A former Finance Minister, Seth Terkper, has stated that the new expenditure measures announced by the government to cushion the citizenry are not substantive and not effective enough to lessen the current economic crisis.

He says due to the distressed nature of the country’s domestic markets, government may have to continue borrowing to service existing debts, a situation he believes would lead to an increase in the deficit.

Speaking on Newsfile on Saturday, Mr Terkper highlighted that the new measures outlined by Finance Minister Ken Ofori-Atta are not going to make any difference to the deficit, borrowing and the debt situation; yet, may see some concrete numbers.

“It is not a matter of one or two measures; it is positive in one sense even if it is not substantive because much of the expenditure is not going in that area. By the way, we have to borrow to refinance [and] we have to borrow to repay old loan. That is the situation that is facing us.

“Is our domestic market that big and if we are blocked from going to the external markets, then I’m afraid; the problems GUTA is raising are going to be worse because government is coming straight into the domestic markets to borrow and it will increase interest rates, and that is why BoG is increasing policy rate as a signal,” he said.

The Finance Minister, Ken Ofori-Atta, on Thursday, announced a number of measures by the government including a 50% cut in fuel coupon allocations for all political appointees and heads of government institutions, including SOEs, a 15% reduction in fuel prices and a 30% cut in salaries for all Cabinet Ministers and heads of State-Owned Enterprises, amongst others to cushion Ghanaians.

But considering its revenue shortfall, Mr Terkper, who doubles as the Executive Director of PFM-Tax Africa Network, wondered how government would raise additional revenue to boost the country’s economic fortunes.

“It is a signal that the ministers themselves, the President himself and others are part of the sacrifice. As we go through these items, give us numbers; hopefully, by the mid-year review, we’d get the numbers,” he added.

Meanwhile, Ranking Member on Parliament’s Finance Committee, Cassiel Ato Forson, has said the new fiscal measures announced by the government lack substance and will not yield any significant result in the economic recovery process.

The fiscal measures announced today are just cosmetic and Empty. It will further erode confidence in the economy. Govt should:
1. place a moratorium on new loans
2. cut 2022 foreign financed projects by at least 50%!
3. And deliver on promise to review all flagship programs!

— Cassiel Ato Forson(PhD) (@Cassielforson) March 24, 2022

He contended that the various interventions outlined to enhance the economy’s growth may end up exacerbating the current economic woes bedevilling the country.

In a tweet to react to the Finance Minister’s address on mitigating the harsh economic conditions in the country, Mr Ato Forson said “the fiscal measures announced today are just cosmetic and empty; they will further erode confidence in the economy.”

The former Deputy Finance Minister suggested that “government should place a moratorium on new loans, cut 2022 foreign financed projects by at least 50% and deliver on promise to review all flagship programmes.”