IFS commends govt on financial commitments in coronavirus fight

The Institute of Fiscal Studies (IFS) has commended government on its financial commitments to alleviate the suffering of the vulnerable in the COVID-19 pandemic.

The Institute in its assessment of government's fiscal policy amid the pandemic noted that even though the country’s fiscal position pre-COVID was 'shaky', the government was able to introduce financial alleviation programmes to ease the sufferings of citizens.

“However, because the pandemic was devastating even rich and advanced economies when it began to hit Ghana, we at IFS commend the government for taking swift actions to secure financial resources to help the country’s fight against the pandemic and bring some relief to the vulnerable in the society,” it said.

Some of the financial commitments of the government included the 50 percent reduction in taxes for frontline health workers, reduction in electricity bills and free water for households, among others.

The Institute advised the government against misappropriation of government spending, especially in this election year, adding that government expenditure should be directed in fighting the pandemic.

“Given the nature of the threat the pandemic posed and the poor fiscal state of the country, it was expected that additional expenditures that are not essential in the fight against the pandemic and to alleviate its economic effects on the vulnerable would be rejected by the government, despite 2020 being an election year,” it said.

It said it was excessive borrowing and fiscal misappropriation that lead to the precarious state of the country’s fiscal position pre-COVID, saying, “It was also expected that existing revenue sources would be carefully guarded, yet, since the pandemic hit the country, the government has taken certain fiscal policy actions that are quite head-scratching.”

The Institute urged government to seek debt reliefs, including debt forgiveness, from its major creditors so as to minimise the enormous size of the country’s debt service expenditure, which was consuming the biggest chunk of the country’s revenues.

It further noted that government should take steps to generate more revenue, particularly from the extractive sector of the economy in the short to medium term.