Government doesn’t need to cut spending – Prof. Akah

0

An economist at the Institute for Statistical, Social and Economic Research (ISSER), Professor Charles Ackah, says calls for more government spending cuts are not the answer to Ghana’s economic downturn.

The government, he said, should instead spend more by increasing spending and pursuing sustainable development goals in order to regain the trust of Ghanaians and spur growth.

He noted that if austerity was indeed the answer, Ghana would not have been in this dire economic situation given how particularly thrifty governments have been in spending.

Speaking on PM Express Business Edition of JoyNews, he said: “I don’t think the solution lies in fiscal consolidation. I don’t believe that at all because once you accept that it’s fiscal consolidation that we need, you say we’ve been lavish, we’ve overspent and we need to cut back.

He said: “I don’t think that’s it because the evidence doesn’t support it. If you look at Ghana’s spending over the past 60 years, we are not spending enough because government spending is only about 10% of GDP.

According to Professor Ackah, successive governments have failed to invest adequately in grants and subsidies, especially compared to other countries, which has inadvertently stymied development and made life difficult for Ghanaians.

He noted that these austerities have affected business growth, leading to low tax revenues.

He explained, “Look at the subsidies, the amount of money the government sends in terms of subsidies and fertilizer subsidies to farmers, LEAP and social benefits. In 2000, we were spending about 3% of our GDP or our total expenditure. Today we are down to about 20%. Malaysia spends around 50%, look at Belgium, look at all these countries, which means the government is actually austere.

The Economist suggested that the only way out of this quagmire was for the government to focus inward and build local trust.

“So how can we ride out the recession? How do you make sure you build trust? Trust is not meant to be built for external creditors, trust is meant to be built for Ghanaians rather,” he said.

Share.

Comments are closed.