Fiscal consolidation non-negotiable in 2022 – Employers Association tells Gov’t
The Ghana Employers Association (GEA) has asked Government to commit to ensuring fiscal consolidation through the implementation of policies and programmes contained in the 2022 budget.
The Association asked it to put mechanisms in place that would reduce deficits and debt accumulation, and set the economy on a growth path of five per cent or more in the 2022 fiscal year.
To that end, GEA urged the Government to ensure that the end-December inflation rate fell within the medium-term band of 8±2, reduce the Monetary Policy Rate (MPR) to a single digit, though the rate was 11.0 per cent as of September 2021.
Mr Alex Frimpong, the Chief Executive Officer (CEO) of GEA, said this on Tuesday at a forum to examine the 2022 budget and the Ghanaian business environment.
He described the content of the budget as critical to all employers and the business community and urged Government to stabilise the forex market to cushion the Cedi from responding to any slight perturbations in its major trading currencies.
Mr Frimpong said that would provide sound environment for businesses to experience speedy recovery from the impact of the COVID-19 pandemic, contribute more to economic growth and create more employment opportunities.
With the Government projecting a real Gross Domestic Product (GDP) growth of 5.8 per cent and end-December inflation rate of 8 per cent, he said, “meeting these targets requires that the government remains disciplined to fiscal consolidation measures by ensuring effective debt sustainability and rationalising expenditures.”
“We, therefore, urge the government to maintain a good balance between the implementation of the revitalisation and transformation programmes in order to promote private sector growth within a stable macroeconomic environment,” Mr Frimpong said.
Among the recommendations put forward by the Association in relation to the budget and the business environment was for the Government to ensure the passage of the Tax Exemption Bill into law by the first quarter of 2022.
The GEA said the passage and implementation of the policy would “address the overgenerous exemptions regime and resolve the problem of underperforming domestic revenue.”
The CEO called for good domestic credit facility for the private sector to help them recover and compete favourably in the single market window characterising the goals of the African Continental Free Area (AfCFTA) agreement.
The 2020 World Bank Development Indicators show that only 10.88 per cent of financial resources were allocated to the private sector in Ghana last year, compared to the 17.24 per cent average in the Sub-Sahara African (SSA).
Touching on the establishment of the Development Bank Ghana, he said, for many years, the country had struggled to have a capital expenditure framework that would look at a long term financing of projects.
Therefore, the implementation of the development bank concept as envisaged in the policy would mean that businesses in the country would have access to enough capital particularly to finance middle to long term projects.
He said that would curb the “challenges on how to invest in industry, especially manufacturing, pharmaceuticals, hotel, tourism and hospitality sectors. It will bring more revenue to government, improve industrialisation and enhance our employment creation.”
On the Ghana COVID-19 Alleviation and Revitalization of Enterprise Support (Ghana CARES) initiative, he urged that “the Government expedites action in determining the modalities for implementation, as well as a reliable framework to enable timely reporting and feedback on key performance indicators of the programme.”
Mr Frimpong echoed GEA’s commitment to the Ghana Beyond Aid agenda and the economic transformation policies of the Government through social dialogue and consultations.
Mr Ken Ofori-Atta, Finance Minister, presenting the 2022 budget and economic policy statement to Parliament last week, said it was geared towards building a sustainable entrepreneurial nation, fiscal consolidation and job creation.
“In the near term, Government, through its economic revitalisation programme will seek to expand the economy with the provision of targeted fiscal stimuli while also ensuring fiscal sustainability to cushion the impact of COVID-19 on businesses and to facilitate a quick and strong recovery of our economy,” he stated.