Manage public sector debt efficiently
Debt overhung on state-owned enterprises (SOEs) partly account for the inability of the government to meet its revenue targets in recent times, an economic analyst has observed.
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An Economist, Mr John Gatsi said a better management of debt by public sector enterprises such as the Volta River Authority (VRA), the Electricity Company of Ghana (ECG) and the State Transport Company (STC) could save the country some revenue for the government.
The economist, who is also a lecturer at the University of Cape Coast, noted that the debt position of such SOEs make it even difficult for them to remit revenues they had collected on behalf of the government to state coffers.
“There is the need for state agencies that generate revenues to manage their debts effectively,” Mr Gatsi stated, adding that “tax debts should not be allowed to continue.”
The economist estimates the tax debts owed the Ghana Revenue Authority (GRA) to be in the region of GH¢300 million, and stressed “we need to put in measures to correct this.”
Mr Gatsi’s call comes in the wake of provisional figures issued by the Bank of Ghana for the first half of the year which indicated that the economy was running on a deficit equivalent to 4.5 per cent of the total goods and services produced within the country in a year, known as the Gross Domestic Product (GDP).
This is as a result of shortfalls in revenues. Total revenues and grants were GH¢9.5 billion, against a target of GH¢10.6 billion. The domestic revenue component came to GH¢9.0 billion, below a target of GH¢9.8 billion.
Total tax revenue amounted to GH¢6.7 billion, compared to the target of GH¢7.7 billion.
This, the BoG, attributed to underperformance of almost all the tax types, reflecting lower imports and energy sector challenges. Companies also faced a stiffer first half due to continuing energy crisis.
The shortfalls in revenues also affected the release of grant disbursements from donors. The amount released was GH¢507.6 million, 41.8 per cent below target.
Non-tax revenues for the period amounted to GH¢2.2 billion, higher than the budgeted target of GH¢2.0 billion.
Mr Gatsi said the country could do very little about the drying donor inflows, which had come about as a result of recession in developed nations and Ghana’s reclassified position as a lower middle income country, signifying “we are capable of managing our own affairs.”
The inability of the government to look for counterpart funding could be partly responsible for the low disbursement of donor funds.
“Part of the Eurobond has been earmarked as counterpart funding to trigger some of these disbursements for projects to go on. We should therefore see much faster disbursements going forward,” the upbeat economic analyst stated.
Mr Gatsi however hopes to see the government living up to the promise to shake up the GRA since it could be detrimental for individuals at the upper echelon of the authority to remain there for unnecessarily long years.
By Samuel Doe Ablordeppey/Daily Graphic/Ghana
