Economic analysts are urging Ghanaians to manage their expectations for freebies in the 2022 budget, which is scheduled to be presented to Parliament tomorrow, Wednesday, November 17, 2021.
According to these analysts, this is because Ghana’s economy is now broke.
Mr. Joe Jackson, Director of Business Operations at Dalex Finance, and Toma Imihere, Editor of the Goldstreet Business newspaper, said that the economy is in a grave state and that immediate efforts must be made to infuse money to support it.
According to Joe Jackson, the lack of tax collection, the high rate of debt servicing, and the government’s massive borrowing make it impossible to announce actions intended to cushion citizens.
He said that with markets now unwilling to lend to Ghana due to the country’s severe economic circumstances, the 2022 budget must concentrate on restoring investor confidence and convincing lenders that Ghana is doing all possible to stabilize the economy.
“The budget must signal better management to the market so that we can borrow because we still have to borrow. They have to know that we are doing our best to manage our affairs so that we can borrow at reasonable rates,” he said.
He said that in order to increase income, the government must go beyond digitalization and expand the tax base, as well as establish progressive taxes on the wealthy and luxury goods.
He also railed against the country’s tax exemptions for private corporations, claiming that they jeopardize the government’s income collection efforts.
“The mere fact of identifying somebody, although it is excellent, will not solve the problem. Unless someone is willing to follow up and ensure the taxes are collected. The taxes should be such that the rich pays more… These tax exemptions are troublesome,” he indicated.
Meanwhile, Toma Imihere said that Ghana’s bond market reputation has deteriorated and that measures must be made to re-establish investor trust in the country’s economy.
He said that Ghana’s recent foray into the bond market failed miserably, and with nothing the government can do about it, the country must seek alternative domestic income sources to fund planned projects and pay mounting debts.
“Even the willingness of people to lend to us is gone. When went to the bond market in March, we said we were going to take $5 billion dollars if the price was right, eventually, we were offered $6 billion dollars but the problem was that half of it, the prices, the interest rate was too high for us so we got only $3 billion. The government said it was oversubscribed but that is not true,” he said.
He accused the government of failing to go after the elite and political class to raise revenue to fix the dire circumstances of the economy and instead introducing taxes that make the poor worse of.
“Our political elites are self-serving. The people who set the tax laws don’t want to put taxes where they will pay more,” he observed.
On November 17, 2021, Finance Minister Ken Ofori-Atta is set to present the 2022 national budget to parliament.
Before the budget is read, there are already a number of demands on the government, including requests from dissatisfied Menzgold customers for a budget relief package.
The Association of Ghana Industries (AGI) is also lobbying the government to eliminate the 50% benchmark value, while the Ghana Union of Traders Association (GUTA) is pleading with the government to maintain it.
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