Business News of 2014-08-07

Gov’t urged to limit budget programmes to fewer projects

A financial analyst and Chief Executive Officer of ClayDord Consult, Professor Cletus Dordunoo, has urged the government to limit the programmes in its annual budget to fewer economic objectives with specific targets.

He said the short-term policies and projects in the budget were too many and over ambitious, a situation which makes the government to accomplish only 20-30 per cent of the policies and projects within a year.

Professor Dordunoo made the call at the mid-year review of the 2014 national budget. The platform was created by the Pentecost University College of Graduate School on August 1.

He said the government needed to identify its priorities and potentials and use the budget to deal with them.

According to the financial analyst, the main fiscal policy theory applied was mainly expenditure-driven which consistently led to huge budget deficits ranging between eight and 14 per cent of Gross Domestic Product (GDP).

Consequently, he said the domestic and external debts and interest payments were reaching crisis level with debt servicing exceeding capital expenditure.

Long-term perspective plan

Professor Dordunoo also stressed the need for the government to adopt a three-tier system by adding a national vision/long-term perspective plan to the budget.

He said Ghana currently adopted a two-tier development strategic framework which comprised medium-term and short-term development plans.

He, therefore, urged the government to add a national development plan where the budget would address issues on a yearly basis towards the national vision.

He said the budget must be consistent, feasible, and comprehensive; with sources of funding and strategies for implementation all clearly spelt out.

Revenue short-falls

Professor Dordunoo also pointed out that revenue shortfalls was a key contributor to the huge deficits.

He said the inability to generate enough resources to meet budgetary targets was the primary reason for supplementary budgets to complement the main budget.

“We, therefore, infer that the main cause of the supplementary budget of GHC3.2 billion which was recently presented to parliament is as a result of government’s inability to meet the revenue targets in the main budget,” he said.

He called on the government to widen the tax net in order to get more people to contribute rather than increasing the taxes to burden a few.

“When you burden the people and they get tired, they will start evading the taxes”. The government must have a clear basis for increasing the tax base because it does not necessarily mean high taxes will yield high revenues”, he said.

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