Restructure economy to consolidate IMF gains - PwC to government
The government must make fundamental changes in the structure of the economy and aggressively implement the public financial management law to ensure greater scrutiny and monitoring of the expenditures of ministries, departments and agencies.
A Country Senior Partner, PwC Ghana, Vish Ashiagbor, who gave the advice, said that would help consolidate the gains chalked up under the International Monetary Fund (IMF) programme.
“We have nice policies but the implementation becomes the problem.
So given what we’ve experienced now, we believe everybody understands that we cannot do business as usual.
“The government must take the opportunity to do some fundamental changes in the structure of the economy, implemented aggressively,” he said.
Mr Ashiagbor, who was speaking in a post-budget interview with the Daily Graphic, said the 2024 budget statement presented to parliament last week by the Minister of Finance, Ken Ofori-Atta, did not come as a surprise to PwC as it aligned with the commitments the government had made under the IMF programme.
“The budget is along the lines that I expected because going into the IMF programme, we had to commit to certain macroeconomic targets, so it was always going to be the case that this budget was going to be aligned with those targets,” he said.
Mr Ashiagbor reminded the government that the economy still remained fragile despite the signs of stability that were beginning to emerge.
He said although the minister, in presenting the budget statement to parliament, said the economy had turned the corner, suggesting that the economy had already recovered and was on the path of growth, the reality for businesses was not the same.
“You know business thrives on confidence and economics, and generally by confidence people who have confidence in the outlook of the economy are more positive in terms of investments.
They are more positive in terms of taking a bit more risk and more positive in terms of employment and all those things.
“So I think part of what the minister was doing, given the role that he occupies, is trying to generate confidence within the economy so that it can add to the stability that is beginning to emerge,” he said.
He said on the business front, many businesses acknowledged that the economy was not out of the woods yet.
“There is a need for careful management and careful assessment of investment in business activities, then we will see what happens,” he said.
Touching on the government’s revenue generation plan for 2024, Mr Ashiagbor said tax revenue remained the bulk of the revenue generation plan to raise GH¢ 176.4 billion.
However, he said the budget statement did not indicate that the government had in place new measures to expand the tax net.
“We have not seen a particularly aggressive move towards broadening the tax base, so what the budget is looking at is to get more revenue by increasing the volume that is coming from existing sources,” he said.
He said the relevant individual businesses that ought to be paying taxes were not paying in sufficient amounts and there was the need to tighten up tax compliance.
“The digital systems we are putting in place as a country is all designed to assist in that regard; I just think that needs to be quick although I know that it involves investment but it seems to be the low hanging fruit in terms of revenue mobilisation,” he said.
Mr Ashiagbor explained that some tax measures in the budget statement had been designed to encourage investment into particular sectors of the economy and also give relief to individuals.
For example, he said the zero-rated (VAT) on locally produced sanitary pads would be directly encouraging local production, but would also be a relief to individuals, for hygiene and health care.
“I think the measures will encourage direct investment into the economy to benefit specific areas,” he said.