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 GHȼ18.9 billion n to GHȼ30.2 billion.
According to him due the sharp decline in global crude oil prices as a result of the novel coronavirus (COVID-19) pandemic, Ghana will suffer a loss of GHȼ5,679 million in expected oil revenue in 2020 fiscal year.
Speaking in an exclusive interview with our correspondent, Franklin ASARE-DONKOH, the Fiscal Policy Lead at Oxfam Ghana explained that the country is again expected to lose GHȼ808 million in import duties.
The shortfall in non-oil Gross Domestic Product (GDP) will also result in a shortfall in tax revenues amounting to GHȼ1,446 million. This brings the total estimated shortfall in non-oil tax revenues to GHȼ2,254 million. He disclosed.
The overall fiscal deficit Dr. Ampaabeng further noted is expected to increase from the programmed GHȼ18.9 billion (4.7% of GDP) to GHȼ30.2 billion (7.8% of revised GDP). The primary balance will correspondingly worsen from a surplus of GHȼ2,811 billion (0.7% of GDP) to a deficit of GHȼ5.6 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 the 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 mobilisation. The surest way to building 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.
Story: Franklin ASARE-DONKOH