Chief Executive Officer (CEO) of Dalex Finance, Mr Kenneth Thompson, has urged government to increase taxes and introduce new ones to raise revenue to save the Ghanaian economy from imminent collapse. Mr Thompson urged the Finance Minister, Mr Ken Ofori Attah to face the reality, take tough decisions and “I’ll be there to support you.”
Sharing his thoughts on the economy at a lecture organised by the Chartered Institute of Marketing, Ghana (CIMG), Mr Thompson stated that Ghana’s debt level had reached an alarming level, a situation that could create negative effects on the economy and throw government’s flagship programme, One District One factory out of alignment with planned spending.
“We are not likely to reduce our expenditure on salaries in the short term, and even though there has been some capping of statutory obligations the net effect is negligible. Our only hope is to increase revenue in the short to medium term in order to fund consumption expenditure, “he stated.
He urged government to get the informal sector to start paying individual taxes, enforce evidence of tax payment on property registration, for example, vehicle registration, company registration, land title registration and increase taxes across board especially property taxes.
"That is our hope in the short term, and reduction in profligate spending, example stopping the purchase of numerous Toyota Land Cruisers that cost over GHC 600,000 each,” he admonished.
Ghana is broke According to Mr Thompson, “Ghana is broke and heading for a disaster,”
Cedi overvalued
Ghana’s overvalued cedi had made the country’s exports expensive and non-competitive, while imports were relatively cheap.
The development, he noted had resulted in stunted economic development and unemployment. Ken Thompson made the case that the trickle-down effect of the overvalued cedi will jeopardize most, if not all government initiatives including the “Planting for Food and Jobs” programme.
“The initiatives are likely to be non-competitive because of the overvalued cedi, Mr Thompson argued.
“We spent almost 100 per cent of all our revenue including grants on three line items as follows: compensation to employees, interest payments, and, statutory payments, example GETFund, District Assemblies Common Fund, and NHIS," he said.
Mr Thompson also raised concerns over the rise in government expenditure which he described as worrying.
Borrowing spree unhelpful
The Dalex CEO criticised the use of borrowed funds to settle recurrent payments.
“Since we spend over 100 per cent of our revenue on compensation to employees, interest payments, and statutory payments, all our other expenditure is done from monies borrowed. We are borrowing to fund consumption and not to fund investment.
"Our debt is piling up (70 per cent of GDP), and, we may not be in a position to repay in future. Even before then, any natural or man-made disaster could send us into a default tailspin of government obligations causing intolerable hardship, widespread business failures, and mass unemployment,” he stated.
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