Group Chief Executive Officer at Databank Kojo Addae-Mensah says government’s ability to hold its overall budget deficit to a maximum of 4.5 percent, will depend on a number of factors especially on how the government is able to control its expenditure levels.
The Institute for Fiscal Studies (IFS) has already warned that government may record a real budget deficit of more than 5 % of GDP if it does not reduce its appetite for borrowing, a situation that will be in breach of the Fiscal Responsibility Law which limits budget deficits to a maximum 5 percent of GDP.
Speaking on how government can achieve its revised budget deficit target for 2019, Mr. Addae-Mensah called for strict implementation of the new revenue-generating measures such as the Communication Service Tax while holding expenditure under control.
“The deficit position is something we should really keep a close eye on. As long as it’s well below 5 % I think we can handle it. The danger will be if we make the mistake of letting it hit 5 %. Honestly speaking if they get anywhere near 4.5 %, they have to really look at expenditure.
Our economy is informal, which makes revenue collection difficult. That’s why the communication service tax, as well as tax components like the Road Fund Levy, the Energy Debt Recovery Levy, the Price Stabilisation and Recovery Levy, are all critical to raising more money.”
