Cutting down expenditure by 20% a smart move by government – Economist

Eric Osei Assibey Senior Economist Dean of International Programmes at the University of Ghana, Prof Eric Osei-Assibey

Mon, 24 Jan 2022 Source: www.ghanaweb.com

Government reduces 20202 expenditure by 20% - Finance minister

Move demonstrates commitment to fiscal consolidation - UG dean

Expenditure cut to assure markets of fiscal consolidation - Osei-Assibey

The Dean of International Programmes at the University of Ghana, Prof Eric Osei-Assibey has described government’s decision to reduce its expenditure by 20 percent as a smart move.

According to him, the move would signal to the international money market that, even if government could not achieve its revenue target, it was still willing to stay within its budget limits.

Prof. Osei-Assibey who was speaking in an interview on Asaase Radio’s Town Hall Talk said that the reduction of government expenditure for 2022 was a step in the right direction.

“I honestly thought that is a smart move. I thought that is the way to go because the market is watching the government’s ability to meet its fiscal targets.

“And so, one good thing: the signal that the recent pronouncement of the Finance Minister gives to the market is that of the government’s willingness to fiscally consolidate even if it doesn’t realise the expected revenue,” he pointed.

He added that the move makes government’s 2022 budget more credible and gives assurance to the international community that government was capable of meeting it fiscal targets.

“It then impacts on Budget execution and credibility. Given the timing, given the environment in which we are, the noise that is in the market, you need to assure the market. The market is sceptical; the market is concerned that the government will not be able to meet its fiscal targets, one of [the doubts] being that the fiscal projection is too high.”

Addressing the media on January 19 2022, Finance Minister, Ken Ofori-Atta announced that the government has suspended 20 percent of its expenditure in the 2022 Budget.

Ofori-Atta explained that the move was "to ensure that the government matches all expenditure to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection," the Finance Minister announced.”

He added that the reduction of the budget was in line with "with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across the board for all covered entities benefiting from the 2022 Budget, subject to revenue performance."

Source: www.ghanaweb.com
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