The Fiscal Policy Lead at Oxfam Ghana, Dr. Alex Ampaabeng has predicted Ghana’s Fiscal deficit for the year 2020 to increase from a programmed GH¢ 18.9 billion n to GH¢ 30.2 billion.
According to him, due to the sharp decline in global crude oil prices as a result of the novel coronavirus (COVID-19) pandemic, Ghana will suffer a loss of GH¢ 5,679 million in expected oil revenue in 2020 fiscal year.
Speaking in an exclusive interview with F. ASARE-DONKOH, the Fiscal Policy Lead at Oxfam Ghana explained that the country is again expected to lose GH?808 million in import duties.
The shortfall in non-oil Gross Domestic Product (GDP) will also result in a shortfall in tax revenues amounting to GH¢ 1,446 million. This brings the total estimated shortfall in non-oil tax revenues to GH¢ 2,254 million. He disclosed.
The overall fiscal deficit Dr. Ampaabeng further noted is expected to increase from the programmed GH?18.9 billion (4.7% of GDP) to GH¢ 30.2 billion (7.8% of revised GDP). The primary balance will correspondingly worsen from a surplus of GH¢ 2,811 billion (0.7% of GDP) to a deficit of GH?5.6 billion (1.4% of GDP). He added.
“Even though the International Monetary Fund (IMF) and the World Bank have responded with a one billion United States dollars in emergency funds and $500 million debt standstill respectively to help Ghana meet its immediate revenue needs. These shortfalls call for urgent and context-specific policies to address fiscal challenges.
Whilst these are useful packages to help the country during and in the early days of post-covid-19, Ghana must take very bold and proactive approaches to harness potentials for internal resource mobilization.
The surest way to building a sustainable and more resilient economy is anchored within locally implemented economic policies,” Dr. Ampaabeng suggested.
According to him, taxation remains the main source of domestic revenue for the country. Saying unless the country adopts creative and innovative approaches towards mobilizing domestic revenue, it could be plunged into decades of unsustainable debt situations, the consequences of which are obvious – widening gender and economic inequalities and exacerbate cleavages and violence/conflict.
Whilst the government will seek to come out of the effects of post-COVID-19 and get the economy running, it must do so with extreme caution and adopt context-specific and relevant fiscal policy measures. Dr. Ampaabeng cautioned.