We must plug the leakages

Issues of the economy have dominated national discourse in recent times, and that can be understood. There is a direct correlation between the performance of the economy and the general well-being of the people.

The government has promised to transform the economy, revitalise the private sector, reduce taxes and ultimately provide jobs. And these promises resonate very well with Ghanaians because at the end of it all, it is about bread and butter.

It is for this reason that expectations are quite high among Ghanaians that the nation will experience the golden era of economic transformation.

This is against the backdrop of an economy which has, for the past three years, grown at an average of 3.5 per cent annually, the slowest since 2000.

Besides, the fundamentals of the economy have been weak. For instance, interest rates are very high, making the cost of business very high since businesses have to borrow above 30 per cent. Inflation rates have been in double digits, even though it dropped to 15.4 as of the end of 2016. The country’s public debt is GH¢140 billion, which is over 70 per cent of the gross domestic debt.

The biggest challenge confronting government in the management of the economy is how to improve revenue and reduce expenditure, and at the same time prosecute its agenda of expanding the economy and create jobs.

On the revenue side, the economy in the past few years have had to bear the brunt of commodity prices volatilities. Being a primary exporter of cocoa, gold and oil, Ghana has suffered from revenue shortfalls from drop in the prices of oil and gold.

Generating revenue is very instrumental to the implementation of government’s change agenda. And that has sent tongues wagging as to how the government intends to raise revenue while embarking on massive tax cuts.

We believe that government will look at creative ways of raising revenue, else it will be very difficult to get the task executed, while at revenue mobilisation, government must work assiduously to plug the leakages in the system in order to generate the needed revenue for the funding of the budget.

One of the biggest challenges to revenue mobilisation is the unbridled tax exemptions which cost the nation about GH¢3.2 billion annually.

We believe that the government must take a very hard look at some of the exemptions that are granted because they do not support the growth of the economy in any way.

Furthermore, to ensure that we are not vulnerable to external shocks in terms of world commodity prices, we should, for instance, look at hedging our oil exports as far as our share in the Jubilee and the TEN oil fields are concerned.

We believe that if the government is able to plug the leakages as far as revenue mobilisation is concerned, the country will not need an extended credit facility with the International Monetary Fund and, more importantly, the economy will be transformed.