Gov’t should trim spending to navigate crisis - Ato Forson

The Minority Spokesperson on Finance, Cassiel Ato Forson, has urged the government to focus on rationalising expenditure by cutting down on projects that are not of priority to the state, as this will help ensure fiscal prudence after the coronavirus pandemic.

According to him, the government will use over 100 per cent of revenue to service debt and pay wages because of the crisis, adding that government should have cut expenditure by now.

He cautioned that if care is not taken, the country would end the year with debt-to-GDP at 70 per cent using the rebased GDP and close to 83 per cent using non-rebased GDP. This would certainly trigger a credit rating downgrade, he said.

Already, credit rating agency Fitch is predicting that the country’s debt-to-GDP ratio would rise to about 77 percent by the close of the year due to the massive revenue shortfall caused by the COVID-19 pandemic.

For Mr. Forson, who used to be a Deputy Finance Minister under the previous NDC government, “in times of emergency, the first thing that comes to mind is to look at your budget lines and to reprioritise.

You look at things that you have no choice but to do such as paying wages and salaries, and you look at goods and services and capital expenditure, as well as other discretionary expenditures—those ones you can cut them.”

This is particularly important, he added, because revenues automatically start dwindling during an emergency, with exogenous factors like the fall in crude oil prices affecting the Annual Budget Funding Amount (ABFA), for which reason government should reprogramme expenditure.

Meanwhile, the government already outlined plans at the end of March to reduce some expenditures in response to the coronavirus economic shock, which the International Monetary Fund estimates will cause a revenue loss of GH?8.7bn this year, equivalent to 2.2 percent of GDP.

The plans, announced by Finance Minister Ken Ofori-Atta, identified reductions in goods and services and capital expenditures by GH?1.2bn, as well as savings of a similar amount by deferring interest payments on some government debt.

But Mr. Forson cited planned spending of close to GH?1bn to compile a new voters’ register as something that should be reconsidered.

The Member of Parliament for Ajumako-Enyan-Esiam also maintained that the size of government can be reduced by 50 percent given that the economy is under strain, stressing that such a measure will help to prune down expenditure Read Full Story