Institute of Economic Affairs says Ghana’s 2020 budget is not ambitious enough to stimulate economic growth

The Institute of Economic Affairs (IEA) has indicated that the 2020 budget and Economic Policy is not ambitious enough to ensure stabilization and growth.

Dr John Kwakye, senior economist

The Director of Research at the institute, Dr John Kwakye said there are no policies that would lead to fundamental changes that will make Ghana develop in the medium term.

“The targets in the budget are not sufficient, they are not ambitious. We see the budget as involving some tinkling and tweaking of figures to stay within a certain boundary defined by the fiscal responsibility act but that will only ensure small incremental developmental accounts for the country over the medium term.”

“The budget is not ambitious enough to bring about fundamental changes that will allow Ghana to make the needed quantum development needs. The figures and policies are also defined by political sensitivities. We think the budget is sensitive to political considerations,” he added.

However, a research fellow with the Institute for Fiscal Studies, Dr. Adu Owusu Sarkodie thinks otherwise.

He said the government’s revenue target for 2020 is overly ambitious.

The Finance Minister, Ken Ofori-Atta in presenting his budget said even though the government has missed its revenue target over the years it is aiming to raise GHC67.1 billion in revenue and grants in 2020.

The Finance Minister said this target is a “radical policy and institutional reforms” towards raising the tax-to-GDP ratio over the medium term.

Mr Ofori-Atta who did not introduce any new taxes said the government would rather focus on efficiency and base.

This is to help increase the domestic revenue towards achieving the Ghana Beyond Aid vision.

But Dr. Adu Sarkodie said though this is to consolidate the gains made so far, the government may be promising more than it can deliver.

“I mean how can you project to grow your tax revenue as a ratio of GDP from 13 percent to 20 percent in one year? That is a very over-ambitious statement to make because 20 percent is not something small you can achieve within a year.”

The government is seeking to spend nearly GHC86 billion on various planned programmes and initiatives in 2020.

This amount represents more than 21% of what the government is likely to spend for this year.

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