Most Rev Prof. Emmanuel Asante, President of the National Peace Council
President of the National Peace Council, Most Rev Prof. Emmanuel Asante, has backed a call by the Institute for Fiscal Studies (IFS) to increase domestic revenue mobilisation as a way of curbing rising public debt levels.
He, however said there is the need for Ghanaians to push for this, by paying their taxes and for the right mechanisms to be put in place for revenue mobilisation.
He said the recommendation by the IFS, for strong revenue mobilisation and prioritization of government expenditure in favour of capital and social spending, is very important in the bid to reduce Ghana’s Public debt.
Most Rev Prof. Asante, who chaired a discussion on Ghana’s public debt, organised by the IFS on the theme: “Ghana’s Growing Public Debt-Implications for the Economy,” said the push for increased domestic revenue mobilisation could be left only to politicians, as they are mostly too concerned about elections to push for such things.
“We are not a tax-paying country, and let’s face it, the politician cannot push it because it will affect his election and so sometimes they are not in a position to push some of these things,” he said.
He said politicians are very concerned about securing votes in elections and therefore could not take certain actions such as stopping people from selling at unauthorised places such as pavements and on the streets.
“It was thus important for us to ensure that revenues come in… and again the mechanisms are not there,” he noted, referring to the failure of property owners to pay property taxes.
The Executive Director of the IFS, Professor Newman Kusi, speaking on Ghana’s growing public debt and its implications for the Ghanaian economy, said weak domestic revenue mobilisation is a key factor in Ghana’s debt crisis, with domestic revenue to Gross Domestic Product (GDP) levels below that of its sub-Saharan African peers.
According him, Ghana’s domestic revenue to GDP ratio averaged 20 per cent in recent years, way below the SSA average of 27 per cent of GDP, which meant that Ghana’s domestic revenue is short of what its economic potential and institutional development could generate.
“If Ghana’s domestic revenue had performed like its regional peers, the country could have generated significantly more revenue, which would have been used to pay off its expenditure overruns, with extra funds to pay off some of its debts,” he stated.
Ghana’s current debt levels, which stood at about GH¢146.2 billion as at November 2017, has implications for Ghana’s economy, particularly due to high debt service cost.
Prof Kusi noted that the cost of interest payment on public debts has increased from GH¢2.4 billion in 2012 to GH¢10.7 billion in 2016.
In 2017, a provisional amount of GH¢13.3 billion was recorded as payment of interest on public debt.
The amount is projected to increase to GH¢14.9 billion in 2018.
He said in order for government to achieve the medium term debt targets, government will have to adopt a comprehensive debt management strategy that will put caps on the levels of gross concessional and non-concessional loans that become liabilities to the government.
“Ghana’s rising interest cost cannot be contained through debt re-profiling as the current debt management strategy seems to suggest…Proactive debt management strategy is therefore needed to reduce interest payments and mitigate risks to the public debt profile,” he said.
