A Former Minister of Finance and Economic Planning, Professor Kwesi Botchwey, has stated that Ghana is reeling from economic woes, because it has largely been living beyond its means.
Making references to the recently held Senchi Economic Forum, he said Ghana’s wage bill, interest costs and public debts accounted for about 82 per cent of public expenditure, leaving 18 per cent of total government revenue for everything else, including vital expenditure.
Prof. Botchwey was speaking on “The state of the nation’s political economy and the role of civil society”, at a lecture at the Central University College at Miotso.
He has described as "brilliant", a lecture by Dr Mahamudu Bawumia which painted a gloomy picture of Ghana's economy.
"I am honoured following on the heels of Mahamudu and his brilliant lecture which stirred healthy debate on the woes of the cedi but generally on our national economy.
"Mahamudu is a young man whose professional credentials I particularly respect.
So I offer no rebuttals to what he had to say. On the contrary, I do agree with much of what he said.
Professor Botchwey said for 2014 alone, out of the projected revenue of GH¢ 24.062 billion, statutory spending on wage bill, pensions, external loan repayments and various funds, among others would take 101.2 per cent.
“So we are basically living beyond our means and must borrow from the domestic and external markets to finance the deficits including sovereign bond issues from the capital markets”.
The consequence of such borrowing, he said, had resulted in a huge public indebtedness, while the graduation of the country to lower middle income status had reduced the country’s access to long term financing from multilateral institutions like the World Bank.
“Nothing comes free; the markets will require you to adopt policies that make macroeconomic stability, with low deficit preferably funded without undue recourse to money printing.
“In other words, these statutory and quasi-statutory funds alone take all government revenue, leaving a negative GH¢287 million for development expenditure and expenditure on goods and services,” he stated.
As part of measures to address the country’s economic challenges, he said energy pricing was very critical, “not only for the 2014 budget but also for the medium term.”
According to Prof. Botchwey, any fiscal medium-term measures proposed by the government should be credible and not be doubted.
“We noted at the economic forum discussions that the target set for the medium term in the proposed home-grown financial and economic policy framework may not be easily attainable especially as regards the target of reducing the wage bill from 57 per cent to 35 per cent by 2017,” he stressed.
Role of civil society
While commending civil society’s active role in exposing wrongdoing and lapses in governance, Prof. Botchwey asked that their focus be expanded to social mobilisation for development.
“It is time to stop the moaning and recriminations and get on with the business of national development,” he said.
Source: Graphic Online
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