Ghana may go back to IMF again – EIU report

The Economist Intelligence Unit (EIU) says Ghana is likely to return to the International Monetary Fund (IMF) in future.

According to the EIU, fiscal laxity may necessitate reliance on the Fund in future.

The report said, “Indeed, government efforts towards fiscal consolidation remain constrained by high public spending, as well as relatively low tax revenue mobilisation, owing to high levels of tax avoidance. Fiscal laxity may necessitate reliance on the Fund in future, although this is not our core forecast as we expect the fiscal deficit generally to narrow over the outlook period.”

EIU says it expects the government to pursue an expansionary fiscal policy in the run-up to the 2020 election as it seeks to boost economic growth (and as spending is not restricted by the need to adhere to an IMF programme), before financing constraints necessitate a shift to a contractionary policy.

Explaining further on Ghana's inability to mobilise the needed revenue the EIU said, “the government has sought to strengthen the Ghana Revenue Authority, ensure broader enforcement of tax identification number measures, and build the capacity of local governments to collect taxes.” However, enforcement remains an issue and many companies continue to benefit from various loopholes. Accordingly, we do not expect these collection measures to provide a major boost to government revenue.”

IMF exit: We must manage expenditure, revenue not to go back- Economist

Economist Professor Peter Quartey says for Ghana not to go back to the International Monetary Fund, IMF, again we need to manage our expenditure and revenue better in 2020.

According to him, we need to grow our revenue base because currently, we are always recording revenue shortfalls.

“The first thing is how do we manage our resources, our revenue especially. We need to grow the revenue base. At the moment we are always recording revenue shortfalls so what innovative thing can the government use to raise revenue to be it from the informal sector or broadening the tax base," he said.

Some economists have pointed out that governments overspend in election years, creating economic difficulties that compel Ghana to back to the IMF for a bailout.

After the final review by the IMF, Ghana has on April 3, 2019, exited the programme.

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