Accra (Greater Accra) 18 February 2002 - Financial analysts, experts and business operators have tasked the government to sustain micro-economic discipline, provide adequate funding for agriculture and ensure that private sector activities were enhanced to meet the growing aspirations of Ghanaians.
They also asked the government to use the budget to provide a clear set of economic stimuli and further tax incentives for businesses to ensure available long-term funds for planning.
Databank, Ghana Union Traders Association (GUTA) and the Ghana Stock Exchange in separate interviews expressed these sentiments on their expectations of the 2002 budget. The 2002 budget to be released on Thursday is expected to revolutionalise nearly all the sectors of the economy and move the call for positive change to reality.
Mr Ken Ofori-Atta, Chairman of Databank Financial Services, said the 2002 budget should be able to give the assurance that the micro economic indices that have created a stable economic environment in the last year would be sustained.
"Growth should be the main focus since merely stabilising an economy is not enough," he said. He said increased revenue generation should be a key feature that should help balance the expected government spending during the fiscal year and beyond.
Mr Ofori-Atta said there would be a negative effect if the government did not spend at all, adding that, "spending itself is not bad, only if it can be matched with a corresponding increase in revenue generation".
Asked if he expected a marked departure from the way budgets had always been designed, Mr Ofori-Atta said he did not think budgets in themselves were so different except that the sitting governments should stick to fiscal discipline and ensure that real private sector orientation would emerge within the budget.
"If the NPP government sticks to a regime of fiscal discipline, then things will work right and the economy can be planned and moved ahead."
Mr Ofori-Atta said numerous companies had made significant borrowing and were in huge debts. "Somebody should address this huge debt overhang for Ghanaian companies within the shortest possible time since I do not think they can wait for say the two to three years that some proposals are pointing to."
On the continued external borrowings for the government’s development projects, the Databank boss said the problem of local counterpart funding was disturbing, because most often it was lacking.
He expressed regret that all the four major roads to be constructed this year were to be funded from external sources. On the proposed divestitures, Ofori-Atta said the divestiture of the government shares in companies like Coca Cola, Ghana Telecom and Barclays Bank must be floated on the Stock Exchange.
He noted that this would bring in Foreign Direct Investment, "a signal that shows that government is really getting out of business." The government faced a strong challenge of ensuring that "our small Exchange grows and it is through such activities and that of listed equities that it will grow."
They called for strict discipline on the divestiture by ensuring that only persons and companies with proven ability buy the companies. "It is crucial that we have people with capacity to run the companies, aside the transparency issue. If not the success we are striving to achieve will be a mirage."
One analyst said it was obvious that the government might not divest all its holdings in the companies through the Exchange, but said it was important for it to do so as a means of strengthening the local bourse.
Industry analysts also told said an inflation of 22 per cent was not good enough especially when Ghana's neighbours had lower rates. They thus urged the government to work hard through the budget to make life more bearable for the ordinary Ghanaian.
One analyst said the budget must increase allocation for agriculture, where immediate and sustainable jobs could be provided. Public-private sector partnership should also be strengthened.
The Association of Ghana Industries (AGI) said the government's policies had not had the desired impact on industry particularly, manufacturing. Budget proposals submitted to the government by the AGI said AGI and PEF surveys indicated that the manufacturing industry was faced with constraints that undermined its ability to grow and become competitive.
The proposals said: "Tight controls on government expenditure and marginal limitations on government borrowing have succeeded in bringing inflation down ...but nominal interest rates still imply a punitive real interest rate which remains detrimental to manufacturing."
The AGI said it expected the government to further reduce its borrowings on the domestic credit market as well as sustain expenditure at levels that would not destabilise the improving macro economic situation.
The AGI advocated for a zero rating of exempt goods such as agricultural and pharmaceutical products, explaining, "under current status they are not able to claim their input VAT. When they are zero-rated, we believe they could claim the input VAT that they pay."
They also urged the government to take another look at the 140 per cent excise duty on locally made cigarettes saying, "it is not only punitive to producers but an incentive to importers, suppliers and smugglers alike."
Officials of the World Bank office in Accra said they would wish the government stuck to its current strict fiscal discipline with a tight lid on spending. They said the government must work at sustaining transparency, spend only what they have and ensure that the microeconomics situation was sustained.
GNA/GRi
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