The Institute for fiscal Studies, IFS, is warning economic growth will drag in 2019 if government fails to prune the numerous policies it is undertaking and seeks to undertake. According to the Institute, while it is commendable for government to roll out ambitious programs for the development of the country, the fiscal space is too weak and fragile to do that.
The institute also believes domestic revenue generations is extremely low and so government may rely on excessive borrowing to fund the projects with a rippling effect economic growth.
Government has announced not less than ten policies it seeks to undertake for the development of the country, which include the Free SHS policy, the One District One Factory initiative and the Nation Builders Corps program.
However, addressing the media ahead of the 2019 budget presentation, the IFS says the numerous projects are not sustainable and will kick economic growth off balance.
A senior fellow at the institute, Dr. Saeed Boakye said the policies must be reviewed.
“If care is not taken, the aggressive move by the government to do many projects can backfire, which can plunge the country into economic mess in the future.”
The institute has recommended among other things for government to consult experts who will help analyze the sustainability of the projects and reduce its burden on the public purse.
“First, giving the weak fiscal and financial state in which the country finds itself, in terms of free fiscal space to maneuver, which is called by the weak revenue capacity, of the state, government should consider pruning down the policies. The money is just not there! and if you force yourself, you can cause economic instability.”
The IFS has therefore urged government to reduce borrowing and increase domestic revenue generation to fund some of its flagship programs.
“In trying to fund the initiatives for economic growth, the government should limit the amount of money it borrows to the barest minimum in order not to cause fiscal over run.”
The IFS says it has submitted several documents on it recommendation to government to help in the drafting of the 2019 budget.
By Nana Oye Ankrah/citibusinessnews.com/Ghana