Fiscal discipline will restore macroeconomic stability - Osafo-Maafo
Senior Minister-designate, Mr Yaw Osafo-Maafo, says the government is committed to fixing the country’s economy, which he says is in a difficult situation at the moment.
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“The state of the economy is not the best but it is doable,” he said, adding that “once the government ensures discipline at all fronts, the economy will be brought back on”.
Mr Osafo-Maafo said this when he took his turn as the first minister-designate from the tall stock of appointees of President Akufo-Addo to face the Appointments Committee of Parliament on January 20.
Sounding highly confident and sometimes bullish, the former Minister of Finance and Education in the Kufuor administration said the government was highly optimistic about its plans and programmes for the economy and further indicated that once the full machinery of the government kicked in, the government would take the country out of the woods soon.
Snapshot of economy
Presently, inflation is in double digit at 15.4 per cent as of the end of December last year, according to the Ghana Statistical Service. Interest rate is also hovering at an average of 30 per cent, a situation which makes it difficult for businesses to borrow.
The country’s debt to Gross Domestic Product (GDP) is over 70 percent while the overall budget target of 5.3 percent for the year 2016 was missed.
It now hovers around seven percent according to reports from the finance ministry. Agriculture and industry among other sectors are all recording abysmal growth rates, something analysts have described as undeserving of a country like Ghana with a lot of potential.
Taxes
Questioned about broadening the tax base, Mr Osafo-Maafo said the government would set the right conditions in place that would encourage companies to voluntarily honour their tax obligations.
For instance, he noted that corporate taxes would be reduced from 25 per cent to 20 while the five per cent VAT on real estate services will also be scrapped.
He said by doing so, companies would be encouraged to pay taxes and that meant broadening the tax base.
Per the ruling party’s manifesto, the 17.5 percent taxes on financial services will be abolished together with other taxes which are making it difficult for businesses to thrive.
“We believe in the private sector and therefore, we believe that once we set the stage right for them, they will grow to absorb the large number of unemployed people in the country.
Statutory payment
Over the last three years, statutory payments by the government have been a major challenge.
Payments to the Ghana Education Trust Fund, district assembly common fund and the National Health Insurance Scheme (NHIS) have all been in arrears.
Mr Osafo-Maafo described the situation as unfortunate and noted that, that had come about as a result of lack of liquidity from the government.
According to him, the government would ensure financial discipline in all sectors and expressed the hope that by doing so, there would be some funds to enable the government to be on time with its obligations.
Borrowing
On borrowing, he said the government would continue to do so but in a manner that would allow some fiscal space.
“We will borrow under different arrangements that favour us so that in the end, we will not be choked,” he added. — GB
