The Institute of Statistical Social and Economic Research (ISSER) has advised the government to limit its desire for high-interest loans.
ISSER Director Professor Peter Quartey remarked that Ghana’s ongoing US$3 billion loan-support arrangement with the International Monetary Fund (IMF) might soon position the country to access capital market financing.
He stated this in an interview with the media during a debate in Accra on “Ghana’s Public Debt Management: Facts, Impact, and the Way Forward.”
“When we go to the capital market, we borrow at six, seven, or eight percent – that’s a recipe for disaster because repayment becomes a big challenge,” the economist said.
He advised the government to be more proactive in increasing domestic income by enticing Ghanaians to happily pay taxes, attract more Foreign Direct Investment (FDI), and demonstrate responsible spending.
He noted that supporting Ghana’s growth needed producing sufficient income, particularly FDI, which the nation had not done successfully in recent years, forcing it to rely on capital market loans and IMF assistance programmes.
He urged the government to use concessional loans with interest rates ranging from 1% to 3%, claiming that such conditions would be preferable and would allow Ghanaians to pay taxes at more reasonable prices.
The Economist reported that only approximately one million Ghanaians paid taxes, therefore the government’s efforts to digitise tax payment systems were a good indicator of compliance.
“People are unwilling to pay tax, and we’ve been told that if you move out of Accra to other places, very few people pay taxes, so we won’t generate enough revenue until we strictly enforce the law,” he stated.
He remarked on the necessity for the government to have Ghanaians willingly pay taxes by providing proof of the advantages of doing so through the provision of outstanding social services.
“If I pay property tax but have to pay for private refuse collection and the streetlight is not working, people start to wonder where the money goes.” He questioned.
According to data from the mid-year fiscal policy assessment of the 2023 budget statement, the country’s overall revenue and grants for the first half of the year were GHS59.3 billion.
This amounts to 7.4 percent of GDP, which is 8.4 percent less than the objective of GHS64.7 billion, or 8.1 percent of GDP.
Total spending was GHS68.5 billion (8.6 percent of GDP), which was 26.3% less than the planned expenditure of GHS92.9 billion (11.6 percent of GDP).
According to Ghana Investment Promotion Centre (GIPC) figures, FDI for the first half of 2023 was US$229.82 million, a decrease of nearly 18% from the US$279.51 million reported for the same time in 2022.
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