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The 2022 budget will focus on expanding the tax net, rationalising government expenditure and optimising the implementation of the government’s flagship programmes, Mr Charles Adu Boahen, Minister of State at the Finance Ministry has hinted.
At the Graphic Business/Stanbic Bank Breakfast Meeting on Tuesday, 2 November 2021, Mr Adu Boahen told the audience in Accra: “We continue to focus the budget, this coming 2022 budget, on some key highlights, especially giving the backdrop to where we are today”.
“We continue to still have high debt levels. We continue to still have challenges with regard to our interest rates that have had an impact on the ability for the private sector to be able to borrow at attractive rates to fund investments and expand the economy. We continue to see some serious challenges with regard to job creation, especially for the youth”, he noted.
Mr Adu Boahen continued: “I think the just-ended census confirmed the fact that Ghana has a very youthful population and we are churning out graduates every day who are struggling to find jobs and we really need to create an environment and job opportunities for the youth, to be able to make sure that they are employed”.
So, he noted, “on the back of that, this budget is focused on expenditure rationalisation and optimising the implementation of flagship and strategic programmes, widening and deepening existing revenue sources including expanding the tax net”.
He said due to the “elevated debt levels in 2020, we saw our fiscal space continue to be eaten up by high interest expense”.
“If you look at how much of our revenue we were using to service our debt, it is clear that we need to look at how we can reduce the cost of borrowing”, he observed.
“I see my good friend here and MD of Stanbic Bank … We had a meeting with him and his colleagues and we were like: ‘You know, guys this interest rates environment is not sustainable; what can we do to reduce the rates so that we can get the impetus to move this economy forward?’”
Alongside that, he said “given the fact that we have such high debt levels, we have to focus on revenue maximisation”.
He noted: “We still, really, do not believe that we are maximising our revenue potential”.
“I think our tax revenue in terms of GDP is under 14 per cent – between 13 and 14 per cent. Most countries’, even [that of] some of our peers in Africa, is closer to 18 or 19 per cent”.
“So, clearly, there’s a lot of room for growth. We’ve set up a revenue assurance unit within the ministry of finance with the focus on trying to plug the leakage”.
Additionally, Mr Adu Boahen said: “We also feel like the digitalisation drive is putting in place the foundation to be able to formalise the economy and create the pieces for us to be able to generate more revenue but it’s a fundamental cornerstone or anchor for our budget into 2022 – the importance of digitisation and widening revenue sources”.
He emphasised: “As I said already, debt stock sustainability amidst fiscal consolidation is also a big priority for us”, pointing out: “We want to make sure that we continue to focus on putting our debt on a declining path as we move forward in order for us to get to what we believe should be normal levels around 60 to 65 per cent debt to GDP”.
On the COVID-19 pandemic, he said: “We also should not underestimate the importance of herd immunity through an aggressive vaccine rollout campaign”.
“Our people can only be productive if they are healthy and, as you see … the workforce, people are actually really working from home, not everybody is in the office and, so, I don’t believe that our productive levels have got back to where they were prior to 2020”.
“So, it’s important that we get everybody immunised, vaccinated so we can get back to normal as quickly as possible”, Mr Adu Boahen noted.
He said: “I think right now we have more than enough vaccines in town and for those of you who are not vaccinated, I really encourage you to do so. … We are not out of the woods yet”.
“We, also, would like to focus this budget on returning our GDP growth to levels around above 5 per cent in the medium term and looking [forward] to investing in the productive sectors of the economy to achieve that”.