The Institute of Economic Affairs (IEA) Ghana has described the 2020 Budget and Economic Policy as “cautious but not sufficiently ambitious.”

Addressing the press on Tuesday, IEA Research Director, Dr John Kwakye said after three years of stabilising the economy, the 2020 budget required more determined means to promote developmental growth in the country.   

“Finance Ministers always face this tension between going for stabilisation on one hand and going for growth on the other. Reading the budget we can see the Minister struggling with these tensions in the 2020 budget and we see him as walking a very tight rope between stabilisation and growth.”

He further explained that “stabilisation involves withdrawing physical impulse or reducing spending, whereas growth and social relief requires an injection of physical impulse, higher spending and higher deficit.”

The Finance Minister, Ken Ofori-Atta on November 13, presented the Akufo-Addo government’s fourth Budget and Economic Policy in Parliament.

Commenting on revenue, Dr Kwakye said government’s revenue projection of GHS67.1 billion was unrealistic and over-optimistic.

“Government has the tendency to over project their revenue, such that they can also over project their expenditure,” he said.

He noted that government may not meet the revenue target since revenue mobilisation challenges still exist and that will affect the expenditure.

“Expenditure is constrained by revenue limitation. The level of expenditure could have been higher if we were raising enough revenue but because we’re not raising enough revenue we have to limit expenditure in order to keep the deficit under control within the Fiscal Responsibility Act ceiling,” he said.

He, therefore, suggested that government should tax profits of the booming companies in the country to generate more capital to fund developmental projects.

“It is a call for selective taxation in super-profit-making companies in Ghana like mining, banking, and telecommunication sectors. They must also be strictly regulated so that they do not pass it on to their consumers,” he stated.

He added, revenue made from this sector could be used to pay bailouts, and taxes generated from citizens to focus on infrastructure and national development.

The Research Director also highlighted that the country loses GHS5 billion revenue through tax exemptions which must be reconsidered and rectified.

”Why are they not taking property tax? Why have they not changed the exemption tax bill which has been submitted to Parliament for two years,” he quizzed.

The IEA analyses budgets presented to Parliament annually to promote public discourse on national policy issues.