A member of parliament’s Finance Committee, Dr. Mark Assibey Yeboah, has urged government to adhere strictly to the International Monetary Fund (IMF) prescription of curtailing spending and cutting down on expenditure if the economy is to rebound.
“There is a lot of frivolous spending going on. We need to stop it. We have to stop borrowing and live within our means. We should cut down on the expenditure, travels; other agencies like GIPC, DIC can be cut off government subvention. You can yank them off government budget and nothing will happen. Then you can stop the borrowing.”
His comments follow Finance Minister Seth Terkper’s optimism about recovery of the economy, citing positive economic indicators and vast improvement in fiscal and current account balances in addition to a surge in real gross domestic product and calm inflationary pressures.
The country has been battling with challenges such as high debt, a wobbly local currency, rising inflation and a chronic power crisis amid job-cuts and labour unrest.
This forced government to sign a three-year US$918million extended facility with the international monetary fund (IMF) in order to restore debt sustainability, boost growth and job creation, while protecting social spending.
Barely a year into the international lender's bailout programme, Finance Minister Seth Tekper said: "The country's fiscal consolidation is bearing fruit; our gap between revenues and expenditures is narrowing".
Dr. Assibey Yeboah however questioned the Finance Minister’s assertion about improvement in the economy. “It is for the ordinary Ghanaian to answer, not for the Finance Minister to tell us. I am not impressed. If you look around unemployment is still high, inflation is high
“If the economy is rebounding our currency has to get stronger. Jobs have to be created. The cost of borrowing, interest rates have to come down. The cost of borrowing is still high up. The currency is still weak. So what has improved, which of these economic indicators has improved from a year ago or two years ago?” he said.
He also maintained that the inflow of revenue is not sufficient to gauge an economy. “Your revenue far exceeds your expenditure. So you are borrowing GH¢8billion. What is worrying is that we are borrowing to pay interest. Interest payment alone for the year is GH¢10.4billion. This means a chunk of our borrowing is going into interest payments.” he said.
Dr. Assibey also touched on capital expenditure, which he claims was Gh?6.6billion less than the interest payments the country will use to service its loans.
Government has started constructing new roads and putting up new community day-schools, which is intended to bring development to the masses; however, Dr. Assibey reckons that “all these schools that government is putting up are not necessary. We can save a lot of money if we rather resource the existing ones”.
The MP for New Juaben South also endorsed government and parliament’s decision to approve the withdrawal of one percent withholding tax on the new Income Tax Amendment bill.
“I think the right thing was done. It is a good thing that the 1 percent withholding tax on interest earned has been withdrawn.”
Parliament has approved the Income Tax Amendment bill. The new Act, when signed by the President into law, will remove a recently imposed one percent tax on interest earned by investors and also cut withholding tax from 15 percent to 7.5 percent.
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