A former Minister of Finance and Economic Planning, Mr Seth Terkper says government’s admission that it will continue to borrow is a “humbling fiscal reality and necessity” that has been occasioned by revenue shortfalls in the midst of exploding expenditures.
Mr Terkper said, the government faced with this reality has resorted to offsets instead of paying arrears.
The former Minister in a tweet on Tuesday, October 30 said the government was experiencing revenue shortfalls despite keeping taxes that should have elapsed.
It is also introducing new taxes and levies, making income tax regressive, and toying with a distorted VAT regime that is increasing prices and not revenues, he said.
He added that expenditures were also bloating “due to dogmatic adherence to campaign promises; and despite ‘capping’ of statutory funds and additional revenues from TEN and Sankofa fields.”
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Seth Terkper also accused the government of using these oil revenues for consumption expenditure at the expense of investments and debt management.
He predicted that with revenues falling below expenditures and budget deficits widening, leading to financing needs, borrowing and debt were set to further increase.
He, however, cautioned the government to borrow prudently by taking a cue from the NDC government’s ‘smart borrowing’ policy.
The tweet by the former Finance Minister was in apparent response to President Nana Addo Dankwa Akufo-Addo who says that government will continue to borrow to develop the economy.
Earlier, former President John Mahama had asked the government to apologise to Ghanaians for making a U-turn on borrowing.
While in opposition, the New Patriotic Party had criticised the Mahama Administration for what it said was unbridled accumulation of debt, with then running mate and current Vice President Dr. Mahamud Bawumia calling borrowing a lazy approach to economic management. He had said an NPP government would prudently use internal resources to develop the country.
The government has, however, borrowed some GH¢40 billion since taking office in January 2017.