Economic management for the past six months has been prudent but economic growth has largely hinged on oil, according to the Institute of Fiscal Studies (IFS).
The IFS is predicting that if government does not take measures to grow the non-oil sector, it might miss its Gross Domestic Product growth target of 6.3 percent.
It bemoaned government’s inability to collect enough revenue locally to support the economy.
“The payments of arrears helped improve private sector liquidity and spending, while capital spending helps to support projects and also provide much needed infrastructure such as roads and power.
“So cutting back capital spending and not paying valid arrears hold back economic activity with serious consequences for domestic revenue mobilization. The IFS observation in its view of 2017 budget that the projected revenue increase of 33.3% was on the higher side given the slower projected nominal GDP growth and wide range of tax reliefs being granted has been proved right.
“From development so far it is obvious that the projected revenue for the year will be difficult to achieve unless new measures are introduced to grow the non-oil economy and enhance revenue administration,” the Executive Director of the IFS, Professor Newman Kusi said at a press conference on Thursday.
He has, however, proffered some advice on how to boost revenue to support economic growth.
“Given that the object of the 2017 budget to achieve strong revenue mobilization is not likely to be achieved, at least for now, there’s the need for the government to introduce additional measures to enhance revenue mobilization effort.”
He added: “Seriously, prioritizing spending in favor of payment of valid arrears, increasing capital spending, dealing with budget rigidity caused by the wage bill, and infrastructure payment will help in this regard.
“The government should also enforce, strictly the provision of the public finance management act to deal with unauthorized, irregular, and fruitless spending as well as strengthen fiscal transparency and accountability.”
Published on 27 July 2017 | 3:11 pm at Source