders Corp programme, saying “I’m not sure the programme will be efficient and sustainable.”

An Economist and Head of the Department of Finance at the School of Business, University of Cape Coast (UCC), Dr John Gatsi for his part described the 2018 budget as “socially driven” and not robust in terms of job creation and infrastructure development.

He said the budget was silent on infrastructure and also did not elaborate more on job creation, indicating the budget was “ambitious in fulfilling social intervention” and government next year would need more revenue to finance its social intervention programmes.

Dr Gatsi said  the government needed to adopt growth-oriented policies to promote the growth of the economy and create more jobs for the teeming youth.

He said the growth recorded in industry this year, which was largely influenced by the mining and oil sector, was not “inclusive,” and “may not deliver the expectations of the citizens in terms of job creation.”

On job creation, the government had projected to create more than 100,000 for the youth under the National Builders Corp, who would be deployed to the health and education sectors.

However, Dr Gatsi questioned the decision of government to employ 100,000 youth next year, when government faced difficulties in absorbing Teacher and Nursing Training Colleges graduates.

Dr Gatsi said government did not have enough fiscal space to finance its development programme next and that was largely why the National Fiscal Stabilisation Levy had been maintained until 2019 to raise more revenue to finance the budget.

The Economist said government could have tapped on Property Tax to raise more revenue to finance next year’s budget but was not bold to highlight it in the budget.

 By Kingsley Asare

 

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