Rejection of budget has serious implications for economy – Dr. Boakye

The case of the rejection of the 2022 budget and economic policy of government by the Minority in Parliament if protracted will have serious implications on the economy as investors may pull out from the country, an economist at the Institute of Fiscal Studies (IFS), Dr. Said Boakye, has said.

“We already know that the economic atmosphere is not so good and protracted deadlock will create confusion in the minds of investors and if this thing gets protracted, they can move to withdraw their investment, especially, those in the financial sector, and that will not be good for the economy,” he said.

He said there would be fiscal problems for the government next year if the budget was not passed before the end of the year.

“The President would have to declare a state of emergency next year if the budget was not passed, but for how long will the President declare a state of emergency,” Dr. Boakye who is a Senior Research Fellow with the Accra-based think tank said.

He said current impasse with the budget must be dealt with in other not to send wrong signals to investors and the international community, saying both the Majority and Minority “have to put down the politics and be pragmatic, sit down and negotiate and work things out.”

Dr. Boakye observed that both the Majority and Minority had to shed their parochial interest and build consensus for the approval of the budget.

The Senior Research Fellow said the Majority should not take a belligerent stance and should negotiate with their Minority counterparts on the issue.

“The Majority now have to understand that they cannot have their way completely and be prepared to come to a compromise with the Minority in Parliament,” he said.

On the part of the Minority, Dr Boakye said “They should have to a compromise. You cannot have everything. So they should sit down and negotiate. And while they are doing so, they have to be pragmatic and see what is best for the economy.”

The Senior Research Fellow said the government needed to find an alternative to the E-levy because the public was not happy with the levy.

“The alternative is not going to be so easy and will not be a one-year issue, but the government has to begin to think seriously about it,” Dr. Boakye said and suggested the extractor sector could help in raising revenue to replace the E-Levy.

The government projects to raise about GHC6.9 billion from the E-Levy and would help in funding government expenditure projected at about GHC139 billion.

According to Dr. Boakye, the E-Levy constitute double taxation, stressing “commodities and products, and not mode of exchanges should not be taxed.”


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