There comes a time in a country’s life where all must come around one table to discuss and find lasting solutions to recurring challenges facing us. I was glad when I heard the Vice President calling for a national economic forum.

The forum is aimed at achieving consensus on policies, strategies and measures to accelerate Ghana’s transition from a lower middle income nation to an upper middle income economy. The forum is themed “Building a National Consensus for Economic and Social Transformation”.

I must on this note congratulate the government for taking a bold initiative to call stakeholders in politics, academia, and civil society among others to deliberate on such an important issue. This indeed confirms government’s commitment to good governance. 

Some of the issues that will feature at the forum include the ballooning public wage, a depreciation of the cedi, high inflation and rising debt stock among others.

The World Bank has grouped low income countries as countries with GNI of $1,035 or less; lower middle income between $1,036- $4,085, upper middle income between $4,086- $12,615 and high income $12,616 or more.

CURRENT TRENDS

According to the World Bank, Ghana’s economy slowed down to an estimated 5.5% in 2013 and is expected to remain at the same level in 2014. Headline inflation breached the monetary policy target of 9% plus or minus 2 for 2013.

The consumer price inflation increased from 10.1% in January 2013 to reach 13.5 % in December 2013 and 14.0% in February 2014 whiles the producer price inflation reached 27% in February 2014.

Foreign direct investment (net) declined by 0.8% of GDP while medium and long term loans declined by 0.4% of GDP in 2013. Again, net international reserves fell from $ 3.2 billion in December 2012 to $2.1 billion by the end of 2013 and $1.7 billion by January 2014 covering only less than one month of imports of goods, services and factor payments.

Public debt reached close to 60% of GDP in 2013. Increased volatility in the global financial markets since mid-2013 and a sharp decline in international commodity price led to a depreciation of the Ghanaian cedi against the US dollar in 2013, and more than 17% in early 2014.

THE ESCALATING WAGE BILL

Since the implementation of the Single Spine Salary Structure (SSSS), the wage bill has been ballooning over the years and there are questions now of how sustainable this wage bill is. Government spends about 70% of tax revenue paying public and civil servants which is totally unacceptable according to international standards. If that is the case, how much is left for government to embark on capital projects. The escalating wage bill is one of the factors contributing to the macro-economic imbalances.

Even though, government has resolved to put some institutions on subvention but that is not enough. What's more…..It is high time we measure productivity against wages and salaries.

The low productivity recorded in the public sector dwindles economic growth and development. In Ghana, there are people in civil and public sectors who are paid for virtually no work done and it is incumbent on some institutions like Fair Wages and Salaries Commission to demand productivity so as to protect the national purse.

TAXATION

Taxation is one of the sources of revenue for government to embark on development of the state. Last year, the Ghana Revenue couldn’t meet its target which is a shortf

I suggest that, revenue collection in this country must see a face right from the collection points to disbursement. The national, regional and district offices of the GRA must implement what I call “ Paid By What You Collect”(PBWYC). This will serve as a motivating factor for tax collectors to give off their best and help check tax evasion in this country. Again, they must be given daily, weekly and monthly targets with strict supervision.

On the issue of Value Added Tax (VAT), government increased the VAT by 2.5% with the notion of establishing the Infrastructure Fund. I don’t know how far the government has gone with its implementation but I must say we have to be committed to bridging the infrastructure gap in order to boost productivity, growth and development.

Last month, government hinted a 17.5% increment in VAT of some financial services.

This announcement didn’t go down well with Ghanaians because the tax payer is becoming overburdened. Taxation is one of the tools used by governments to solve the economic inequality gap especially progressive taxes.

The informal sector in Ghana is under-taxed which is contributing factor to the economic imbalances is. My humble submission is that, GRA must launch an aggressive campaign to bring the large informal non-tax paying people under the tax net. Consequently, some of the tax incentives and holidays given to multi-national companies are sometimes unacceptable. These incentives given to them make them highly competitive at the detriment of the local companies. In our quest to develop as a nation, government must cushion local industries thus give them incentives in the form of taxes and others especially in industries we have comparative advantage.

TRADE

Last month, there were a whole lot of controversies surrounding Ghana’s position on either signing or not signing The Economic Partnership Agreement (EPA).

Some government officials have hinted that, the agreement will favor the country likewise some Think Tanks. Their main argument is that, because prices of our traditional exports experienced decline on the international market, it would be good for Ghana to sign to make us benefit from the gains that comes with non-traditional exports. This argument is quite laudable but let me ask; what is the volume of trade between Ghana and Europe?

What is the volume of trade between Ghana and China? How do we expect ailing local industries to compete with fully grown European industries? Indeed, the non-traditional exports are doing well but that can’t be an absolute reason for letting Ghana sign the EPA. Our exports have been basically primary commodities which continue to increase our balance of trade deficits.

If Ghana is keen on diversifying her economy, massive investment must be made infrastructure like roads, energy, bridges, railways etc. so as to reduce cost of production for our local industries to add value to their primary commodities.

I can’t end my humble submission without stressing the need for government and other stakeholders to “block the loopholes”. The level of corruption in recent past is nothing to write home. Corruption continues to widen the gap between the rich and poor in society. There is a new wave of corruption I call “public-private looting” where government officials liaise with private sector institutions and individuals to dupe the states of millions of Cedis.

Again, fiscal indiscipline must be checked so that, public officials don’t overspend their budget. Fiscal indiscipline especially in election years turns to place a burden budget the following year leading to macro-economic imbalances.

For Ghana to attain an upper middle income status, trade policies, low unemployment rate, low inflation rate among others must be pursued aggressively for realization of this goal. Indeed I am optimistic that, the National Economic Forum would inure to the benefit of Ghanaians if its outcomes are not laid on the shelves but implemented.

The author is an Associate Chartered Economist