Current IMF programme likely to negatively impact Ghana's revenue shortfalls – Economist

Renowned economist, Dr. Nii Moi Thompson, has cautioned that the current IMF programme for Ghana will likely have a negative impact on revenue shortfalls.

He argued that the government has not implemented measures over the years to address the revenue deficit, leaving revenue sources in disarray.

During an interview with Accra-based Channel One TV, Dr. Thompson also accused the government of failing to provide the necessary credit and lending for businesses to thrive, instead burdening them with taxes, leading to a high cost of doing business.

"Ghana has historically overshot its wage bill by a staggering 9%, while simultaneously experiencing a revenue shortfall of approximately 4%," the economist is quoted by citinewsroom.com to have said.

He added that, "Since 2008, every single year, we have exceeded our wage bill by almost 10%. And over that same period on average, we have had revenue shortfalls of around 4%. You see the contradiction emerging - your revenues are falling short in terms of budget. So actual and budget, it’s falling short by an average of 4%. But you’re exceeding your wage bill by almost 10%. Then the third element is a shortfall in capital expenditure, which is also around 4%. It’s like a perfect storm. You’re not investing enough in your economy, and as a result, you are not collecting enough revenue."

"I see a slight decline in the wage bill for the estimated figures for last year [2022], we don’t have the final. But the others remain the same, revenues continue to fall short. And it will actually get worse as the IMF program is implemented. Because sources of revenues are business activity growth, and here you are strangulating them. By not giving them credit, raising the cost of doing business, tariffs, electricity tariffs, and so forth, we can expect this to get very difficult as we go on," he explained.

The former Director-General of the National Development Planning Commission (NDPC) concluded that the current IMF program will worsen the country's revenue shortfall, leading to further economic downturn.

"The IMF programme as it is now can never solve our problems; it will only make it worse," he asserted.

Ghana is currently awaiting the IMF Board to approve the disbursement of the third tranche of bailout funds made up of US$360 million. The country has also secured a deal with the Official Creditor Committee on the terms of a debt revamp of external debt.

MA/AE

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