Political Risk Analyst, Dr. Theo Acheampong, has asserted that Ghana does not have a revenue problem.
According to him, the country's current debt distress situation could largely be attributed to not being prudent in managing expenditure.
“Consistently, the story has been made to look like Ghana has a revenue problem, but I have a far bigger problem with expenditure and the quality of spending that we have," he said on Joy FM’s Super Morning Show, on February 7, 2022.
Dr. Acheampong stated that "there’s a lot of published/academic work that shows that sometimes, as much as 30% of spending goes to waste.”
His comment follows the recent downgrade of Ghana's economy by two International rating agencies; Fitch and Moody’s.
Fitch downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B’ with a negative outlook
Subsequently, Moody’s also downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3 and changed the economic outlook to stable from negative.
The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges.
Moody’s added that Ghana has set more ambitious targets in its fiscal consolidation plan presented in November, 2021.
Moody’s cited for instance a 20% cut in primary spending announced by the government which is equivalent to a 4% cut on a year-on-year basis or 16% in real terms, to compensate for any shortcoming in the government's revenue measures package
According to Moody’s, “such an unprecedented fiscal tightening will be socially, economically, and politically challenging to implement.”
Dr. Acheampong, in reacting to whether government's 20% cut in expenditure is attainable, stated that the target is quite a tough one.
“If you look at the plans to actually cut back on some spending items and to do as much as 20% in this quarter, it is going to have political consequences,” he said.
That notwithstanding, Dr. Acheampong believes it is a good idea to for government to cut expenditure.
“I think the very important thing in terms of signaling to the international market could be to demonstrate that they can make some cuts and even if they did 5% or 7%, that would be a good start,” he said.
Meanwhile, government has questioned the international credit rating agency, Moody’s recent downgrade of Ghana from B3 to Caa1 with a stable outlook on the Long-Term Issuer and Senior unsecured bond ratings.
In an official statement, government explained that the forecast and projections had inaccurate balance of payments statistics, lack of supporting quantitative analysis, or data on Environmental, Social, and governance credentials.
It also complained about the “omission” of key material information such as the 2022 Budget expenditure control measures – 2022 upfront fiscal adjustments.
Latest Stories
-
Herman Suede is set to release ‘How Dare You’ on April 24
2 hours -
Heal KATH: Kuapa Kokoo, Association of Garages donate 120k to support project
2 hours -
KNUST signs MOU with Valco Trust Fund, Bekwai Municipal Hospital to build student hostel
2 hours -
The influence Ronaldo has on people, Cadman Yamoah will have same on the next generation – Coach Goodwin
3 hours -
Gender Advocate Emelia Naa Ayeley Aryee Wins prestigious Merck Foundation Awards
4 hours -
South Africa bursary scandal suspects granted bail
4 hours -
Ecobank successfully repays $500m Eurobond due April 18
4 hours -
Re: Doe Adjaho, Torgbui Samlafo IV, call for Unity among Paramountcies in Anlo
4 hours -
Extortion and kidnap – a deadly journey across Mexico into the US
4 hours -
Rihanna says fashion has helped her personal ‘rediscovery’ after having children
4 hours -
Development Bank Ghana targets GH¢1bn funding for commercial banks in 2024
5 hours -
Shatta Movement apologises to Ghana Society of the Physically Disabled after backlash
5 hours -
Sammy Gyamfi writes: Tema-Mpakadan Railway Project; A railway line to nowhere
6 hours -
Bright Simons: Is the World Bank saving or harming Ghana?
6 hours -
CAF Cup: RS Berkane banned from entering Algeria because of a map of Morocco with its Sahara
6 hours